Daphne Zohar, the founder of PureTech Ventures, isn’t afraid to take big technical risks when it comes to funding new innovations. Nor is she necessarily put off by technologies that demonstrate clinical proof-of-concept without a clear explanation of why.
In fact, those are the kind of potential breakthrough technologies that the firm finds most intriguing.
Despite its name, PureTech Ventures isn’t a traditional venture capital firm. Zohar founded it 10 years ago to deconstruct some of the biggest problems in healthcare, re-think conventional strategies for addressing them and collaborate with researchers to create companies based on novel approaches.
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Akili Interactive Labs, founded by PureTech along with UCSF cognitive neuroscientists and game designers, is an illustration of that. The startup made headlines earlier this year for striking a deal with Pfizer to test its mobile video game platform designed to detect brain disorders and improve cognitive function in patients who have them.
Zohar sat down with me last week in Boston and shared some insights on the evolution of venture capital and where she sees the biggest opportunities for healthcare innovation.
Q: Let’s talk about where early-stage innovation and funding is headed. How does your model fit into that?
A: We are 100% focused on creating companies. We definitely see some venture funds doing venture creation-type stuff, but their main business is investing versus founding. I think the ecosystem that used to exist where entrepreneurs would start companies and then they’d raise angel money followed by VC was severely disrupted over the last five to seven years. Angel investors and entrepreneurs weren’t really rewarded for taking that kind of risk. Obviously people are still starting companies, and there are still angel investors, but it’s changed. So I think that has forced the venture funds to have to source and create their own deals in some cases.
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Q: Are there particular disease areas or technologies that you’re really interested in right now?
A: We don’t do anything that is “me-too.” For us, one of the key things is it should be really novel – not just first-in-class but more like creating a new class. And that unique part of it should be protectable by intellectual property.
The other thing is that it should affect a major market, so we’re not going after approaches that are nichey and small. We’re going after big ideas, big problems, really novel, where there’s a clear technical risk, and if we can address that technical risk then there’s clearly big value.
A unifying principal for us is looking at new modalities for addressing problems that had previously only been thought of from a drug perspective. So, for example, creating a “smart-pill” for obesity that’s a capsule that expands in your stomach, or a mobile video game that has the potential to be prescribed instead of a drug to treat ADHD and other cognitive disorders.
Q: On that note, what’s your take on digital health? Is it going to be the game-changer that many people think it’s going to be?
A: We’re very interested in digital health and consumer health. It’s really interesting to see all these companies coming into healthcare – Google and Apple and major food companies and even sporting goods companies. There’s this really exciting convergence. So what we’re most excited about is the convergence, not necessarily digital health or one specific segment, but the concept that as different disciplines converge onto healthcare you can really do novel things.
Q: Where are you finding these ideas and solutions that you’re incubating?
A: We start by defining the problem, and that’s usually with people who have thought deeply about the space. We’ll say, here’s the problem we’re trying to solve and here are the constraints that people have hit before. We’ll usually have people involved who are both experts and then people who have never thought about that problem before but bring a really interesting, orthogonal perspective. It’s very much proactively sourced.
Then we’ll reach out to academics, usually through people who know them that are involved with us. Often we’ll license in technology from multiple research institutions, because usually there’s different components of it that are necessary and they’re not all in one place. We don’t just go to tech transfer offices and say, what are all the technologies you have? We’ve found that that’s not necessarily the best source of identifying a new breakthrough approach.
Q: Then what?
There’s usually a few people from our team who are fully dedicated to that initiative and they act as the executive team in the early stages. Our first hire is usually someone who can run experiments, because once we’ve identified the technology we typically start with defining the things we have to prove to ourselves. We go with the approach of – what’s going to kill the project? Ok, let’s do that experiment first, and if it goes well that’s great because there’s value add.
Editor’s note: This interview has been edited and shortened for brevity.
