Steve Blank, a serial entrepreneur, author and professor at Stanford University, developed the curriculum for the National Science foundation’s business boot camp for scientists before the NIH adopted it for scientists in the SBIR grant program. At a fireside chat at New York University Langone Medical Center hosted by NYC Bio this week, Blank talked about a new investment group called M34 Capital that will invest in technologies seeded by federally funded research, particularly graduates of I-Corps boot camps.
Led by CEO Errol Arkilic, founding and lead program director for the NSF I-Corps program, the Berkeley-based company was co-founded by Arkilic, Blank, Jim Hornthal, and Tom Baruch, according to its website. Its seed investment spans from $50,000 to $250,000. “We want to be the first external capital invested, and work closely with the founding team to help refine their business model and create the framework to systematically demonstrate its full potential,” according to the website. “We believe that the best entrepreneurs have the ability to blend technical insight with market-based feedback, allowing their innovations to mature into a successful company.”
Blank spoke with MedCity News about how M34 came about after the fireside chat. “We had this observation: Here we are investing all this money in science and now we’re training scientists to think like entrepreneurs. And yet they go to VCs…We wanted to take advantage of the fact that the government is now helping scientists leap this ditch of death. Maybe we should be looking at some of those companies and not only those companies but also other science-based companies that traditional VCs were passing by. It’s not the only venture firm that’s doing this there are other contrarians out there and I think you will see more and more of those as time goes on.”
The company’s name is derived from Mach 34, the speed required for an object to escape the gravitational pull of the earth.
Blank lamented the shift away from early-stage biotech investment by venture capitalists. But he voiced optimism that by schooling principal investigators on the tenets of lean startups, more venture investors will return to investing in early-stage life science companies, maybe within the next five to seven years.
Asked how long he thought it would take for the lean startup model to attract life science investors back to early-stage investment, Blank estimated it would take seven to 10 years. But with government organizations like the NSF and NIH supporting the program, combined with principal investigator graduates from the boot camp returning to their respective universities and encouraging them to add the I-Corps to their curriculum, it will make a big difference.
“I came up with what became the lean startup out of the rubble of the Internet dot com crash. I remember my wife asking me, ‘how long is this going to take?’ I said any revolutionary change takes about seven years. It took about a decade and it came from even in a crisis VCs were looking for alternatives … and so it took a decade for this out of the rubble to be if not standard at least be given lip service.”
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
“I think in the next seven years it will become the common way we do life science funding and start thinking about how we build companies. I think the difference this time is I didn’t have the NSF and NIH backing it on day one. So I would even change it to five years, because now with credible partners saying this is at least a methodology that the government supports… The other surprise that happened was after Stanford and then I-Corps adoption, this is probably the fastest adoption in business schools of any capstone class. Now we teach close to 200 educators a year how to teach this i-Corps class as the capstone class. It’s a tidal wave, because what happened is principal investigators were going back to their universities and saying, how come you’re not teaching this stuff? That’s been a virtuous cycle.”
