Early Traction. Whatevidence ordata do you have to support your hypothesis that the world needs (or wants) what you are building? Strategic partnerships are often key early indicators that people value what you’re building. We invested in a Blue Mesa Health, a digital therapeutic startup, for a variety of reasons but the one that pushed us over the edge to make the investment was their global partnership with Merck.
As part of our series about “5 Things I Need To See Before Making A VC Investment”, I had the pleasure of interviewing Neil J. Littman, MS. He has comprehensive healthcare-specific financial experience in venture capital, business development, and investment banking. As a member of the Executive Leadership Team and Director of Business development at the California Institute for Regenerative Medicine (CIRM), Neil managed more than 40 clinical stage stem cell and regenerative medicine therapies totaling over 500 million dollars. Neil was also previously the Vice President of Business Development at Notable Labs, an oncology-focused startup where he led the development of global corporate partnerships through the successful completion of the companies’ 40 million dollars Series B financing.
Neil started his career on Wall Street as an investment banker at Deutsche Bank and Thomas Weisel Partners, where he advised emerging growth biotech companies on public and private financings, licensing, M&A and other transactions over 1 billion dollars.
Thank you so much for joining us in this interview series! Before we dig in, our readers would like to get to know you a bit. Can you please share with us the “backstory” behind what brought you to this specific career path?
While working at the California Institute for Regenerative Medicine (CIRM), I met a little girl named Evie who was born with adenosine deaminase-deficient severe combined immunodeficiency, or ADA-SCID, a disease that is usually fatal within the first year of life if left untreated. Even the common cold can be fatal for these children, so they must be sheltered in clean environments with limited physical contact with family and friends and certainly no outdoor play. Evie was a participant in a CIRM-funded clinical trial and — along with 28 other patients — was cured. Evie now lives the normal life of an 8-year-old; she loves to surf, has a dog, and goes to school — all things that would have been impossible without that new treatment. It was through meeting Evie and her family that I got to see first-hand how R&D funding can change and save lives.
I also saw that the private company biotech that developed the drug later listed on the public markets with a valuation of 1 billion dollars, to the great benefit of their early investors. It was then that I decided more investors should have access to the emotional and financial returns made possible through early-stage healthcare investing.
Is there a particular book that made a significant impact on you? Can you share a story or explain why it resonated with you so much?
“Shoe Dog” by Phil Knight, about the founding story of Nike, is one of my all-time favorites. There’s a passage in the book that talks about Phil’s realization early on that he wasn’t selling shoes. He fundamentally believed in running and truly believed that if people ran a few miles every day, he thought the world would be a better place. Phil believed his shoes were better to run in and once he stopped selling shoes and started focusing on promoting a way of life and looking at the world, people sensed his belief wanted some of that belief for themselves.
I have internalized that approach at Bioverge and truly, deep down, believe the world will be a better place if we all have the ability to invest in life saving healthcare technologies. Capital influences the shape of the world and for too long investment in early, cutting edge therapies has only been accessible to a small number of people.
Do you have a favorite “Life Lesson Quote”? Do you have a story about how that was relevant in your life or your work?
“Whether you think you can or you think you can’t, you’re right.” — Henry Ford.
To me, this quote epitomizes the entrepreneurial mindset. While we may not have control over outside events, but we can choose how to think. As I’ve built Bioverge, I’ve kept this in mind and always aim a little higher than I’m comfortable and I’ve redefined failure along the way…the only true failure is not trying, the rest are merely learning opportunities. Bioverge has a highly ambitious mission — transforming healthcare and bringing science fiction to life. We think we can do this by accelerating the development of solutions for intractable problems in healthcare by democratizing the access, tools, and resources necessary to invest in the most innovative companies operating at the intersection between health and technology. There is no reason to innovate against a nearly 100-year-old culture surrounding private investment to bring entire novel therapies to market unless you believe that it’s possible for regular people to alter the course of human health.
How do you define “Leadership”? Can you explain what you mean or give an example?
As General Patton once said, “don’t tell people how to do things, tell them what to do and let them surprise you with their results.” I’m always surprised when I come across micromanagers and those that feel the desire to try and control everything. In my experience in leadership positions, micromanaging typically leads to subpar performance and employees become bored and complacent far too often.
Rather, I’ve found the most effective approach to be guiding toward an ultimate goal while providing enough support to help them get there. You just might be surprised at the creative solutions people come up with that you never would have thought to consider.
At the macro level, you can see this reflected in the healthcare industry itself. People live vastly longer lives than what was possible even a hundred years ago because of the diverse approaches that researchers have used to understand and treat human disease, be it small molecules, large molecules, devices, behavioral interventions or food as medicine. This dynamic applies to a company, particularly companies that want to innovate. To innovate at scale, you must draw on the most diverse range of experiences and knowledge possible. That can’t happen when a single approach to a problem is applied across the board.
How have you used your success to bring goodness to the world?
At Bioverge, we’re focused on the healthcare industry because it presents the opportunity to invest in companies whose output improves the quality of life, extends life expectancy, and raises productivity. We like to think that our success is shared collectively with everyone if we can help advance healthcare and save or improve the quality of life. People are living longer now because of new discoveries built on the breakthroughs of the past. By helping advance today’s breakthroughs, we are not just improving the lives of our neighbors, but our children and our children’s children and beyond.
Ok, thank you for that. Let’s now jump to the main part of our discussion. The United States is currently facing a very important self-reckoning about race, diversity, equality and inclusion. This is of course a huge topic. But briefly, can you share a few things that need to be done on a broader societal level to expand VC opportunities for women, minorities, and people of color?
I think we’re beginning to see it. The issues driving inequality are about access, not talent. According to PitchBook, in 2019 startups founded by a woman or a group of women brought in 3.54 billion dollars from VCs, or 2.7% of total investment that year. A 2018 report by Morgan Stanley found that women and minority-owned businesses receive 80% less investment than the median investment in companies overall. This is not only a justice issue. By underfunding women’s health, most VCs are finding themselves playing catch-up in the high-demand Fundtech space. By expanding access to allow more people to invest in private companies we create an avenue wherein founders can access the capital they need — potentially from similarly underrepresented investors who have a personal stake or interest that enables them to identify demand that someone else would not. This is why we’re so excited to be at the forefront of fostering healthcare investment via Regulation CF. Ending an 80-year-old rule where private companies could only raise capital from the wealthiest 2% of Americans opens up a realm of possibilities — the opportunity for a wider variety of founders to pursue their vision and for smart investors to access alternative investments that generate wealth. As for the rest, VCs follow success.
Can you share a story with us about your most successful Angel or VC investment? What was its lesson?
One of our most successful investments happened in 2020. Our portfolio company, Foresight, is redefining how people suffering from mental illnesses are treated by incorporating advanced technology. The lesson we learned is that in order to be a successful investor you must have discipline. Foresight wasn’t exactly in a ‘hot’ area when we made the investment. However, it fit squarely within our investment thesis and we were prepared for the long game because we fundamentally believed in the business, team, and the opportunity. If you fast-forward to today, the pandemic hit, and Foresight’s business has rapidly accelerated outpacing even our most aggressive assumptions. The point is that by sticking with our investment thesis and having discipline instead of chasing that new shiny object, we found a great company that is outperforming everyone’s expectations.
Can you share a story of an Angel or VC funding failure of yours? What was its lesson?
One of our biggest failures came from investing in a team that even at the time we knew was a roll of the dice. They were all incredibly smart and hard-working and had a huge vision, but what they lacked was the practical ability to execute. Investors love grandiose visions, but the lesson we learned was not to get so caught up in the vision that you underweight the importance and practically of how the team will get from step 1, to step 2, etc.
Can you share a story with us about a problem that one of your portfolio companies encountered and how you helped to correct the problem? We’d love to hear the details and what its lesson was.
All startup founders face a shared challenge — building a team that can foster scalable, rapid growth. For this, you need more than competence. You need self-sufficient problem solvers who can work independently and deliver results with lean resources who can one day serve as department heads. But, because start-up employees must be able to work autonomously, being able to do the job is not enough. The team must unanimously understand and follow the vision with fervor. We understand how critical having the right team in place can be to the success of the company, especially in the early days. One of our portfolio companies was having trouble recruiting for a key engineering role. We spent the time to understand the key skills for the role and then dug into our network and found the right person to fill the role. Turns out, the woman we recommended was a recent graduate student and the daughter of one of my former colleagues.
Is there a company that you turned down, but now regret? Can you share the story? What lesson did you learn from that story?
Yes, Mammoth Bioscience was a molecular diagnostics company we had the opportunity to invest in early on and passed, mainly due to prioritizing other deals ahead of it. We didn’t even take the time to kick the tires in diligence and they’re, of course, doing great things now. The lesson we learned is that we needed a better process to help us triage our deal flow.
Super. Here is the main question of this interview. What are your “5 things I need to see before making a VC investment” and why. Please share a story or example for each.
- Passionate and dedicated founder. Our very first investment was in Notable Labs. We invested because the founder was trying to develop a technology that could help his father in his fight against brain cancer. The founder was upset about the lack of available treatment options and set out to solve the problem.
- Team. In addition to the founder,are other key team members in-place or have they at a minimum been identified? We’ve passed on many investments because we haven’t felt the cohesion in the team has been strong enough to weather all the storms that building a successful company will entail.
- Early Traction. Whatevidence ordata do you have to support your hypothesis that the world needs (or wants) what you are building? Strategic partnerships are often key early indicators that people value what you’re building. We invested in a Blue Mesa Health, a digital therapeutic startup, for a variety of reasons but the one that pushed us over the edge to make the investment was their global partnership with Merck.
- Market. By this we mean not only understanding the size and dynamics within your target market, but how will your product be used and by whom? In biotech investments we call it the Target Product Profile, but it’s equally applicable across verticals…start with your end product in mind, the required features, it’s use case, and work backward to develop the plan to get there.
- Moat. What is your competitive advantage? What separates you from your closest competitors and what prevents them to doing what you’re doing? We made a recent investment in a healthcare company because they had very strong IP protection within they vertical they were operating.
You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
Capital influences the shape of the world. We should all be investing in startups that are working to tackle the diseases that affect us all. What if we collectively put the type of resources and effect behind finding cures for Alzheimer’s, ALS, etc. that we did for developing a COVID vaccine? If every disease were treated with the same level of urgency we’d be well on our way to significantly extending human health span and lifespan.
We are very blessed that some of the biggest names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US whom you would love to have a private breakfast or lunch with, and why? He or she might see this. 🙂
After already serving as one of the architects of technology today as we know it, Bill Gates looked for effective ways to improve the lives of millions of people and has led a profound transformation in the way we view the world’s most pressing health concerns. I’d love to sit down for a meal with him to discuss our shared passion for creating positive change in hundreds of millions of people’s lives around the world by improving healthcare. In particular, I admire how he applies his strongest skillset — a well-established knack for sifting through complex data sets — to identify the best pathways for making progress around the globe.
This was really meaningful! Thank you so much for your time.