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How is the economic crisis affecting tech companies?
As available venture capital dollars shrink, many VCs say they’re seeing more and better deals come through their door. But it’s an upside to the down economy that may be lost on Andrey Zarur. For the second time, the Kodiak Venture Partners general partner is investing in a company he has helped found himself.
Medford-based Greenlight Biosciences has operated in stealth, developing a way to turn sugar into pharmaceutical petrochemicals like benzene through a form of fermentation, cell-free synthesis. Zarur is CEO of Greenlight and the investing general partner at Kodiak, its sole backer so far.
“It’s going to be very rare that we’re going to invest in companies that aren’t our own,” said Zarur, describing what he called Kodiak’s new model for venture investing.
Last fall, Kodiak used a similar model to launch Waltham-based Lumicell Diagnostics Inc., a company developing a tool designed to help surgeons spot cancer cells remaining after an operation. Kodiak has invested less than $3 million in each company, having signed on Greenlight last month.
Dan Phillips, entrepreneur-in-residence at the University of Massachusetts Boston Venture Development Center, said Kodiak’s plan may be unique among VCs. Its success depends on an investor’s operational experience in specific areas, which in itself could be limiting, he said.
“I can fully appreciate in this market a VC firm deciding to have a smaller number of investments and focusing much more closely on that smaller number of investments,” Phillips said. “I would worry about a venture capital firm that’s going to focus soley on their partners’ area of expertise.”
Kodiak has four investing partners — Dave Furneaux, Chip Meakem, Lou Volpe and Zarur — representing startup operational experience in semiconductors, Internet commerce, network technology, life sciences and clean tech.
Zarur said he thinks Greenlight has something different. The company is applying a cell-free synthesis process developed in the lab of Stanford University professor James Swartz, who was traveling and could not be reached. But Zarur said he hopes that capability will offer a competitive advantage in the market for chemical supply to drug manufacturers, which now operates with commodity margins, and has the potential to make a significant dent in oil consumption.
Venture-capital investors should take on such big problems, said Zarur, who before coming to Kodiak founded Woburn-based BioProcessors Corp., a maker of systems for improving biologic drug manufacturing that sold earlier this year to Seahorse Bioscience Inc.
In Greenlight’s case, the big problem is global oil dependency. “My friendly VCs, stop investing in the 100th (software as a service) company,” he said. “We need to try to put another man on the moon and make a profit from it.”
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