A couple of weeks ago, a brand new, startup incubator launched in town--with a slightly different focus, on biomedical technology. The incubator--Greenwings Biomedical (www.greenwingsbiomedical.com), is led by Richard Koffler, a serial entrepreneur and angel investor in Los Angeles. Koffler tells us why Greenwings isn't just another accelerator --and instead, is internally incubating companies based on research from local universities. He sat down with us to tell us more about the incubator, plus why--having started an equivalent of what would be called accelerator today, but during the dot com days--he's a fan of a different model today.
What is Greenwings Biomedical?
Richard Koffler: It's an incubator of biomedical technology. Our mission is to bring inventions and innovation out of research institutions, primarily Universities, and license them and convert those inventions and innovations into viable products, and eventually companies, which we can get acquired for an early exit, or launch them into commercial operation and then eventually get acquired.
Why did you decide to start Greenwings?
Richard Koffler: I've done this before. I was involved in the healthcare industry with a company that I ran, and eventually sold, in healthcare information systems and telemedicine. After we sold that business, I started an incubator during the dot-com bubble. That ended up being the wrong model. It consisted of what today would be called an accelerator, which involves sprinkling a few dollars and coaching on other people. It was a failure. I think it's very difficult to find success on that model. It was also focused on consumer internet, which was not my strength. My strength lies in hard science and engineering. Three years ago, I started the first of three companies in a portfolio out of the UCLA health system, VAL9000. I then started another project, based on an invention out of the USC biomedical engineering department, a company developing an ultrasound device used for cardiac monitoring. Finally, I started a third project out of the USC Keck School of Medicine, using software to optimize drug dosages for individuals. That is aimed at personalized medicine.
I had this portfolio of projects, and they were all making great progress, and I realized that I had already extended myself, and needed to bring it up a notch. So, I create the concept and company called Greenwings Biomedical, to help scale out that model and capacity, both in terms of manpower, talent, and financials. I think we're doing this the right way with this incubator, as opposed to what I had tried many years ago. Plus, with biomedical companies, you have the opportunity to make a positive difference in the world. The devices and technologies you are working on can affect the delivery of medicine and increase the wellness of the population on a global basis. Any good, biomedical products has the opportunity to make a big difference to lots of people, and can also be financially lucrative. Everyone wins.
Given the long time to market for medical products, does acceleration make sense?
Richard Koffler: It does take a long time. There are a combination of factors to make it happen. You have to got through a more rigorous planning and designing process to design these devices, and plus there's the approval necessary from the FDA. All of that does add to the time and expense to go to market. It's not easy, that's why people don't do it.
But, many people are doing this, successfully. It's not in a field that isn't without a history of success. We're not inventing anything new. We're just emulating others who have done it successfully for many years. I have found ten incubators across the country--none in Southern California--doing what we're doing, and doing it very successfully. They are all doing, more or less one, or at most two projects per year. At the same time, they're running three or four project simultaneously, with maybe five max. They're also all doing something very specialized. They might specialize, for example, on biotech, drugs, molecules, or for others certain types of medical devices, or certain types of conditions. Our focus is down the line of innovation and inventions which are deeply rooted in intelligence and algorithms. That implies software, but we're not just looking at software, we're also looking at devices where that invention is enabled by software. For example, one of our companies, Viderics, is working on a cardiac monitor, and the invention which makes that possible is an algorithm.
Do you provide funding for companies?
Richard Koffler: The answer is yes, but it's unlike the accelerator model, which has become popular in the recent past, where the accelerator puts a few thousand dollars into someone else's company, and then buys a minority interest. That's what I did ten years ago. In Greenwings, instead, we are the founding entity. We license the technology from a university or owner of that intellectual property, and so we are 100 percent of the project when we're starting. We'll give away some equity in exchange for the license, to the researcher, the founding team and engineers and scientists who are going to get this moving from the lab to the market. But, we own the project, as opposed to investing in someone else's company. Having an entrepreneur come to us and tell us they need our money--that's not our model.
The funding for this so far has been from myself, primarily, and each project has the capacity to raise funds on its own, via grants and equity. Going forward, we're also seeking investors to fund the operation of the incubator, and fund early seed funding into the projects we start.
Why was your prior model--which people are calling acceleration now--not successful for you?
Richard Koffler: In my experience, when you're investing in other people, you need a very large, diversified portfolio. It's no different than angel investing, which I have a lot of experience in as a member of the Tech Coast Angels. It's the same issue. If you invest in only a small number of companies, you probably aren't going to be lucky. You're giving someone else your money, and then you lose sight of them, they go out on their own way, out of your oversight, and most don't make it.
That's the diversification strategy that accelerators and angels have to have. It's not a bad one, but it's not for me. In this model, I take control, and the team shares the interest, and they've done it before in other places. We are betting on ourselves.
We own the whole company, starting around the invention, rather than investing in others and just hoping for the best. We believe the fact that we're controlling and managing each project, with our own staff, plus the people we bring on and the board and advisors, we'll have a much higher probability of success from a small portfolio of projects, as opposed to having to have a large portfolio of other people's companies, so that the successful ones can pay for the rest that aren't.