Kevin Judice lists himself on LinkedIn as “Entrepreneur.” Perhaps he has to; there just isn’t enough space to include the three companies he recently started and at which he concurrently is employed as CEO or CSO.
Judice, you see, is a serial founder. “The phase I like the most is the building. Getting things started. It’s just a fun, creative, and an exciting part of biotech,” he says.
And it requires raising money, something he has come to know a lot about. I ask him if that side of the business is as exciting. “That might not be the right word,” he replies, and then provides this analogy:
“Why do you breathe? Because you have to. It is an autonomic function, but if you stop you will know it pretty quick. As a start-up biotech, all you can do is burn money. So if you are in a senior position, among other things, you are responsible for ensuring you have enough money to continue to execute your plan. The money raising is just as necessary and automatic an activity as breathing.”
Judice, an early employee of Genentech and founder of Achaogen, is a featured panelist at Outsourced Pharma West in San Francisco November 10-11. In our conversation preparing for his panel, “Finding Capital That Matches Your Goals,” he gave advice on government funding (non-dilutives) and angel investors.
Non-Dilutives and Angels
Judice reaches back to his founding of Achaogen in 2004 to help demonstrate his first piece of advice. “We raised a lot of money from non-dilutive sources,” he says, referring to government grants and funding streams, “maybe a bit of a different approach than other biotech start-ups. Of course this made investors really happy, as well as making us happy.”
Judice says Achaogen set up collaborations with various government entities interested in what his company was pursuing. “They gave us a ton of money,” he recalls. “This is the kind of strategy I would like to talk about on the panel at Outsourced Pharma West.”
A first lesson here is to take the time and effort to find out what is available and to think expansively. “The government will give you money because you have the research they want,” says Judice. “In our case, they were worried about a terrorist attack, such as with anthrax or plague. We were focused on pathogens and infectious diseases in hospitals, but our drugs were also good at combating these other harmful substances. It just happens there is overlap there.”
Recently, Judice has been dealing more with angel investors. “This is an interesting group of folks,” he says. “Most are pretty savvy and have already made a lot of money. For whatever reason, part of their strategy is to do some spot, one-off investments.” He says this group is willing to make investments of from as little as $100,000 to $1 million, in the gamble for big returns.
However, aside from returns, Judice also sees a psychological side to many of these investors.
“A few years ago, there was this buzz going around about venture-philanthropy—doing well by doing good,” he says. While that term might have been short-lived, Judice says, “I get the sense from talking to a lot of high-end worth folks that they are in that mind-set. Instead of giving their money to foundations and charities, they invest it in a way they think might be socially responsible.”
Part of that social responsibility may lie in the very act of helping people fund new companies. “They’ll invest in worthy and big ideas,” explains Judice. “While part of their decision-making is that they want to be on the ground floor of the next Genentech, another part is they have an affinity, even an affection, for entrepreneurs, and they want to help people who are starting, get started.”
Raising Money To Outsource
As our conversation starts to wrap up, I ask Judice about going out to investors to raise money specifically for outsourcing needs.
“It’s done all the time,” he says. “It goes over better than if you ask for funding for a lot of fixed infrastructure. Those costs stay with you indefinitely. If you are going to outsource, that is sort of an on-off toggle, and it is pain free.” Moreover, he points out, a startup moving to development needs various skills along the way. “To keep all those people busy, you need many compounds continuously moving through the development phases,” he says. “It is better from a capital efficiency perspective to say, ‘we need this now, so let’s just go to a shop who knows how to do it.’”
Non-dilutives, angels, and outsourcing. Should make for interesting discussion on raising capital for your company at Outsourced Pharma West.