Sameer Bhatia's death: What we must do

It is tragic that Sameer Bhatia died on March 27, 2008. He was diagnosed with Acute Myelogenous Leukemia (AML), and died after a courageous battle in Seattle. Sameer was an accomplished Silicon Valley entrepreneur. The courage that Sameer, his wife Reena, their parents, and all their friends showed in finding every possible solution to help him, is indeed inspiring to us all. The only way we can help Sameer's cause is to work on the Asian bone marrow registry and to continue to fund research for cancer by giving generously and encouraging the innovators and researchers who are spending a lifetime to rid us of this disease.

May he rest in peace.

Visit http://www.helpsameer.org/

So you want to be a venture capitalist

While being successful as an entrepreneur is one path to venture capital, it is not the only one. Good investors need not be good entrepreneurs and vice versa. The important thing is that a venture capitalist must understand and respect what the entrepreneur does, realize what a tough job it is, and be able to add significant value to increase the chances of success for the entrepreneur.

To join venture capital, it is important to show that you exhibit behavior that is typical of someone who is or should be in the business of investing and building companies. venture firms need Associates and Principals to process and execute deals, and support the work that Partners do in building companies, and these Associates and Principals are (sometimes but more often than not) successful entrepreneurs.

What is ultimately important is to understand whether you are good at investing, and have a mind-set for helping growing companies. By answering these questions for yourself, you can demonstrate that you have an understanding of the business, and what it means, even though you may never have stepped inside a venture firm.

Since I get asked this question all the time, I thought I’d put together a list of questions particularly for the younger (sub-35 crowd) who are not in venture capital but want to get into the industry. You can use these questions as a set of proactive responses to provide to someone about what you’ve done to become relevant, or as a list of action items of things to do if you really want to get in.

QUESTIONS (IN INCREASING ORDER OF IMPORTANCE)

Fundamental Skills

• Have you ever written a business plan (powerpoint alone is sufficient)
• Have you taken part in a business plan competition. If so, how did you do and who was on your team. Did you win ?
• Have you built an excel model showing financial projections of a business to a detailed level. Do you understand the revenue drivers of the company ?
• Have you taken classes in venture capital and/or entrepreneurship
• What do you think are the three most important personal characteristics or skills for being a successful VC
• What are the three most important characteristics of being a successful
• entrepreneur

Skills in Financing and Investing

• Have you read any books written by entrepreneurs or VCs.
• What is your favorite sector to invest in - explain your investment thesis and why this sector will make money
• If you’ve never invested in the private sector, have you made any public sector investments ? What stocks are you picking and why (this could be a parallel to show that you can think like an investor)
• What are the most important terms in venture deals. Are you familiar with the basic terms of VC deals. Could you read a term sheet ?

Knowledge: Markets & Companies

• What are the most interesting VC deals in recent times that you know of
• Have you done a detailed market reviews, studied different business models of startups and the problems they are solving, and tried to understand how they intend (or are) making money ?
• Do you have detailed knowledge of a sector (global) especially the startups in that sector ? Are there any startups that you like. If so, why do you like them ?
• Do you have any business ideas of your own ? Can you pitch them to me in 30 seconds ?

Actions: Entrepreneurship

• Have you helped anyone start a company. What did you do for them and what happened to the venture. What was your contribution ?
• Have you ever invented a product or been a part of that creative process ?
• Have you started a company or entrepreneurial venture of any kind

Relevant Experience

• Have you ever raised money for someone
• Are you strong technically ? (Engineering, Science or Medical degrees) ?
• How large or diverse is your rolodex ? How strong is your network. Do you know people who can open doors. If not, do you display characteristics of someone who can build a strong network. Would you be good at Human Resources / Headhunting ?
• Have you ever sold anything ? If not, do you have marketing and business development experience or an understanding of these functions (for late stage companies)

I am sure all VCs will have different perspectives, and this is one of many. However, I hope it is useful.

The Oncology Revolution: Feb 28 event at Harvard Medical School

I attended an excellent oncology event at Harvard Medical School recently, organized jointly with TiE Boston’s Lifesciences & Healthcare Group (which I co-chair) and the Harvard Biotechnology Club. The event was organized by Pushwaz Virk, Anna Chodos and Kanchan Mirchandani, with support from Jugnu Jain. There were several presentations, and a panel discussion. The presenters and panelists included:

• Steven Tregay, Managing Director, Novartis Option Fund
• Mara Aspinall, President, Genzyme Genetics
• George Demetri, Director of the Ludwig Center, Dana-Farber Cancer Institute
• Elan Ezickson, Chief Business Officer, AVEO
• Mike Boss, Chief Business Officer, Xanthus Pharmaceuticals
• Janina Longtine, Chief of Molecular Diagnostics, Brigham and Women's Hospital

I’ve provided highlights from some very informative presentations, discussions and Q&A.

Thanks to our understanding of oncology, the 5-year survival rates in cancer have improved to 70%. Targeted therapeutics represent 66% of revenues (even though they represent only 40% of all drugs on the market).

• 2001: 15% drugs were targeted therapeutics
• 2006: 40% drugs were targeted therapeutics
• 2010: 60% drugs are going to be targeted therapeutics

Sidney Taurel, Chairman & CEO of Eli Lilly believes that targeted therapeutics can significantly drive up market share. Without compannion diagnostics, a cancer drug's market share would likely remain at 10-20% of a larger base. With companion diagnostics, the market share can rise to 80-95% of the nice; and provide 200-400% more revenues from the product depending on the niche covered.

There are currently 60 clinical trials for products that are already on the market in oncology that are recruiting for biomarkers. So interest in biomarkers is clearly growing.

However, the discovery process in Oncology is high-risk. Of all the oncology drugs that go into clinical trials, failure rates are high. Unfortunately in oncology, failure rates are high at Phase 2 and 3, which means a lot of money has to be spent before efficacy can be proven. To counter this risk, startups should go after multiple cancers at the same time, thereby improving their possible outcomes. However, ”Patient targeting continues to be a black box.”

• Phase 1: 60% success (move to next phase)
• Phase 2: 30% success (move to next phase)
• Phase 3: 40% success (move to next phase)
• Regulation: 70% success (move to market)

Oncology is a crowded marketplace with hundreds of drugs in development. Competition is intense, but that should not dissuade innovators and researchers. Genentech, the 800-lb gorilla in oncology drugs was in trouble not too long ago. Genentech raised $35MM in 1980, and produced four products since then. 1996 – Rituxan approval (was discovered at Idec), 1998 – Herceptin, 2004 – Avastin and 2004 – Tarceva. Two of Genentech's blockbuster drugs weren't even discovered there. So focus on the size of the market opportunity and the large unmet need.

There was a good discussion around standardization of diagnostic tests and innovation. One panelist said that even if Her 2 was arguably not the best antibody for Herceptin, it was the first. Instead, Fish tests may be better (in-situ hybridization) but these remain hard to implement and read. The panelists cautioned that the diagnostic should not be tied to the drug too early, or patients end up with sub-optimal tests with little innovation.

There is a problem with companion diagnostics. There is no standardization in the labs. When companies say – “Look for a 3-log reduction”, no one does it because they don’t know what this really means. The tests are not repeatable. RNA degenerates fast, so tests that involve RNA cannot be transported far. There is no input from industry on standardization of these tests. This makes it hard to scale. Pharma and diagnostics companies should focus efforts on creating standards at the labs. Home brews in particular should be treated with caution. Secretary of HHS says that there should be some oversight. ASCO/CAS said that Her2 Testing standards need to be adopted. Everyone in the industry is adopting the tests; need to drive standardization in the way people understand and use them.

The good thing is that we’re finally getting smart about discovery in cancer. Biopharma is one of the last things that America does well. In fact, we can tell now if we’ve hit the tumor target with six hours; this is real innovation. However, diagnostics are important but remain a challenge.

Europe is changing the way we pay for drugs. In the UK recently there was a landmark agreement where Velcade was approved for Multiple Myeloma. However, it came with a twist. The UK government said if it does not work, it would not pay ! Panelists agreed that companies should be incentivized to do deals like this, which would change corporate behavior and raise the bar on the drugs that are pushed by the pharma companies.

There was a final word on clinical trials. There has to be a reduction in patient trials; FDA data needs are staggering - and rising with the recent withdrawals (read Vioxx). Finding companion diagnostics may be that way forward - because 700 patient studies at $30,000 each are inelegant and extremely inexpensive. Since every cancerous tumor is unique, innovators must find better ways to identify the right patients and hit those targets. We need more structure-guided drug discovery, and it should be used on every every project.

Excellent presentations from Xanthus and Aveo Pharma.

What we love about India

This presentation is intended to give you a quick snapshot of the country and the most important things that the country cares about, in less than 10 minutes. Download it here.

The business of cricket: The $2 billion Indian Premier League

Recently, India officially created the Indian Premier League for cricket. Its a bit like the soccer premier league in the UK, the NBA and the NFL in the USA. Since India is a cricket crazy nation, I expect that some of these teams will take on the brand, valuations and cache of global brands like the Yankees, Manchester United and the Lakers.

Its unprecendented, because the league overnight has become worth $ 2 billion. Sony Entertainment paid $1 billion to acquire the rights for the next 10 years. Owners have pumped in another $1 billion to buy each of the 8 teams. I am sure this number will rise to 20 teams, as other cities get in the game.

The money has been used to "acquire" (not sure what this means) and auction 80 international players. (Note: In international cricket, there are 8 teams of note, and 11 players per team, so basically all the top world players will probably be here). I wouldn't be surprised. Several players will make a million dollars for 44 days of work. Quite attractive.

When you want to see where the money is in sport, follow the TV rights. India controls the money in world cricket, simply due to its population, and when a person gets into the Indian cricket team (the sport has 11 players on a team), he becomes an instant millionaire, as the franchise deals are significant.

While Australia may be the world's best cricket team, 17 million viewers means that Aussie cricketers won't get rich playing cricket at home. Neither does anyone (even in England) pay attention to the irrelevant 4-day county matches in England, where top star was paid $1.6 million.

However, the Indian cricket league will change all that, and its a long-overdue development coming twenty years after Kerry Packer, the Aussie, created a rebel league in Australia. This one, unlike that, has real money and will result in a giant sucking sound, pulling top-ranked cricketers from around the world, to play in India. Its just a beginning, but NBA-style long-term contracts will start to dominate the sport, once the game gets underway.

Cricket is an eccentricity the world does not understand. How can one play for 5 days and yet not produce a result. The game changed when we went to the 50 overs-a-side, 1-day games. However the new format introduced this year to the YouTube generation has been the real hit that will drive adoption. Twenty20 is twenty overs a side, and gets done in 3.5 hours. Everyone gets it, because we all grew up playing 20-over matches. We understand the excitement and the tension of twenty overs, and the recent World Cup (that India won) shows it. Superbowl and Baseball games are 3-4 hours long.

The Indian Premier League has announced the following owners of the new teams (valued from $50MM - $100MM)

• Mumbai ($119MM) - Mukesh Ambani’s Reliance Industries


• Delhi ($84MM) - GMR Group


• Kolkata ($76MM) - Bollywood icon Shah Rukh Khan’s Red Chillies Entertainment


• Bangalore - Vijay Mallya’s UB Group


• Hyderabad ($107MM) - Deccan Chronicle


• Jaipur ($67MM) - Emerging Media


• Chennai ($91MM) - India Cements


• Mohali ($76MM) - Film star Preity Zinta and Bombay Dyeing scion Ness Wadia

VC and PE firms like DLF Private Equity, Temasek, India Value Fund, Macquarie Bank, Deutsche Bank and ICICI Venture wanted to get in the race. I guess these valuations were out of control for these teams.

For sports teams to return their significant investments, they require stadiums, significant investments in buying players, a good merchandising and ticket-selling strategy, and ultimately a winning track record. In the US, teams move to the towns that will subsidize their stadiums. I doubt this will happen in India, so fiscal discipline is more likely.

Sports is not great business for its owner as investments, but its good for the ego, and sports team prices will rise significantly with the fortunes of India's emerging billionaires. If we look at the US and UK for lessons, this has been a low cash-flow business because of the significant amounts of money that need to spent to buy the best players, and the amounts needed to build stadiums. However, valuations remain high, because owning sports teams are a dream for the mega-rich, and I suspect that in India, if the league is executed right, that it won't provide venture returns, but it'll do decently with at least 2x-4x for its investors. We'll have to wait on the red herring from a public IPO to learn about the business.

Its going to all lie in the execution. For now, let the games begin.

My 2007 Readings

How Doctors Think - Jerome Groopman
Complications: A surgeon's notes on an imperfect science - Atul Gawande
Three Billion New Capitalists: The Great Shift of Wealth and Power to the East - Clyde Prestowitz
True North: Discover Your Authentic Leadership - Bill George
War on the Middle Class - Lou Dobbs
Mr China: A Memoir - Tim Clissold
Palestine: Peace not Apartheid - Jimmy Carter
Room to Read: Why I left Microsoft to Change the World - John Wood
Banker to the Poor: Micro-Lending and the Battle Against World Poverty - Mohammed Yunus

FICTION
Life of Pi - Yann Martel

Mr Banker

12 Nov 2007, Times of India

Anupendra Sharma shares his experience of studying in three top institutes across countries.

It was 1992 in Manchester, UK. My application for burger-flipping had just been turned down by McDonalds in the midst of a recession. It was a character-building experience as I ended up in a Pakistani restaurant chopping vegetables, lugging flour on the streets and cleaning dishes.
However, my stubborn resolve to pay my way through my Masters degree crumbled that first weekend. I was exhausted from working 12 hours a night at 80 pence an hour. When the University gave me a job shelving books for 5.50 pound an hour, I was relieved that I could keep my promise.

I used my 99 percentile GMAT, above-average BITS Pilani grades, a well-written essay, and resume with interesting summer and extra-curricular experiences to get accepted into the 25-strong, one-year Masters in Accounting and Finance programme at Manchester Business School. I had no prior background in the subject.

Remembering the McDonalds rejection, I applied for 100 jobs, filling every one of the four-page applications by hand. I was living by Andy Grove's philosophy that `Only the paranoid survive.' I researched every company that interviewed me in great detail and my first offer came on
December 8,1992,and I was proud to have five offers by the time the recruiting season ended, although only two classmates were employed. I observed that Indians in other Masters and MBA programmes had offers as well. Indians generally fare better than most international student groups in finding jobs, even in adverse economic conditions.

I joined London-based auditor at Pricewaterhouse for a year, and then moved as a financial analyst on the core team launching Ford in India and China. It was exciting. But, I was still keen to pursue my dream of an Ivy League MBA.

I made two mistakes in applying. Firstly, I applied early with two years of experience at two different companies. Secondly, I knew little about the MBA a d m i s s i o n s process. I thought my rank and my high GMAT would get me in. I was lucky when Cornell called.

The US MBA was very different compared to the UK. I immersed myself in school, tried different things and led initiatives. I started a shrimp farm in Central America, taught three classes, worked during summers at McKinsey London, learnt to fly a plane, worked as a computer consultant, assisted the career office, and racked up $90,000 in loans even with B-school jobs and summer internships. But more importantly, I met my wife, a classmate at Cornell. When I graduated, I pursued my dream of working on Wall Street with several investment banking offers.

B-school taught me many hard skills, but more importantly soft skills that included networking, leadership, entrepreneurship, presentations, communications and golf - the skills that carry us through our careers. If you can combine these skills with integrity, tenacity, hard work,
patience and good humour, with a dash of good luck, the MBA degree has the potential to achieve all of your dreams.

Band of bio vets lobby state spending plan

By Catherine Williams
Appeared in Mass High Tech on October 1, 2007

A group of the Bay State's top life sciences leaders have banded together to make sure budding biotechnology entrepreneurs aren't left out of Gov. Deval Patrick's billion-dollar life sciences promise.

The new group's organizers say the goal is to use $6.7 million worth of state funds over the next decade to protect the industry's earliest ideas and youngest minds amid what could become the sector's feeding frenzy of institutions and business groups keen to get their hands on the governor's proposed billion-dollar bounty.

The purpose of the group, dubbed the Massachusetts Lifesciences Startup Initiative, is to ensure smaller companies can transition to a venture-backed company quickly, said Anupendra Sharma, a founder of the group.

"We should reduce the friction from idea to a funded venture," said Sharma, who is also partner at Boston-based investment firm Siemens Venture Capital.

Even though the state funds have yet to win approval by the Legislature, every corner of the Bay State's life sciences market is buzzing. If Patrick's life sciences bill passes, the Massachusetts Life Sciences Center -- the state's life sciences investment arm -- would hold the purse strings. Sharma and his group plan to pitch a handful of ideas to the Life Sciences Center on how best to spend state funds on spawning life sciences startups.

Participants of the group include Martin Madaus, president and CEO of Billerica-based Millipore Corp. and a director of the Massachusetts High Technology Council; Glen Comiso, director of life sciences at the Massachusetts Technology Collaborative; Ganesh Venkataraman, founder and senior vice president of research at Momenta Pharmaceuticals Inc.; Lita Nelsen, director of the MIT technology licensing office; and Maggie Flanagan LeFlore, head of R&D Ventures for AstraZeneca Plc.

Representatives of local industry groups are also weighing in. Both Mark Robinson, the chief operating officer of the Massachusetts Biotechnology Council, and Laura Allen, a director at Medical Device Industry Council, have joined the group.

One idea, with a proposed price tag of $3 million, is to set up an entrepreneur-in-residence program. A second idea the group is considering is to establish a statewide Geek Day, an event for local scientists to pitch innovations to venture capitalists. The annual event is estimated to cost $500,000 over 10 years.

Leon Sandler, executive director of The Deshpande Center for Technological Innovation at MIT, said he supports any efforts to help startups spin out technology.

But Sandler cautions that lawmakers, or think-tankers, should pilot the proposals before building a bureaucracy around them, he said.

Meanwhile, it's unclear when, and if, the governor's 10-year, $1 billion bill will pass. Bay State House legislators are debating the initiative.

Sharma's new group is one of a checkerboard of organizations bent on furthering the Bay State's life sciences industry and offering opinions about how the state might spend the money.

But Sandler said the more ideas, the better.

"It's a political process. The joy of democracy is that it is chaotic and overlapping," said Sandler.

How to keep the edge in life sciences at home in Mass.

By Anupendra Sharma
Appeared in Mass High Tech on June 11, 2007

Massachusetts grew solidly through the 1980s and 1990s, but ultimately important employment sectors such as computers, Internet, silicon, finance and engineering slipped away. Either the innovative growth occurred elsewhere, or as in the case of BankBoston, they were consolidated.

Today, two exciting fields hold great promise -- clean tech and life sciences. Competing in clean tech presents challenges. California has more money, Europe has been tinkering with the technology for years, and both China and India have greater need to find immediate solutions.

Life sciences is very different. The state has a combined edge in biotech and med tech. Massachusetts has 770 biotech companies and a handful of top 20 research institutions funded by such entities as the National Institutes of Health. The state is home to two of the world's largest med-tech companies, and has top health care venture capital firms. Our universities and teaching hospitals know how to license technologies and spin out companies. Amazingly, 21 angel networks operate in the area. The concentrated cluster of people, ideas and money is unparalleled. Since we will never be as large as California, or as populous as China or India, we must use our critical mass and concentrated size to our advantage.

If we don't have a strong game plan, life sciences will be another race that we may give up: to Silicon Valley in biotechnology, to China in medical technologies and to India in contract research. The Sunshine State has 5,400 biotechs. There are thousands of med-tech companies in Guangzhou, China, alone. In India, arguably more patients can be signed up in a week for device trials than in a whole year in the United States. Meanwhile, in Massachusetts, annual VC investments are flat at $3 billion, while the number of venture-backed startups is declining.

We have to focus on what's important to entrepreneurs and give them just that. Tax breaks and more office space in Cambridge are arguably important, but leaders, workers, money and global connectivity are more urgent. Below are four vital points:

Channel the money: Massachusetts is a rich state with deep pockets. Angels are beginning to get organized. However, only a few angel groups have health care expertise. Their efforts can be pooled to invest more in life sciences. These resources have to be channeled in an orchestrated manner.

Stop the migration of highly skilled labor: Our employee base of 25-year-olds to 34-year-olds has shrunk by 25 percent since 1990. Big companies and startups have to reverse this tide. We need to ensure our talent stays by expanding internships and getting organized statewide for those who graduate with skills in life sciences.

Grow, train and mentor the pool of entrepreneurs and leaders: One of the nation's leading med-tech headhunters said Boston is tough to hire into or hire out of. So we have to develop what we have. Large corporations have to shoulder their share of the burden in training future leaders, so if this talent quits, they stay in the statewide ecosystem. Let us find mechanisms that bring managers with entrepreneurial spirit out of their cubicles and get them exposed to early-stage ventures.

Connect Boston directly to the world: Why is India, a growing R&D powerhouse, setting up operations in New Jersey? Where are Israeli companies moving into the United States? Why do I need to connect through another city to get to Israel, China or India? It is imperative that we connect Boston to these innovation clusters. It gives us better, faster access to ideas, people and markets. We will maintain world-class R&D, the way Silicon Valley has managed to do so in technology, in spite of the noise of outsourcing.

Collaboration will be the key to winning. We won't sell our startups too early. Serial entrepreneurs successful at running billion-dollar companies will stay when they see an open, welcoming, globally connected, low-friction culture that focuses on mentoring and educating entrepreneurs, and is teeming with excitement akin to the Valley's technology scene. We can achieve this because we are compact, connected and willing -- more so than any other cluster anywhere.

Chemclin Closes First Round Of Fund Raising led by WI Harper and Siemens Venture Capital supported by Softbank China Venture Capital

Chemclin Press Release

June 5, 2007 - Chemclin Closes First Round Of Fund Raising led by WI Harper and Siemens Venture Capital supported by Softbank China Venture Capital

Beijing, China, June 5, 2007 Chemclin, a company successful in diagnostics reagents and systems in China, today announced that it has now completed its first private fund raising. This $5 million funding was led by WI Harper Group and Siemens Venture Capital with participation of Softbank China Venture Capital. China eCapital acted as exclusive financial advisor to the company on this transaction.

'We are pleased to have preeminent venture capital firms and one of the world's leading diagnostics company support our company. It is a validation of what we are doing,' said Mr. Xitang Ying, CEO of Chemclin. 'The advice and support of top venture capitalists will be of great assistance as we build a global company,' he added.

'We're extremely pleased about the cooperation with Chemclin,' said Peter Liu, Chairman of WI Harper Group. 'They have demonstrated and proven their technological capabilities and sit on top of a tremendous opportunity. Their strong market presence and distribution network, combined with their costadvantages relative to their foreign competitors gives them an excellent position in which to grow. We're proud of having Siemens Venture Capital and Softbank China Venture Capital in this round of fund raising, and look forward to working together more closely in the future.' Peter Liu further noted that the Company enjoys significant first-mover advantages due to its CLIA licenses
in specific critical areas.

Richard Hausmann, President and CEO of Siemens Ltd. China, said 'We are extending a helping hand to the Chinese government in its plans to provide healthcare to everyone in China. By supporting Chemclin, we want to make sure that cutting-edge diagnostics technologies used around the world are available to all Chinese hospitals and laboratories at a reasonable cost.'

Anupendra Sharma, Investment Partner at Siemens Venture Capital in Boston, added 'We are excited about our first healthcare funding in China. Chemclin's management team has done an excellent job of building high quality products and systems, and enjoys an unparalleled reputation in the domestic market. With the support of Siemens, we look forward to making the company the unchallenged leader in the Chinese diagnostics markets.'

Peter Hua, General Partner at Softbank China Venture Capital, said 'Chemclin is one of the important players in the China in-vitro diagnostics market, which is a huge potential market with fast growth. With its strong management team, we believe Chemclin will achieve tremendous success in the domestic and global markets.'

About Beijing Chemclin Biotech
Beijing Chemclin Biotech Co., Ltd. (Chemclin) was established in 1999, and has emerged as one of China's leading diagnostics companies with its own development, manufacturing and distribution headquartered in Beijing. Chemclin develops radioimmunoassay (RIA) kits, ELISA and chemiluminescent (CLIA) kits. The company has a well-established marketing and sales network across China with presence in 30 provinces, more than 2000 local districts and 30,000 towns. More information can be found at: www.chemclin.com.

About WI Harper
With close to $400M under management, WI Harper is one of the first U.S.-based venture capital firms to create a value-adding bridge between the United States and Greater China. For nearly a decade, WI Harper has been building companies internationally by facilitating the flow of capital, technology and management best practices across both sides of the Pacific. The Firm is focused on fueling companies at early expansion stage within Internet, wireless, digital media and life science / healthcare sectors. WI Harper's star portfolios include Focus Media, DivX, Beijing Xinwei, Bridge Pharmaceutical, Cardiva Medical, Commerce One, Celestry, Intraware, iKang Healthcare, MJ Group, Panorama Stock, SirF, 3G.CN, Maxthon and Verisilicon. More information can be found at: www.wiharper.com.

About Siemens Venture Capital
Siemens Venture Capital (SVC) is the corporate venture organization for Siemens AG, one of the largest global electronics and engineering companies, with reported worldwide sales of 87.3 billion euros in fiscal 2006.
SVC's goal is to identify and fund investments in emerging and innovative technologies that will enhance the core business scope of Siemens, particularly in the focus areas of long-term growth markets such as Energy & Environmental Care, Automation & Control, Industrial & Public Infrastructure, and Health Care. To date, we have invested over 700 million euros in more than 100 startup companies and 35 venture capital funds, making venture capital at Siemens an integral component of the Siemens innovation and growth strategy and supplementing its in-house research and development activities (5.7 billion euros and 50,000 R&D experts in 2006).

SVC is located in Germany (Munich), in the U.S. (San José, CA and Boston, MA), in China (Beijing and Shanghai), in India (Mumbai and Bangalore), and is active through Siemens´ regional unit in Israel. SVC is part of a greater network at Siemens whose mission is to drive technological innovation by supporting startup companies. In addition to Siemens Venture Capital, Siemens Technology Accelerator and Siemens Technology-To-Business Center also contribute to Siemens' innovation strategy.
Their individual mandates are defined according to financing stages and industry focus. More information can be found at: www.siemensventurecapital.com.

About Softbank China Venture Capital
Established in 2000, Softbank China Venture Capital (SBCVC) is a leading venture capital firm in China. SBCVC invests in high growth technology companies in various stages, including early, growth, expansion, and pre-IPO. SBCVC covers various industrial sectors, including internet/broadband, wireless, digital media, software, IC design, consumer, medical device, new materials, energy technologies. SBCVC's portfolio companies include Alibaba, Taobao, Focus Media, eBao Tech, PPLive, GDS, etc. More information can be found at: www.sbcvc.com.

About China eCapital
China eCapital is a leading investment bank in China. Founded in 2000 with headquarters in Beijing, it provides private placement, merger and acquisition (M&A), and initial public offering (IPO) advisory services. With an international background and strong local presence, China eCapital has emerged as one of the most dynamic and active players in the Chinese investment banking market. While its clients encompass a wide spectrum of industries, the firm is focused on media and entertainment, technology and internet, consumer products and services, and healthcare. More information can be found at: www.chinaecapital.com .

2007 Cornell Business Plan Competition Winners

1st Place

e2e Materials produces strong, biodegradable composites from annually renewable fibers and soy protein, an agricultural commodity. Based Cornell technology, its products replace toxic, petroleum-based materials filling landfills. The company is commercializing a formaldehyde-free, cost competitive alternative to particleboard. Formaldehyde, a carcinogen, is being legislated out of the $6.3B particleboard market. http://e2ematerials.com/

2nd Place

DNANO Systems LLC has a long term vision of offering protein-based medicines to patients at much lower costs. DNANO will achieve that goal by commercializing a proprietary technology to rapidly produce proteins at super high yields without involving living cells, hence eliminating costs associated with cell-based manufacturing processes.

3rd Place

Veratag, Inc.'s mission is to change the cost-benefit equation for security in radio frequency identification (RFID) systems by building on work done at Cornell University's Craighead Research Group. The innovation is micro-electro-mechanical systems (MEMS) resonators which produce unique analog signals that can be used for identification, authentication and counterfeit prevention.

Advice for health-care IT entrepreneurs

Mass High Tech: The Journal of New England Technology - January 19, 2007
by Anupendra Sharma and Tamara Nazzal


Health-care IT is a complex, dynamic business. A 200-bed hospital can have up to 100 software applications, each supplied by a different vendor. It takes up to five systems exchanging data to dispense a drug. If you are CIO, it's a nightmare. If you're a systems integrator, it's an opportunity. If you're an entrepreneur, these are interesting times.

Health-care IT is a $25 billion to $30 billion industry, with the largest segment targeting hospitals and physicians. The 2 percent to 3 percent of revenues providers spent on health-care IT starkly contrasts with 7 percent spent by financial services, where investments in seamless, integrated global IT systems have all but eliminated paper. The investment lag in health-care IT is evident in multiple hand-filled forms, 100,000 annual medication-related deaths and billions spent in redundant testing. It is a large, but fragmented industry represented by six public companies with capitalization greater than $1 billion, divisions of a few large companies, and mostly midsize companies.

After several lackluster years, the sector started to surge in 2004 with a spate of acquisitions. Strong M&A activity and rising stock prices have improved the sector's investment profile. Awareness is rising in government. In the 2005 State of the Union address, President George W. Bush urged higher spending in health-care IT to reduce medical errors. As principal author on the Wired for Health Care Quality Act, Sen. Hillary Clinton, D-N.Y., will likely incorporate health-care IT in her campaign agenda. Health-care IT is a bipartisan issue.

Popular tech companies have also created a buzz. Intel Corp. created a Digital Health Group, Microsoft Corp. acquired the Azyxxi software from Datomics Licensing and General Datomics, and "Google Health" has everyone wondering about what they are up to.

The pie is growing. Top hospitals are expected to double their IT budgets over the next few years as hospitals strive to implement electronic medical records (EMRs), improve operations and grow margins. Analysts are predicting 12 percent annual growth. The major players, including GE Co., McKesson Corp., Philips Medical Systems and WebMD Inc., are showing willingness to invest in or acquire smart startups.

Massachusetts has its share of interesting startups. Medventive Inc. of Cambridge (cost and quality management), Radianse of Lawrence (RFID) and PatientKeeper Inc. in Newton (EMR) raised VC money in 2006. Other startups include eClinicalWorks of Westborough (EMR) and Sentillion Inc. of Andover (patient identity).

So where are the opportunities? The emphasis is on quality; reducing errors; improving efficiency; capturing data in a painless, integrated way; and better decision-support systems. Hospitals are concerned about reimbursements, proper billing and collapsing revenue cycles. Companies looking to get into the health-care IT space should focus on solving problems, reducing or eliminating waste, improving supply chains and automating workflows.

To get a foot in the door, start with a pilot at one hospital. Build relationships with clinicians. Find a champion. The radiologist who cuts test wastage may be a better entry point versus the IT department.

When you pursue ideas, remember that ROI is important, but ultimately products or services must significantly impact patient outcomes or hospital efficiencies. Don't get caught up in the elegance of a disruptive technology, nor build another EMR. Instead leverage RFID, wireless, remote monitoring, robotics or web-enabled applications as components to solve problems. Health-care IT is a different beast than traditional IT, with more regulation, slower adoption, longer sales cycles, and different players. For patient entrepreneurs with good ideas, the sector offers several structural advantages: consistent topline growth even in tough times, good margins and barriers once you are in.

A comment on financings. Consider bootstrapping with SBIR, STTR grants or by selling services. Annually, 20 to 30 companies get early-stage venture capital money, but expect that number to rise in 2007. New investors are getting interested. Series A premoney valuations are typically under $5 million; Series B valuations remain in single digits even for the most successful startups, reflecting the risk-return profile of investing in this sector.

The opportunities are here and the dollars are coming. So tread carefully, but do get in.

Anupendra Sharma is a Boston-based investment partner for the Medical Solutions Fund of Siemens Venture Capital, which has no investments in any of the companies mentioned above. He can be reached at anupendra.sharma@siemens.com. Tamara Nazzal is a research assistant with the Center for Integration of Medicine and Innovative Technology. She can be reached at tnazzal@partners.org.