Written by Ron Kanter
Computer Scientist and Venture Capitalist, Zavain Dar is the premier example of the mind behind the capital behind any one of Synthetic Biology’s successful startup companies. A member of the investment team at Palo Alto, California’s high technology oriented VC firm Innovation Endeavors, Zavain knows what it takes to turn the ambitions of enterprising scientists and entrepreneurs into an achievable reality. I recently had the pleasure of speaking with Zavain to discuss our booming industry, not from the perspective of the laboratory, but from the perspective of the boardroom. To Zavain Dar and the industry at large, creating a reliable method to approach de-risking a burgeoning firm is instrumental to a start-up’s success.
To begin I ask his positioning towards the whole of SynBio. Zavain, as with any savvy investor, addresses the uncertainty which surrounds any booming field:
ZAVAIN: “The hardest question that I’ve been getting up to speed with in terms of investing in this area is and really understanding it well is [as a non-scientist] separating what’s fact and what’s fiction and what’s short and or medium term and long term… finding a view on the world where you can both match incentives as investors and entrepreneurs as well as scientists and technologists has been at the forefront of the thesis I’m building or the work I’m doing.”
In a field which promises the future, it is understandable that grasping a scope of the technological development with regards to the present paradigm is what builds a foundation. We continue with this line of thinking:
RON: “In your opinion what is the definition of short term, medium term and long term?”
ZAVAIN: “They’re vaguely defined. You can argue that long term is ten plus years of a few R&D projects away. As an investor you are hesitant with anything that says it will take ten plus years to substantiate this vision that we are trying to accomplish. You’re also hesitant to invest in any R&D project. There is a space in the world for it and those are generally research labs at academic institutions of DARPA or large, Fortune 1000 conglomerates.”
We continue further with attempting to flesh out the method behind Zavain’s reasoning. Understandably, he has a winning method adapted from what he knows best: software startups.
RON: “How do you deal with these dreamers from a standpoint of investment and negotiations?”
ZAVAIN: “This is where Silicon Valley and software based entrepreneurial endeavors can really lend a lesson to Synthetic Biology technologists and entrepreneurs. It’s really validating to have a vision and have a dream and pursue something non-trivial, to come in with a pitch which explains ‘Ten years from now this company will change the world and here’s why…’
The path I try to set them on is [communicating an understanding of the value of their vision] and let’s keep that as your long-term goal, but rather than taking millions of investor dollars up front and working towards that in a straight linear fashion, how do we de-risk in smaller portions? How do we take a few hundred thousand or a few million and de-risk phase one of this project?
For Zavain, de-risking is the most important component of bringing the visions of entrepreneurs into the bigger picture. Cutting away the lustrous dreams of scientists to reveal the true value of their intentions is a must before helping a company build their funds. Specifically within the scope of Synthetic Biology, learning from mistakes of the industry during its infancy is essential to perpetuating a stable financial culture for Synthetic Biology in the future:
ZAVAIN: “If you look at the previous generation of Synthetic Biology, Microbial Engineering or Chemistry startups, think green energy or green startups, they all took the prior approach. They said ‘Here’s our big vision, give us $500,000,000 and eight or nine years and we’ll capitalize on that.’ I think the problem with that approach in terms of a fiduciary liability that is immense is that investors are jaded and scarred from the last generation.
…You can never know what things will happen what things will happen seven, eight, nine years down the line. To invest in an idea or a kernel of scientific innovation and bank on it hitting fruition while the rest of the industry stays stagnant, that’s hard and doesn’t really happen.”
To an investor, the big leap findings that make headlines and simultaneously ignite and startle the scientific community the world over are part of the highest risk, institutional side of the industry. This institutional attitude has led to problem with firms attempting to lift off in the past and to a forward-thinking investor it has done nothing more than impede the progress of great ideas. On the private side of things, within the startup world, Zavain and his colleagues at Innovation Endeavors look to a different attitude to foster innovation while stifling risk:
ZAVAIN: “[For example] If I need to build a spaceship, over five years, rather than take $300,000,000 and go to my garage and attempt to building it for three years, I take $50,000,000 and just work on an engine. So six months [from that point] I can come back to my investors and say ‘Here’s my progress, this worked, that didn’t, it looks like it’s going to take six years instead of five and maybe I need a little more capital, but, here’s what I’ve learned.’ It’s a lot better than taking five years and $500,000,000 to come back and say we didn’t know what we didn’t know and here’s what we should have done different.”
Sinking funds into a black hole of long-term uncertainty isn’t the only potential pitfall learned from the Genetic Engineering and Synbio startups of old (mid 2000s):
ZAVAIN: “I think I’m being a little bit unfair here to the first generation of Synbio companies from the early 2000s, [those] who I like to think of having attempted to disrupt the oil and gas energy resources. What we learned, I think this is what anybody in the industry will tell you, is that it is not so much so that it is scientifically hard to grow with that competitive set, but it is hard to meet price parity. So you’re seeing the next generation of Synbio companies coming in, at least the vertically integrated Synbio companies, and their not trying to hit the biggest markets. In those biggest markets what happens to be the case is the prices are the lowest, it’s hard to hit those price parities so instead they’re going after specialty industries like fragrances and chemicals. There, maybe the scientific risk is a little bit harder, although in the short term it makes better economic sense.”
De-risking, as described by Zavain is not only achieved by approaching a project within the scope of relying on realistic incremental funding and goals but also through understanding how to enter the market. While focusing on broader sectors of the economy in need of Synbio technology may seem like an enticing goldmine, getting left behind by the large scale fluctuation of resource driven pains intrinsically tied to the viability of synthetic biological undertakings can leave a firm without direction. With positioning in smaller, niche areas the technology can alleviate some of the risk of firms outpacing the startup.
Properly defining value before finding a uniquely comfortable place the field in conjunction with enlisting a technological development model of constantly and consciously reevaluating the direction of capital can assure a firm stays afloat rather than sink under the pressure of its own weight or due to turbulence from the rest of the industry. Zavain Dar truly understands what it takes to apply this science not only to companies in the Synthetic Biology realm but within the scope that can be applied to high-tech ambitions across the spectrum.
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Zavain Dar is a member of the Investment Team at Innovation Endeavors, a San Francisco based Venture Capital firm with the goal of providing much needed capital to highly innovative Startups in The United States and Israel. Zavain’s focus is truly at the cutting edge of the most radically groundbreaking fringes of new technologies. As a highly accomplished programmer, computer science scholar and founder of successful web Startups, Zavain has an edge on the industry with regards to understanding the value of today’s infantile ideas with respect to the future. An individual who understands the potential and scientific pursuits of Synthetic biology, Zavain is highly knowledgeable regarding what is valuable from the perspective of an investor in amongst the myriad of infantile Synbio companies. Also, Zavain is extremely passionate in his vision for the future of singularity, a merger between technology and biology. Zavain is a proud graduate of Stanford University and will be leading a seminar there in 2014 concerning Cyrptocurrency.
To read more about Innovation Endeavors visit their site here.
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