By
Shera Dalin
Brooke Private Equity, manager of the Vectis Life Sciences fund
of funds recently assembled its member funds to network and
collaborate at its home base in St. Louis.
Since its founding in 2004, the $81.5 million Vectis Life Sciences
Fund I is now fully invested in roughly a dozen VC firms located
in St. Louis and on both the East and West coasts. The Funds
include St. Louis’ Prolog Ventures, Oakwood Medical Investors
and RiverVest Venture Partners. In addition, Vectis has made
a direct investment with cancer-diagnostics developer Kereos
Inc., which received $20 million of the $115 million in venture
capital invested in the area in 2005.
The objective of gathering the member funds is to spark collaboration
and share strengths, John Brooke says. The initial meeting of
the Funds took place in St. Louis during June 2005.
“By bringing these seasoned professionals together, we are creating
an atmosphere of relationship-building among our managers so
they can source, evaluate and syndicate investments together,”
Brooke says. “The venture capital industry and the life sciences
sector in particular is one where collaboration among venture
firms is extremely important.”
By being based in St. Louis, Vectis has a unique opportunity
to foster growth in the emergence of life-sciences companies
here, Stifel Nicolaus & Co. Senior Vice President Joseph Schlafly
says. Stifel Nicolaus assisted in raising the capital for the
Vectis Fund.
“The idea is to draw VC investors from San Francisco and Boston
into St. Louis to see, hear and feel what is going on here,
which in the absence of this type of meeting, would not occur,”
Schlafly says.
The venture capitalists and other interested St. Louisans networked
during a dinner and social hour the evening before the next
day’s formal presentations. At the main conference, each Fund
presented its particular portfolio strategies and philosophies
during the full-day meeting at the Washington University Medical
Center. Building relationships and sharing information is one
of the benefits, says David Collier, managing director of CMEA
Ventures of San Francisco.
“The fund managers continue to be impressed by the sustained
progress underway in St. Louis in terms of creating an environment
for the emergence of new companies seeking to commercialize
the outstanding research taking place in St. Louis,” Schlafly
says.
Out-of-state funds into which Vectis has invested include: Prospect
Venture Partners in Palo Alto, Calif.; HLM Venture Partners,
Advent International and MPM in Boston; Sherbrooke Capital in
Newton, Mass.; HealthPoint LLC in New York and Accuitive Medical
Ventures in Atlanta.
Several investors singled out the strength of Washington University
research efforts and the evolving attitude at the Medical School
that commercializing discoveries and research techniques is
worth the effort. Other investors were impressed with the work
of the Donald Danforth Plant and Life Science Center and its
mission to eliminate famine world-wide through the creation
of new products to heighten crop yields.
“The [St. Louis] research organizations, universities, venture
firms, incubators and corporations are all world class and we
are trying to bring in these venture firms and their partners
into the marketplace and expose them to what we consider to
be a well-kept secret,” Brooke says.
The Vectis meeting in 2005 prompted deals between several of
the member funds, Brooke says. Advent, Oakwood, RiverVest and
Prolog have collaborated on joint investments and HLM and Accuitive
are working on a transaction together, he says.
“We feel that this is only the beginning and as time goes on,
more collaboration will take place. We feel we have built a
unique portfolio of venture capital firms from across the country
and have brought them to St. Louis and have begun to introduce
them to the key life-science players in the market,” he says.
“To see these connections being made and relationships develop
is very gratifying and the very heart of what we are trying
to accomplish. When one sees this occurring along with the early,
but strong investment performance of the fund, it is a clear
indication that an investment program can produce compelling
returns and have a positive economic impact at the same time.”
St. Louis business leaders would like to foster more of these
types of relationships and interaction with emerging companies,
says Jay Delong, vice president for new ventures and capital
formation for the RCGA.
“My interest is to make sure the entrepreneur is ready for the
investment and can articulate the opportunity to the investor,”
Delong says. “But we also want to make sure it’s an appropriate
match for the investor.”
For Brooke, the essential pieces of the puzzle to grow St. Louis’
biotech industry are strong management and access to capital.
“Biotech and life-sciences venture capital and company development
are still in their nascent stages of development, but are poised
for significant growth. All the building blocks are in place
from technology research to capital formation,” he says.
The following institutions invested in the Fund: Danforth Foundation,
James S. McDonnell Foundation, Washington University, Missouri
Foundation for Health, McCarthy Building Cos. Inc., AmerenUE,
Local 36 Sheet Metal Pension Fund, the University of Missouri
and the Barnes-Jewish Hospital Foundation.
As Fund managers, John and Peter Brooke have demonstrated their
ability to construct the Vectis model. They have successfully
executed on their plan by linking emerging St. Louis VC firms
to prominent national firms which should lead to very good investment
returns for the Fund investors and at the same time open up
more capital to emerging St. Louis enterprises.
After three years of development, Vectis has successfully directed
a national spotlight on the intellectual assets St. Louis has
to offer, and Vectis appears to be well along in the process
of demonstrating that successful investing is not inconsistent
with economic development.
“As we begin 2007, it appears increasingly clear that Vectis
is on course to meet its primary objectives: deliver a good
return to its investors, provide capital for the leading St.
Louis VC firms and create national awareness of the life science
effort in St. Louis,” Schlafly says.
For additional information on entrepreneurship and technology,
please visit the St. Louis Regional Chamber & Growth Association
(RCGA) website. http://www.gotostlouis.org/x416.xml
