By Shera Dalin
Prolog, formed in 2001 and with more than $100 million under
management in two funds, combines multiple strengths to help
make its investments flourish.
“We have an experienced team at Prolog, people who have both
investment and entrepreneurial background. That experience positions
us well to source and properly structure investments,” Nykin
says. “We are also very successful at syndicating our investors
and we are very supportive.”
Prolog works with each portfolio firm to mentor its principals,
help them make contacts they need for sales, marketing, personnel
and management, advises on financials and a host of other activities.
The amount of involvement changes based on the needs of each
company.
“It depends very much on the situation. The earlier stage it
is, the more significant the assistance they may require,” Nykin
says. “We help them develop and refine their strategy, with
recruiting their team, structuring their operations, connecting
with outside sources like consultants or other companies, helping
them attract more capital and using our expertise in successful
fundraising.”
The result is $20 million invested in St. Louis-area companies
and being the lead or co-leader in attracting other investments
to that enterprise. Nykin estimates that for each dollar that
Prolog has invested in a local firm, $6 to $7 came from another
investor.
“Obviously, we do not claim that we singlehandedly were the
reason that this money came in, but we were a factor,” he says.
The reason Prolog is able to build strong syndicates is its
track record and the reputation the firm has built with institutional
and a variety of other investors. In addition to Nykin, Prolog
consists of managing directors Brian Clevinger and Gregory Johnson,
as well as chief financial officer Michelle Murray and senior
associate Christine Karslake.
“They have seen firsthand that we are good at what we do. When
we tell them something is good, they take a look. Having served
with us on boards and having seen us as skilled, experienced
investors as well as adding a lot of value to the (portfolio)
companies, they would know that our participation would improve
the chances of success and that would be a comforting factor
for them.”
Prolog likes investing in St. Louis because of the abundant
deal flow in the region, especially in Prolog’s area of expertise:
life sciences.
“Our primary reason for investing in St. Louis is that it is
an area that is extremely rich in opportunities. It is one of
the best places anywhere,” Nykin says. “You have first-rate
medical schools, researchers, hospitals and clinics. We find
the best, most promising of those opportunities come from those
organizations, are affiliated with them and inspired by them
and take those ideas to market.”
Prolog’s local investments include: Singulex, Divergence, Akermin,
Kereos, Chlorogen, Quick Study Radiology, Zystor and Stereotaxis.
The firm focuses on early stage investments of around $2 million
to $2.5 million. But with syndicate funds, the amount can jump
significantly higher, as was the case for drug-developer Kereos
at $20 million.
“Early stage is what we know best and what we can bring the
greatest amount of added value to. I see us continuing to build
our leadership in those emerging areas,” Nykin says. “We are
proud to be creating a center of expertise here in St. Louis.”
Another investment that Prolog singles out is Singulex, which
is developing disease detection chemicals. Prolog poured more
than $4 million into Singulex, which has been able to attract
another $32 million in additional support.
Nykin notes that each investment is just the beginning for the
firm. Prolog reserves additional resources for investing in
successive stages of its portfolio companies’ growth. With,
for instance, Divergence, Prolog’s original $2 million investment
helped attract another $7 million from others. The agricultural
genetic pesticide developer has received more than $5 million
in grants and contracts from the federal government and trade
associations.
“They have an excellent corporate future,” Nykin notes. “We
have invested in every round and we will continue to support
this company.
“Because it’s early stage and it’s life sciences, where things
don’t happen overnight, you have to have patience as an early
stage investor. It is not at all uncommon that it will take
seven, eight, nine or 10 years before you know what you’ve got.
But you have the potential returns that you don’t usually have
any other way.”
Nykin is optimistic about Prolog’s future in the St. Louis region
and the prospects of making additional investments with existing
firms and start-ups.
“We are specifically in St. Louis continuing to see great promise
in the deals, ideas and opportunities that arise out of the
entire life sciences infrastructure. They continue to snowball,”
he says. “Hopefully, we will continue to grow, which will allow
us to make more significant investment and develop our team.”
