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PROLOG'S COMBINATION OF EXPERIENCE,
SUPPORT MAKE SUCCESSFUL INVESTING


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.”

 

 

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