Venture partnering
By Adam Rosenberg
Adam Rosenberg is a Venture Partner at RA Capital Management. Adam was President, CEO, and member of the Board of Directors of Rodin Therapeutics until its acquisition by Alkermes in 2019. He serves on the boards of multiple private biotech companies.
June 24, 2021
I joined RA Capital as a Venture Partner on January 1, 2020. We didn’t announce my new position, and I told just a few people in my network. One good friend – whose dad was CEO at a Fortune 100 company in the 90s – responded with “Oh man, that’s a plush gig.” I think he was referring to the private jets and high-six-figure board perches occupied by retiring senior executives who take venture partner roles in the private equity stratosphere.
That, however, is not how things work at early-stage biotech venture funds. At some firms, venture partners are included with the fund’s carry (profits), suggesting a longer-term residence. At others, venture partners are paid a salary and receive access to resources and a desk (remember those?). But the point of this article is not to discuss boring compensation models.
The point is to lift the curtain on what biotech venture partners and entrepreneurs-in-residence (EIRs) typically do.
I didn’t conduct research for this article, and I don’t claim to be an expert. But I did spend an amazing 4+ years with Atlas Venture (as a Senior Advisor while running Rodin Therapeutics), and I’ve now been with RA as a venture partner for almost 18 months. Between running my first company (Link Medicine) and joining Atlas/Rodin, I also spent almost 7 years as an “independent” EIR; basically, starting companies while taking on advisory and interim executive roles, without being attached to a venture platform. So this is not intended as a systematic review of venture partnering – rather just some personal observations based on a couple of decades in the venture-backed field.
First – what’s the difference between a venture partner and an EIR? Each firm may define these roles differently, but the reality is, not much. Both venture partners and EIRs work with the fund’s investment team to look at new deals, lend their expertise to the existing portfolio, and typically at some point move on to a full-time operating role (ideally with a portfolio company, although this is more of an implicit compact than a contractual requirement). Some firms recognize a difference based on seniority or other defined factors – e.g., a venture partner may be someone who has a long-term relationship with the fund and has maybe sold a portfolio company or two, whereas an EIR may be someone earlier in their career or a scientist moving from academia to industry. But to save space here, I’ll refer to all of us as EIRs.
So how does an EIR spend their time? Let’s take each of these broad categories in turn:
Looking at New Deals
For many executives who have spent their careers on the operating side, the opportunity to analyze new deals with an investment team is eye-opening. Without betraying the secret sauce of any single firm, the reality is that new deal review is messy. As in operations, everything may look shiny and strategic on board slides, but this masks countless hours of team dialog, scenario mapping and different perspectives. New deal review is equally fraught with the realities of pressure-testing key assumptions, managing uncertainty, and bridging information gaps.
For many EIRs, spending even a few months behind the curtain is incredibly valuable prior to returning from the dark side and taking on a new operating role. You see firsthand:
How difficult it is for investors to get to yes, no, or not now
Why investors so often take the frustrating but understandable approach of “Not quite yet, but let’s keep in touch, and let us know when you have new data”
Note – this is perhaps the least satisfying response that a CEO can receive from a VC; a fast no is much better than a long maybe…but it is often a genuine sign of interest rather than a calculated hedge to hang around the hoop
How input from many both within and often outside the fund is required to move forward with a deal
How to understand and manage the differential influence of different people within the fund, and
What complex roles relationships and competition/FOMO play in decision-making.
Observing and participating in this process may not actually make EIRs feel better about how funds reach their decisions. It may, however, help bridge understanding and improve success rates for future fundraising efforts.
Creating Companies and Advising the Existing Portfolio
For funds that focus on company creation, leveraging collective EIR expertise often helps shape newcos. Getting early experiments off the ground and thinking through newco strategy (indication selection, target prioritization, fundraising/partnering, etc.) is typically a collaborative effort. There is some value (certainly, P&L value) in not having a full-time CEO/CSO/CMO/etc. if the company doesn’t need one. And at a certain point, a company making real progress needs and deserves full-time leadership. But in the early days of a venture-created biotech newco, collaboration between the investment team and EIRs can help guide key decisions.
More mature portfolio companies can also sometimes benefit from EIR expertise. For example, one company I’m involved with was too early for a CMO, but needed quick and informed guidance on a key clinical question to help inform preclinical strategy. Rather than hire a consultant, a couple phone calls with an experienced RA EIR – who was already familiar with the company from regular portfolio reviews – helped shape an aligned path forward.
Jumping Into An Operating Role
Company creation is all the rage in the biotech venture world; there is much more overlap between investment and company creation now than there was 25 years ago. That’s why at some firms, there’s an expectation that an EIR “joins” the fund, looks at and weighs in on deals, and then launches or joins a single portfolio company within an explicit or implicit timeline (usually 6-18 months, in my experience). At other firms, there’s a willingness or perhaps even an expectation that EIRs will help with multiple newcos. This can also be determined by the personality and preference of an EIR; some people really enjoy throwing themselves into one project, while others like to have multiple projects going at a time.
Personally, I like to mix it up. I’ve seen the very real advantages of going all-in; there’s no question that my almost 5 years each at Link (2005-2009) and Rodin (2015-2019) would have been very different if I were jumping around among different companies. But during my “independent EIR” period (2009-2015) and now at RA, I’ve really enjoyed helping to launch multiple newcos.
Beyond “What does an EIR do?”
I also thought a few personal anecdotes might help inform others considering the full-time operating role vs. EIR decision.
I’ve helped RA launch 3 companies in the 18 months since I joined; each of them operates in a very different space, and each now has a full-time CEO and strong R&D leadership. I’ve stayed on the boards of each company and I try to be as available as I can for the CEOs if they need an ear. At some point, perhaps I’ll jump back into a company full-time…although I am really excited about the potential for all three companies I’m advising now, as well as a new opportunity that I’m helping to shape. While I don’t like to admit this, perhaps it makes me more VC-like. Then again, even Harry Potter could speak to snakes, and that didn’t make him a Slytherin.
Certainly, not everyone finds the EIR path attractive. I’ve spoken with multiple friends in industry who would prefer to jump right into a new full-time operating role after the prior role wraps up (whether by sale, wind-down, or otherwise) rather than take a year or two (or more) attached to a venture fund.
But for those who are interested in becoming an EIR, how do you actually get there? As with many biotech opportunities, finding these positions is all about relationships. I’m not aware of recruiters out there doing retained EIR searches, although I may be wrong (if so, they’re not calling me). In some cases, an EIR offer is really just a way for a fund to keep someone in the network until the next company comes around. Others may be willing to take a chance on a smart person with a killer new idea that’s not quite ready to be a company yet, so they slap an EIR title on you and give you some time to figure it out.
After Rodin was acquired in late 2019, I didn’t immediately know what I wanted to do next. I had been so intensely, exclusively focused on Rodin that I knew I didn’t want to jump right back into a full-time operating role. And while I pondered the idea of throwing on a backpack and trekking around the world for a few months, that seemed a tad unrealistic with two teenagers and a tween on the home front. Personally, I was also looking for an opportunity to learn; I’ve spent most of my career with private companies, thus learning more about how a diversified firm like RA approaches public market investing was intriguing. For me, anyway, this became the perfect time and place for venture partnering.