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Coronado Venture Forum

Coronado Venture Forum. Clinton Bybee ARCH Venture Partners September 16, 2004 Santa Fe, New Mexico. ARCH Venture Partners. $1,059M. ARCH Development Corp founded by University of Chicago in 1986 17+ years of venture capital investing Nationally recognized, nationally focused

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Coronado Venture Forum

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  1. Coronado Venture Forum Clinton Bybee ARCH Venture Partners September 16, 2004 Santa Fe, New Mexico

  2. ARCH Venture Partners $1,059M • ARCH Development Corp founded by University of Chicago in 1986 • 17+ years of venture capital investing • Nationally recognized, nationally focused • 110+ investments in seed and early-stage technology companies • 38 IPOs and acquisitions • 24 employees with 17 investment professionals $709M $329M $149M $42M $9M Vintage Year Fund I II III IV V VI

  3. Life Sciences Physical Sciences Information Technology

  4. Portfolio Companies EnSemBle Artificial Muscle Life Sciences Physical Sciences Information Technology

  5. ARCH Technology Sources

  6. National Scope A A A A A Portfolio Company Location Technology Source ARCH Office: Chicago IL, New York NY, Austin TX, Seattle WA, Albuquerque NM A

  7. Organization • Founding Scientists • Remain in Lab/Academic Institution or join the company? • Pros/Cons • Historical Data • Ongoing role with the company? • Full Time • Consultant • Compensation • Equity Stake • Cash

  8. Organization • Scientific Advisory Board / Other Scientific Contributors • Augment Base of Technology • Additional Technical Contributors • Tie-up Key Inventors in the Field • Signaling Effect • Compensation • Equity • Cash

  9. Organization Management Team: 1. Done it Before - Built successful company 2. Know it Cold - Industry expert: 10+ years - P&L/ management experience - Successful track record

  10. Building a Management Team Y Knows Industry Cold N N Y Done it Before

  11. Building a Team in New Mexico • Scientific Founders Abound • How to best work with them? • Management • Proven Management Talent is scarce • Not a lot of local companies to recruit out of • Hard and expensive to import that talent • Start-up Infrastructure is developing but modest • Customers are not local generally • Corporate partners are not local • Acquirers are not local (can be a good thing) • Not a lot of examples of successes

  12. Companies to Build in New Mexico • Leverage Unique Infrastructure in NM • SNL capabilities • UNM capabilities • LANL capabilities • Other labs • Positive Regulatory Environment (?)

  13. Team: Larry Bock ---- Calvin Chow Wally Parce Location: Cambridge ---- Palo Alto

  14. 7 8 3 • Genetic control of broad set of building blocks • Massive parallelism • Nanoscale control of positions, assembly, material composition

  15. Other Examples • Intelligent Reasoning Systems • Illumina • Commotion • All biotech companies we have ever invested in

  16. Compensation Structure Equity Salary CEO 5-10% 175-225 Sci Founder 1-20% 0-10K/mo CTO 3-5% 125-175 VP-Engr 1-3% 140-180 VP-Sales 1-2% 125-175

  17. Options • Still a Good Tool? • FASB changes to require companies to expense options • Expense hit to earnings is BIG problem for many public companies • Potential of option expense overhang in M&A • But… • Still a great tool for private companies

  18. Summary • New Mexico is a great place to build the right company • A+ Management is what really matters • Done it Before • Knows industry Cold

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