A Midas List VC on the problem with the Midas List


Earlier this week, Forbes published its annual Midas List, whichshowcases who the outlet believes to be the top investors in the world. Stuart Peterson of Artis Ventures was on the list very fardown, behind the many VCs whose epithets are instantly recognizable to founders, like Chris Sacca and Peter Fenton and Mary Meeker.

The way Peterson tells it, thats the route he likes it. Theres a reason he didnt threw his name on the door 17 years ago when he left the hedge fund Cypress Funds in L.A. to open his own firm in Silicon Valley. Im not completely fucked up being the centre of attention. I never wanted to do this by myself. I think you can be successful if youre part of a successful team.

Certainly, Artis has discovered its share of success. In one of its most remarkable bargains, it invested in YouTube before the company sold to Google in 2006. A family connection seemingly helped. At the time, Artisemployed David Lamond, son of renowned VC Pierre Lamond, who expended 30 times with Sequoia Capital, another early YouTube investor.

Artis also invested alongside Sequoia in a number of other bargains, including Aruba Networks, whichwent public in 2007 and was acquired by Hewlett Packard Enterprise in 2015. Lamond left Artis in 2012 to form his own firm.

Artis whose newer bets include troubled Juicero, along with Zenrez, a company that sells pricing engineering and tools to fitness studios more recently made a killing off sales of cancer narcotic developer Stemcentrix to AbbVie last year for $10.2 billion .~ ATAGEND

Artis led Stemcentrixs Series A round and Peterson sat on the companys board. In reality, though Founders Fund has received much attentionfor contributing the companys Series B round( it reportedly returned $1.4 billion off a $300 million investing in the company ), Petersonsays Artis made merely less than$ 1 billion from its $35 millioninvestment in the company.

Asked how he landed the bargain, Peterson points to a2010 event tounveil a social apps fund created by Kleiner Perkins. At the time, famed VC John Doerr was hosting a panel that included Facebook CEO Mark Zuckerberg and Amazon CEO Jeff Bezos, and Doerr asked Bezos what advice he had for investors and founders.

If I were coming out of school today, mentioned Bezos, I think I would be very passionate about genetic engineering, synthetic life, I think these are incredible areas . . .

Doerr, confused by the change of theme, interrupted, On social networks?

No, Bezos continued, Im talking about test tube and engineering real biological organisms to solve clean energy and a whole bunch in the best interests issues.

I was blown away by that, says Peterson, whose firm has invested roughly a billion dollars because it inception, some of itin life science corporations, and much of it via special purpose vehicles whose funding has come from CEOs, CFOs, actors and sports starrings. Says Peterson, They adoration the idea of access, and theyve added a tremendous quantity of value to companies that weve funded.

So where isPeterson who plansto raise a fund for Artis next year getting his leads today? We asked him that and much more in a wide-ranging conversation yesterday. Heres an outtake 😛 TAGEND

TC: You got behind Stemcentrix at a time when not many in Silicon Valley were focusing on novel biotech cancer medicines .

SP: You had Zynga and Groupon and Twitter and all these seemingly overnight successes that had raised very little capital and were creating great returns. We felt like maybe theres merely one YouTube and now its time to move on.

TC: VCs certainly would agree with you at this level. I dont think a few weeks pass withoutanother firm jumping into biotech expending .

SP: Because a lot of benefits accruing to the tech landscape are now accruing to the life science space. Ten years ago, it cost a few million dollars to map out the human genome; now its a few hundred dollars and before you know it, itll be $30. Its collapsing faster than Moores Law.

But its not just about mapping out your genetic instruction defined; theres opportunity in everything that living on and inside of you. Its funny, we dont even understand yet whats going on in our microbiome, yet we want to travel to Mars. I adoration the enthusiasm, but our torsoes are their own solar system. We need to get to a level where instead of having a doctor test you for 20 or so pathogens to figure out whats wrong, medical doctors says, Were going to sequence your bacteria, fungis and viruses, and Im going to tell you exactly what you have in an hour.

Its like thisNetscape browser moment. You knew it was powerful, but you didnt know where it was going to take us. Now we know that mapping out your own instruction defined is powerful, but where will it take us? I think well find out shortly, and that its going to liberate a tremendous quantity of value.

TC: What are some of your most recent life science bets ?

SP: We did the Series A of a company called IDbyDNA[ which aims to be able to identify any pathogen] a year ago. We money Fabric Genomics[ whose software aggregates insights about cancer and pediatric genomics from around the world, then spits out an actionable report for lab technicians to send off to clinicians ].

Were going full circle[ in our newfound ability to more easily find co-investors ]. When we looked at Stemcentrix and needed to find another investor, it was really hard.We all looked all over the table, and we mentioned, We better call Peter Thiel. I didnt have a number two.

[ Editors note: Asked for comment, a spokesperson for investor Brian Singerman, who is credited with betting on Stemcentrix on behalf of the members of Thiels Founders Fund, says Singermanwas introduced to Stemcentrix via the debt firm WTI .]

TC: You made it on Forbess Midas List this week. How are you feeling about it ?

SP: I watch 12 people who money Twitter. If I was given a selection between funding a targeted therapeutic to cure cancer or Twitter, Id take the therapeutic. I look at the garbage thats money every day, and even if its staggeringly successful, who cares? Will it change my life?

TC: Alot of investors do seem to be experiencing a similar switching in believing .

SP: I think were determining it. Y Combinator is trying to wrap its limbs around the life sciences opportunity. Yesterday we threw a term sheet out to a life sciences corporation, and guess who was there with a term sheet? Andreessen Horowitz.

Whats interesting to watch is how people fulcrum but try to keep their tale intact. The venture firm Data Collective wanted to do everything in big data, but then they began to see the possibilities of in life science. So what do you tell investors? That genomics is the biggest data opportunity weve ever seen. Andreessen is the same. It was never going to invest in healthcare, then it had to fulcrum into life science without appearing crazy.

I think its great, by the way. If youre the investment in[ the video platform] Vessel[ acquired, then shut down, last year by Verizon] or[ the pet-sitting service] DogVacay, I dont think you can complaints about the lack of exits.

TC: So speak to me Benchmark here. I dont think theyve jump-start into life science .

SP: Trust me, if[ Benchmarks] Bill Gurley went after these targeted therapeutics and he was successful, he would have asmuch liquidity as he could imagine. Sequoia is trying. Kleiner is trying. Either these firms pivot or theyll disappear. They merely wont be relevant.

TC: Youve money an array of corporations from different industries. Are you saying youll simply do life science bargains now ?

SP: We look at everything. We led a $35 millionround in[ the networking corporation] Versa Networks. Were about to lead another round in a healthcare corporation thats in stealth and well likely raise $35 million for them. We invest in about a dozen corporations each year. But theres no mandatory. This may be the last networking bargain we do, or the last targeted therapeutics bargain we ever do.

As far as the consumer-facing space, I dont know. I entail,[ the video editing and movie making app] Flipagram I dont even know what this is. I was like, I cant listen to this for five minutes. It looks like Instagram to me with longer video feeds. Its numbers likely looked just like Googles early on, but I didnt care.[ Editors note: Sequoia and Kleiner, Googles earliest venture investors, wound up co-leadingFlipagrams early fund. The corporation, which struggled to gain momentum, sold in February to the Chinese corporation Toutiao .]

Same with Jet.com. I merely supposed: If this is hugely successful, who cares? Amazon is already operating on razor-thin margins.

I think people in the Midwest, when they watch five different billionaires that come out of a place like Twitter or 12 different venture monies that helped make acompany asuccess, they are likely meditate: Is this the best we can do? Actually?

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