- GV is the venture capital arm of Google’s parent company Alphabet, and used to be called Google Ventures.
- The investment firm has backed over 50 healthcare and life science startups looking to reduce human suffering and help people live longer.
- The size of GV’s cheques range from $US100,000 to hundreds of millions.
Google became one of the biggest companies in the world after it launched a search engine in 1998 that surpassed the abilities of market leaders Ask Jeeves and Yahoo.
But the $US650 billion (£497 billion) business, which today sits under parent company Alphabet, is now looking to cash in on the success of companies operating far beyond the realm of software and search engines — with a particular focus on healthcare.
Through its GV venture capital arm (formerly Google Ventures prior to the restructuring of Google), Alphabet is taking an equity stake in companies looking to reduce human suffering and increase human life expectancy.
These are firms aiming to limit ageing and improve how we treat diseases by researching areas like genomics, cell therapy, and biotechnology.
Founded in 2009 by Bill Marris, who left last August, GV has backed more than 300 companies and has over $US2.4 billion (£1.9 billion) at its disposal. It provides startups with funding, while also giving them engineering support, PR and marketing advice, and introductions to relevant people at Google.
GV is investing roughly a third of the capital it gets from Alphabet into healthcare and life science startups. It obviously hopes to make a financial profit on its healthcare investments, but says that it’s not the only motive. The investment partners at GV also want to ensure that the companies they’re backing are given the best opportunity possible to improve the world we live in.
Krishna Yeshwant, a doctor who leads GV’s life sciences and health team, told Business Insider: “One of the best things about investing in healthcare is that we can do well by doing good.
“Life expectancy is just one (important) measure of that. If we saw an approach we thought was exciting in human life extension we would absolutely invest. However, we invest across all aspects of life sciences and healthcare delivery, with the primary intent being to reduce human suffering.”
GV: Life science startups can become the next tech megacorporations
Several of GV’s 12 partners are hunting for potential healthcare and life science deals around the world — but the UK and Ireland are a particular hotbed of activity for the VC.
Speaking to Business Insider at The Ivy in London straight off the back of a meeting with some GV-backed founders, Tom Hulme, a partner at GV, said he’s “absolutely” confident that some of today’s healthcare startups will evolve into multibillion dollar corporations in the same way that GV portfolio company Uber has.
“I would say by definition these problems [that healthcare startups are working on] are incredibly impactful to a large proportion of humanity and my belief is that will create a large economic opportunity,” said Hulme.
“That doesn’t mean overcharging or gouging the end customer. It means these problems are so ubiquitous that actually you can have very fairly priced organisations that become massive businesses.”
GV has backed over 50 healthcare companies worldwide to date, with investments ranging from $US100,000 (£76,000) to tens of millions of dollars.
Hulme said he’s comfortable with GV’s team size in Europe (two partners and a small support team) even though it was reduced significantly in December 2015 when GV folded a dedicated $US125 million (£96 million) European fund into a larger global pot. “The main reason I’m comfortable is we’re bolstered by an amazing team in the US,” said Hulme, who studied physics at Bristol University followed by an MBA at Harvard Business School.
GV set up its European fund in October 2014 but closed it down just over a year later, with a report in The Financial Times claiming that tension developed between GV’s European and US teams on investment strategy. GV denies the claims.
GV is capitalising on the IP coming out of Oxbridge
Of the startups in the GV portfolio, Hulme is particularly bullish about the prospects of Oxford Sciences Innovation (OSI), which provides capital and scaling expertise to Oxford University businesses based on interesting intellectual property (IP).
OSI has raised £580 million, making it the largest private university fund in the UK. It’s unclear how much GV put in.
“You could think of it as a fund,” said Hulme in reference to OSI. “I tend to think of it as a really interesting company that’s transferring IP effectively. One of the interesting challenges of Oxford is if you look at their base of academic research, it is world class. And I don’t think that’s ever translated into a throughput of startups. In many ways I think Cambridge’s funnel was more efficient historically because of Cambridge Angels and CIC (Cambridge Innovation Capital).”
OSI has made over 40 investments and about half of those investments have been into life science companies. “The quality is absolutely exceptional,” Hulme claimed. “They have a relationship with the tech transfer office [at the University of Oxford] and they can get referred into any science department, be it medicine, genomics, etc.”
Hulme said he wouldn’t be surprised if OSI turns into one of the UK’s largest companies in the next 10 years, adding that he expects it to create hundreds of jobs in turn.
Another life science company in the GV stable is Dublin-based Genomics Medicine Ireland, which has raised $US40 million (£31 million) from GV and others to carry out genomic research across Ireland while examining the broader relationship between genetics, health, and disease.
There is also Cambridge Epigenetix, which is a biosciences company building easy-to-use epigenetic tools that can be used to study and modify human genes. The five-year-old company has raised $US26.5 million (£20.46 million) from GV, Silicon Valley investor Sequoia Capital, and others.
“The revenues are potentially a fair way off [for Cambridge Epigenetix], but the size of the problem we’re solving makes us completely comfortable with deferring revenue,” said Hulme.
“We’ve chosen to select companies where I believe that economic return is completely aligned with human well-being. So I’m equally as excited about that as the cash return.”
There could be more UK investments on the way soon. “We’re currently looking at [another] one in London and another in Oxford,” said Hulme.
GV has a “patient capital” approach to investing
There’s no immediate pressure for the companies in GV’s portfolio to start generating profits for shareholders.
Alphabet does not specify exactly how much money GV should make on its investments, according to Hulme. “The reason for that is the timeline is unknown. What I know they do judge GV on is the historical returns or the progress today that the portfolio is making.
“And they have been great. Alphabet is absolutely satisfied with that, which I think is kind of reflected in the fact that (very generally) the fund has tended to increase in size over time.”
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