Baidu-backer Singaporean Finian Tan bets on the next big thing … – DEALSTREETASIA

Bloomberg

February 10, 2017:

Baidu Inc. is often referred to as Chinas Google with a market value of more than $60 billion. But in 2000, it was an upstart struggling to get any attention from investorsexcept from a guy named Finian Tan.Tan, then head of Asia at DFJ Eplanet Ventures, began investing in the search engine, betting that 1.3 billion Chinese would eventually embrace the internet. When it went public five years later, Tans firm emerged as the bigger beneficiary with a stake larger than the 22 percent held by Baidu co-founder, and now billionaire,Robin Li. Hes making a similar bet on San Diego-based regenerative medicine company Samumed LLC, which is valued at $12 billion.

What attracted Tan was Samumeds approach to treating arthritic knees, hair loss, scarring of the lungs and degenerative disc diseases. The company is pursuing novel therapies for those conditions and cancer with drugs that target a cell-signaling pathway that offers promise in reversing the biological processes of aging.

Only twice in my life I have bet so big on day one, says Tan, 54, a Singaporean who co-founded Vickers Venture Partners in 2005. Samumed is going to make even more money for us.Samumeds chief executive officer is Turkish-American entrepreneur Osman Kibar, who has managed to raise more than $300 million in private funding for the company he founded in 2008. Before that, Kibar was scientific founder of Genoptix Inc., an oncology diagnostics company that Novartis AGbought for $470 million in 2011.Tan began investing in Samumed in 2012. Today, Vickers and its co-investors own about 11 percent, including 3.8 percent held by Vickers. Tans company is the only VC firm backing Samumed with the rest of its funding coming primarily from institutional family offices, the startup said.Investing in biotech startups is innately risky, with uncertainties over regulation and execution, according to Paul Santos, managing partner of Wavemaker Partners in Singapore.

All of these things are beyond your control, he said. From a fund allocation standpoint, if you put so many eggs in one basket, you almost cant miss again. And there are many cases where people missed in a big way, like Theranos. Theranos Inc., a blood-testing startup that once commanded a $9 billion private valuation, has seen most of that evaporate amid regulatory battles and questions over its technology.

Samumeds drug candidates are being tested in five patient studies, according to its website. Its pursuing ways to repair or regenerate human tissues through drugs that target the complex system known as the Wnt pathwaya key process in regulating cell development, cell proliferation and tissue regeneration.Scientific understanding of this biological activity represents a major breakthrough in tackling human diseases, according to Elizabeth Vincan, a senior medical scientist at the University of Melbourne, who convened the first international meeting held in Australia on Wnt in 2014.

The Wnt pathway is one way that cells communicate, and the Wnt pathway tells the cells what they are, where they need to be and what they need to become, she says. Its very important in diverse human diseases, so the Wnt pathway is possibly the most interrogated pathway now in drug development. Vincan continues: The aging process is really just cells getting tired, and if you can rejuvenate them, you can certainly reverse the process.The opportunity to invest in Samumed was presented by Tans partner Khalil Binebine, vice chairman of Vickers. Tan was immediately drawn to Samumeds diverse pipeline of drugs covering multiple therapeutic areas.Typically, his firm follows an unusual vetting process for making investments. Each of its five partners is required to get to know the founders of the companies they are considering backing. When they are ready to make a decision, each investment proposition is given a score from 1 (lowest) to 5 (highest). Number 3 isnt allowed because Tan doesnt want any fence-sitters.If one partner loves a deal that everyone else hates, he or she is still allowed to invest as much as $1 million on the startup through the lifetime of a fund. Unanimous deals tend to be the worst deals, Tan says. We are not afraid to be innovative.The probability of companies such as Samumed uncovering the fountain of youth isnt good. Derek Lowe, a medicinal chemist who comments on drug discovery for a blog run by the publishers of the journal Science Translational Medicine, says the overall failure rate for medicines undergoing clinical trials is about 90 percent.

I have not seen anything that makes me think that their chances will be higher than that average, Lowe says. If their investors think differently, they could be in for an unpleasant surprise. Clinical trials are mostly about unpleasant surprises, unfortunately.

Tans path to Vickers includes a variety of roles. He has a Ph.D. in engineering from Cambridge University and has worked at Goldman Sachs Group Inc. and Credit Suisse First Boston. During his brief stint as a senior public servant in Singapore, he also managed a $1 billion fund to develop science and technology in the city-state.Yet many people attribute Tans success to his famous parties. The proficient networker entertains an average of 200 people a month in his home, combining business with pleasure to pull together connections to spot the best deals and talent in technology.The same approach is applied to managing employees, whom he invitesfor a weekly lunch at his sprawling penthouse apartment overlooking Singapores Sentosa Cove.

On a sunny day in January, a dozen of them gathered around the dining table over crispy chicken, spring rolls, sauteed vegetables and the house specialty, beef noodle soup. New-hires from Credit Suisse and McKinsey & Co. joined the gathering.Its not all science that we do, Tan said. A lot of it is art. And a lot of it is entertainment. There are VCs who give you an umbrella when its sunny, and they take it away when its raining. We have a different ethos.Vickers performance is posted on the companys website. Assets raised under its four funds, including co-investments, total $363 million and have a combined value of $2.1 billion.The net value of its fourth fund has increased more than five times, making it the best performing among the venture capital funds that debuted in 2014, according to data compiled by Preqin at the end of June.Vickers understood and supported our need for flexibility to think and act for the long-term crucial aspects for the time-intensive process of developing a broad platform in tissue regeneration, Samumeds Kibar says. Vickers is currently raising $250 million for a fifth fund that closes in July. Tan plans to invest more in Samumed, one of many startups Vickers is bankrolling globally.

More recently the firm has made investments in SiSaf, a Belfast-based biotech firm that aims to improve drug administration. In Singapore, its led a funding round in lifestyle and fitness startup GuavaPass. Its also backing digital payment service provider MatchMove Payand Spark Systems, a foreign exchange platform. Tan says about 28 percent of the ventures Vickers has backed have failed, compared with an average failure rate of more than 50 percent across the venture-capital industry. Of the deals that have succeeded, he says 36 percent have returned more than five times the initial investment.Most VCs play safe, Tan says. Ive always been radical. For us, its all about home runs.To keep closer watch of his most important bet, Tan recently bought a house in San Diego to be near Kibar at Samumed.As housemaids begin serving dessert at his Singapore home, prepared by his three chefs, Tan, dressed in blue jeans, white t-shirt and blazer, throws a question to his lunch guests: If you are able to grow cells at will, what do you think is the age at which we will die?Then he draws an analogy with a car that can last forever if one can keep changing the worn-out parts. Its the same with the human body, he says. We will never die.Despite the odds,Tan isnt giving up hope of bettering the spoils from his bet on Baidu.

Also read:

Vickers Venture leads $5m Series A round in fitness platform GuavaPass

Vickers Venture hits $63.5m first close for Fund V, confident of beating $250m target

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Baidu-backer Singaporean Finian Tan bets on the next big thing ... - DEALSTREETASIA