How to go from scientist to venture capitalist: Bharat Srinivasa - Amplitudevc

0:00 Hi everyone. Welcome to Learning with Rishad. My name is Rishad Usmani. I'm a physician, angel investor and founder of One Fail Startup. On this podcast, I talk about healthcare, investing in startups, venture capital, life and everything in between. Bharat, thanks for joining me today. I'm really excited for this conversation. To get started, I think our childhood shapes us to an extent. There are things from our childhood that we learned that contribute to our success, and there are things that we have to unlearn from our childhood to be successful. Talk to me about your childhood and what are some things that you learned that contributed and what are some things you had to unlearn?

0:44 So let's start all the way back. I grew up in India, but also in the Middle East. And I basically jumped from one place to another every couple of years. And so every time it was a new experience where you start from scratch, build new friends, build new relationships and scale that up. The one consistency throughout all of that was my parents, obviously, but them saying, look, you do not have to be a doctor. You don't have to be an engineer. You don't have to be this. Do whatever you want. Be curious and that's fine. And so what's allowed me to stay true and make sure that I am who I am, I think is that curiosity from the beginning, which was you want to go study animals, let's go to the zoo. You want to go study plants, let's go to the forest. You want to study X, let's go to X, let's go to Y. So there was never a don't ask stupid questions, but if you're asking questions, let's give an answer. If you don't know what the answer is, let's go try to find that. That's something that I'm trying to inculcate in my own kids as well, that sense of curiosity. And that, I think has allowed me to continue what I'm doing now. The fact that I was also jumping from one place to another allows me to build relationships. And so for me, I'm very comfortable being outside of my comfort zone because that's how I was raised. When you're never comfortable, you're always looking for something new and therefore it allows you to get up to speed, become comfortable and really drive forward into different avenues in different areas.

2:15 One thing that I'd like to fix, again, grew up in India, as I mentioned, as I think did you. And so the education system there is all about memorize this, study only this, answer only this. So it beats curiosity out of you to some extent, because all you need to do is pass the exam and you're done. And you can get a hundred percent and you're done if you get a 70 or a failure, blah, blah, blah. So that's something that I've had to try to get out, which is it's not about the marks, but it's about the process to get to the understanding of the subject and how you can explain that to somebody else in a manner that makes sense. If you can do that, then you're good and you've truly understood the subject. Thanks for that very informed answer, Bharath.

2:57 And I have a million questions and I did grow up in India as well. One thing that moving a lot programmed in me was this need to move every two years. And anytime there's discomfort in my life, my answer is how I can change my environment. There's a few quotes in stoic philosophy and I'm going to butcher this, but essentially when you move or when you travel because you're uncomfortable, the problem is you, not your environment and you're taking you with you. So your new location, you will be uncomfortable as well. Is that something you experienced? Is that something you learned by moving a lot? And if so, how do you now find comfort in stability as opposed to comfort in new things and new environments?

3:46 Yeah. I mean, when you're a kid, it's not like you have a choice in the matter, right? You move because you're moving. So it's really, you sink or swim and you figure it out. And I think what's that led to now is absolutely what you're saying, right? If something becomes comfortable or routine, I don't like it. And I start to get itchy. And whether it's detrimental or not, I try to break the pattern or break the routine. But sometimes it works, sometimes it doesn't. I think what I've done, and again, whether I'm successful or not, I have no idea, is I've tried to harness that in a manner that can help drive my career. I've been the CEO for a couple of companies and I didn't enjoy that because it's very, let's do one thing and one thing only. But as a VC now, what I get to do is jump across multiple different areas. So today I'm studying about cellular biology. Tomorrow I'm studying about gene therapy. Tomorrow I'm studying about, the day after I'm studying about something else.

4:44 So you get shallow enough to understand it, but then you can jump to something else and drive that. So that to some extent keeps me excited, keeps me engaged, and gives me the new experience that I crave versus trying to become comfortable in one thing and just being one thing and doing that over and over again. Perfect. That's a great answer, Bharath. Let's talk about when to start on a new idea. Adam Grant talks about the sweet spot for success as moderate procrastination. So when you have a new idea, you think about it for a while and then you get started. And he phrases that in the schema that when you look at people who do best on exams, they're the ones who start early but don't submit to the last second. They're not the ones who are procrastinators or the ones who submit early. Do you yourself, do you have a proclivity to planning or a proclivity to action? I have a proclivity to action and a dangerous one at that. I started lots of big projects because I have somewhat of an ego and I think I will learn on the way. And I've found oftentimes it doesn't work out and there are things that require planning before you jump in. So I'd just love to hear from your perspective. Do you fall in the bias to action or the bias to planning? And which one do you think makes for a better investor and a better founder?

6:07 I mean, bias to action by far. If it involves planning, if it involves sort of process, I'm not good at it because again, it goes back to routine. And for me, it's just, I have that fundamental issue with routine. I just cannot do it. Whereas, again, like you said, what I know I'm good at is figuring it out and figuring it out live to get to a solution. That I know I'm good at and that's why I tend to do that. Now, what does that lead to? You said, you said exams and submitting a sentence, stuff like that. That might be why I've never gotten a hundred or anything or a 90 or anything. I think the most I've ever got was like a 75, 80. And that shows in that. It's last minute, it's driven, it's good enough and it's good enough to get the job done and to move the needle forward. I think I still do that currently. If you're ever trying to get to a hundred, you will never get there. If you want to get to 90, you might get there, but the time commitment to get there is a lot. So the time commitment to get to 80 is, I'm just throwing in like two hours as an example. Time commitment to get to 90 is two more hours. Time commitment to get to a hundred is two more hours or three more hours or four more hours. Is it really worth that in order to get 20% more? I don't think so. So for me, I still follow that policy.

7:32 Even in diligence, you can never get to a hundred percent. But if you are sufficient, if you know what's there, if you trust the team, if you know what you're doing, if they know what they're doing, make a bet and things will figure it out because over planning is pointless. The world is way too complex and way too heterogeneous for you to be able to plan to the dot and to the T. This is a very interesting answer and one that partly goes against other VCs. I would love to dig deeper into structured decision-making versus intuition in investing. And from whatever in the past, if it's not a hell yes, it's a no. Do you believe in that philosophy? And tell me about your process for decision-making when you're looking at pitch decks and when you're evaluating companies doing due diligence, how much of that is structure? How much of that is intuition?

8:29 I would be lying if I told you I had the intuition of someone who's been doing this for 30, 40, 50 years. I don't have that. I'm not that old. At the same time, structure- Our hairline lies, Bharat. At the same time, structure, I feel like structure is what's... It makes you feel that you're doing the right process, but if you do it that way, you're missing out a lot. So if you were only structured, that's a problem. If you're only intuition, unless you have 30 years of experience, you're not there. So you have to balance that. You have to have some structure, but also have some intuition in order to drive that forward. So when I'm doing diligence, if it's a hell no, then it's a hell no. There's no way it's happening.

9:19 There is a very, very rare chance that something is a hell yes. It just never happens. So for me, it's always, huh, that's interesting. Now that's interesting to me, I can tell, because I am reading all the time, and I'm reading absolutely everything on completely diverse subjects all the time. And so for me, I'm trying to make up intuition by reading as much as possible and just collecting information. So when I think something is interesting, it's because somewhere in the back of my mind, I think I have read something of somebody else doing something and raising capital and being successful and getting into patients. So I say, oh, how is this related to that? Let me dig in for you. And so I dig in a lot, but like we talked about, I don't dig into a hundred percent. I dig into 50, 60 percent.

10:06 And that allows me to say, this is really interesting. And now I want to spend some more time to get from 50 to 80 percent and then drive in. And so for me, if I was structured, then I would say, oh, I have seen this company X, this company X has good management, good science, good this, therefore it is a good investment. And therefore I will do dollars. I mean, there are some funds that do that. There's a blank here on the name. There's an AI fund that looked at all of the successful investments in their past and effectively tried to make a decision based on what AI would tell you to do. I'm blanking on the name now. And I don't know if that's been super successful. And at the same time, those that are completely in the way, like I will figure it out live and make a bet and see what happens that hasn't successfully worked as well. I think it's somewhere in between. And your process in a career is to find the right balance between intuition versus deception.

10:56 That is a fascinating answer. And I'm very happy I asked that question. Let's talk about your undergrad experience. So everything you've said, you have a bias towards action. You want to work on multiple projects at the same time. And I'm the same type. If you told me that, if you gave me your persona and my persona to an extent and said person A went to do a master's and a PhD and person B went to med school, I'd be like, no way. Their personality does not fit 10 plus years of education. And the reason I went to med school is A, just pressure from culture, from parents. And B, I didn't know what else to do. And this is a very weak answer, I think. Tell me more about your path to, if you're an undergrad, you have committed to four years and then you committed to two more years and then you commit to four more years. What are those decisions like? And do you think looking back, it was the right decision? Is 10 years too long? And I'll ask one more question on that.

12:00 Does it make sense that every undergrad degree is four years? And this is the leading question. Does it make sense every master's is two years and every PhD is, you know, four to six years? Yeah, I mean, so I'll answer the last question first, because it's probably easier. You know, is an undergrad four years, is a master's two, is a PhD five? I think time is irrelevant there. It's more about what you want to get out of your academic degree. And in an undergrad, it is learning that there is a whole world out there, which school doesn't teach you. School teaches you do this, get marks and get out. Undergrad is well, for the first time, you're probably away from parents, you've got the world of education that you can do in terms of subjects and theses and blah, blah, blah. And you're working with other people that are similar to you and, you know, free birds effectively. So it's more about learning who you are as a person and learning about how to learn a little bit. And if that takes four years, it takes four. If it takes five, it takes five. Schools still tell you it's four. So whatever, it's fine. Right. That's the summer regiment that schools need to do. And that's where the four year comes from. Masters and PhDs are slightly different because there it's driven by what you get out of it. And in a master's, it's a thesis.

13:22 In a PhD, it's a thesis and papers. Right. And so my master's was, you know, about 18 to 20 month masters. And I'm happy to talk about sort of why I chose those as well. But my master's was 18 months. I got out with one paper. That is what I wanted. And out of my undergrad, I realized that, well, actually, let's take a step back. Out of high school and since grade six, I knew I wanted to go into biology. I don't know why, but I just knew I wanted to go into biology. I had no idea why. So I stayed in biology. 11th and 12th was biology as well. I knew I didn't want to be a doctor from grade 12, but I didn't know what I wanted to do out of biology. And so from India, I applied, got into U of T.

14:08 And I knew for some reason that, you know, immunology, microbiology sounds interesting. It kills bugs, kills people, kills animals, really no treatment against it. Why? Let's go figure it out. So I knew I wanted to go do that in undergrad. And then undergrad taught me that there's this whole other world of host pathogen relationships and human immunology that I had no idea before. So that's what I talked about undergrad being sort of exploding your mind. So master's was, okay, let's go learn human immunology. I tried to understand that. I got bored of human immunology, especially immune deficiencies. And I wanted to understand viruses and immunology. And so why did you get bored of human immunology?

14:50 Because human immunology, it's very, it's very, you know, it's the same reason I didn't want to go into med school. It's here is the knowledge, right? It is here's anatomy. The bone is the bone. You cannot change anything. Physiology is physiology. You cannot change anything. Human immunology is human immunology. You cannot change anything. So it's more about learning T cells and B cells and this and that and that. For me, what got excited is how do you, and maybe this goes back to what we talked about, how do you disrupt, how do you disrupt a routine? And for me, I love viruses and bacteria because it goes in and disrupts that routine of the human clock, the human immunology clock by changing it completely. And so I was really curious about that. And I wanted to go learn that. And so I finished my master's, went and did a PhD. During my PhD, I decided I didn't want to be an academic. I didn't like writing grounds. I wasn't good at it. I hated working in the lab. So what could I go and explore outside that? My PI was supportive. So I finished my PhD in three and a half years and got out of that two papers, a review, and the knowledge of what I knew and what I didn't know. So to answer your question, is the time a component?

16:03 I think time is irrelevant, at least from a master's and PhD level. It's what you want to get out of that. That really drives that. I ranted about this part, so I forgot the first part of your question. So if you want to repeat that, I can answer that again. You're putting the pressure on me, Bharat. I think my first part of the question was, do you regret the amount of time you spent in school? And looking back, ask a different question. What piece of advice would you give to Bharat in undergrad? And would you advise him to do anything differently in terms of your master's and PhD? And we'll talk about post-PhD after. Honestly, what I would have told myself from 10 years ago was, get outside experience rather than just academics. Because for me, I'm paying a lot of money to come to do this undergrad degree as an international student. And so I need to make it worth it. And so let me go choose the classes that I think will help me in the future. So I went and did immunology, and I went and did class X and class Y. When there were easier classes available, I chose the harder classes just because I have to... It cost me 2,000 bucks for a class. I may as well get something on it. So it was very sort of, I'm thinking of that, and therefore I need to choose it now. And so there were a lot of experiences that... Well, we went to undergrad together so we can talk about it. But there were a lot of experiences that we had as undergrads that I think were more academically driven than learning about yourself

17:37 as a person that I feel like I missed out on sometimes. But on the other side, it made me who I am. And when did you learn about yourself as a person? You're always learning who you are as a person. I don't think you're ever done with that. But it boils down to, I know I can get shit done and I know I can figure it out. So that's something that I learned during my undergrad. When you have assignments due tomorrow and you're starting today and you need to do it, you just get shit done. And it doesn't matter. You just need to pass, you need to get 75. And I knew I could get 75. So let's just do it that way and get 75.

18:22 Okay. I know there's a lot of physicians who listen to this and a lot of academics as well. What advice do you have for them if they want to venture out of academics and medicine and into the world of investing venture capital? And I'd love for you to talk about your path post PhD into venture capital. Yeah. Honestly, the one piece of advice is just do it. You're in a world right now where there are so many investors and they're always looking for advice. So if you reach out to someone and say, Hey, I'd like to learn more, they will never say no. So always reach out and just have a conversation with them. Right. Having conversations with people is what got me to where I am now. And so get out of your comfort zone and just reach out and talk to people. You don't have to make a commitment, but talking to someone is not that difficult.

19:22 My pathway is, I talked about undergrad masters. In my undergrad, I thought I wanted to be an academic, went into the masters, realized I didn't want to be an academic. Thought I'd go into consulting because it was science, but also doing other stuff. Applied to a bunch of consulting shops. I had no outside experience in real life work experience and thought, okay, you know what? PhD makes sense. I had this curiosity. Let's go figure that out. But I didn't want to go just to any PhD. I knew exactly which PI I wanted. And I basically, this is funny. I emailed him about five or six times. He never responded. So one day I said, you know what, screw it. I know where his lab is. I'm just going to go meet him in the lab. And I just started walking down the hallway. This is at Negril at the Montreal General Hospital. I was just walking to his lab and I think he was heading home. And I just literally stopped him on the hallway and I'm like, Hey, I sent you some emails.

20:21 I'd like to chat about a PhD blah, blah, blah. He's like, yeah, just come tomorrow and let's chat. So I went there tomorrow. I went there the next day. I started talking about why I wanted to do this. Told him, look, I want to do science, but I don't want to be a scientist. I want to go do something else. I don't want to be an MD, blah, blah, blah. And it's right time, right place, right person kind of thing. He was looking for a PhD student. He was working for a, you know, he was a chief medical officer at a medical vaccine, biotech vaccine company. And they were looking to do something in the respiratory virus space. And I said, I wanted to go do get industry experience. So it's sort of right time, right place. And I ended up joining his lab as a PhD. Told him, look, I want to get out. I don't know what I want to get out and do.

21:06 I think consulting, but I want to go do that. Yeah, that's fine. Let's figure it out. So started working on my project during my PhD. You have a lot of downtime, and this is embarrassing, but you have a lot of downtime when waiting for experiments. So I watched a lot of TV. And I think this was at the time where Shark Tank was starting to be popular. And I was watching a lot of Shark Tank. And I'm like, huh, that's cool. Wait, so you can put money into ideas and see if that works. That sounds really cool. And so I talked to a bunch, I just reached out to a bunch of VCs during my PhD. And they all said, look, you have no experience in the real world. Just go out, get some real world experience and come back and let's talk. And what are you messaging them? Like what's in the email? It was just, listen, I'm a PhD student. So I was careful. I only messaged VCs who were also PhDs. And my ask of them was, hey, look, PhD, trying to get into VC, love to learn more about you. Do you have 30 minutes? And I sent about five or six emails, got rejected from most of them. One person or two people responded. They then connected me with someone else and that expanded my network. So I just did that. They also get some real world experience and come back. So I said, okay, how do I get real world experience when I'm doing my PhD?

22:23 So then I cold emailed the Megal Tech Transfer Office and said, look, I'm free labor. I think I'm helpful. Can I come help you out? And again, they said, yeah, sure. Free labor. What's there to do? Just come over and help you out. So I did that for a few months with them. My project out of my PhD, I said, this is an idea. I should go try starting a company around this, if I really want to go be a VC. So talked to the same VCs and they all, they basically laughed it out of the room. You have no experience, they're terrible people. They're terrible people. You have no experience, they're a terrible idea. It's going to cost a lot. Clinical trials are expensive, blah, blah, blah. So I said, huh, okay. That's fine. At least I tried something.

23:05 If it failed, it failed school. So finished my PhD, got the papers, graduated as I mentioned, three and a half years, and then went into healthcare consulting for a few years. Didn't enjoy healthcare consulting as much because it was very sort of, here is a process. You have to do this project and you have to do it in this exact manner and you have to get this deliverable and you give this deliverable to somebody else. And they say, yeah, I don't like the answer. Just double the revenue projection. Okay. There you go. So you're sort of doing it for somebody else and it's very, you know, Excel files are going to be perfect and everything has to be perfect and designed and all of that crap. But I did that for a couple of years. It really helped me learn about the VC space, sorry, about the biotech space, the industry and all of that.

23:51 But still kept in touch with my VC connections and would send them an email every six months, like, Hey, this is what I'm doing. This is what I'm doing. And out of the blue, so one of the people that I emailed to, this was at the business development bank of Canada, the BDC. She emailed saying, we have a job opening now. Are you interested? I'm like, sure. Can you send me the posting? She's like, yeah, the posting expired two weeks ago, but just send it to me and send me a resume. So I said, sure. So I send my resume. And I think within like 10 minutes, they said, yeah, just come and have a first chat with us. I had a first chat, went through the process and then got hired. I think there was, I was the only one hired out of like three or 400 people. But when I was going through that process, I would go to work, come back at like 5pm. And then from five to nine, I would just learn everything I could about VC or whatever I could about VC.

24:45 Because again, it goes back to, I knew I could figure it out. So let me go figure out what VC was. And then I did that. And how are you learning Bharat? Like are you taking courses, reading books, YouTube videos? I'm just reading, just reading as much as possible. I mean, Google is amazing in that there's literally anything and everything that you can think or think of and find. So I would just read everything about VC that I could. I still made a shit ton of mistakes during my interview, but I knew how to fake it sounds terrible, but I knew how to talk my way through anything. And that part of what I did and acted like I knew enough to be curious, which I was, but also enough to say, I don't know this and this is what I want to learn. This is how to drive it forward. And then there were a couple of experiences like me trying to start my company and what, you know, I have a lot of opinions about everything. And VC is partly an opinion role, at least in terms of by the company to learn. And I shared a lot of those opinions in my interviews and backed them with facts. And that allowed me to get the role. And many things happened after that.

25:57 Let's go deeper into many things happened after that. I think it's very interesting how you went from that to starting Amplitude. If you're open to it, talk me more about that journey. And maybe you can frame it in a way on what are things you might do differently if you were to do it again. Yeah. So to do things differently is a loaded question because I have no idea whether I'll be successful or not, whether Amplitude will be successful or if anything we do is successful or not. And so when you're in the midst, it's really hard to know whether you're going up or going down. You're just there. And so it's hard to say I would have done something differently because you have no idea. It's only when you fail or you're successful that that'll happen.

26:45 But I'll walk you through the process and maybe that'll answer some of that question. So I went through that interview process, got into the BDC Healthcare Venture Fund, joined as an analyst. I had no idea what we see. I was pretending day one. And we'd be having these sort of... Our team was spread out across Montreal, Toronto, and Vancouver, and San Francisco. So we were having virtual calls. And people would say something and I would just be Googling what is that on the site so that I could act like I knew what I was talking about. So they'd be like, oh yeah, and the preferred shares, blah, blah, blah. What are preferred shares? And Google it and read quickly and say, oh yeah, yeah, that makes sense.

27:28 And so it was sort of, you're learning by yourself and that's effectively what we see as always. You're thrown into the deep end, go and help a company and you just do it. And meet as many companies as possible. So I did that for a couple of years. This was also the time where we had already at the BDC completely invested into all of our companies. A lot of our companies were doing follow on rounds of financing and they were going public as well. So I worked with the partners to understand what those follow on deals look like. How to take companies public. I spent a lot of time reading legal documents because I figured that can help differentiate me because everybody has a science background, but there's very few lawyers and scientists. So if I can understand the legal stuff, I can negotiate my way out of anything. So I spent a lot of time looking at that. Spent a lot of time looking at absolutely everything under the sun in terms of biology, just reading as much as I could. And then when we were already at the BDC, there were some discussions around we should be spinning out. So there were early conversations happening already.

28:35 So me and three others, we started putting the plans together in terms of, this is how you build a model for spinning out. This is our strategy. This is a thesis. This is our plan. This is the portfolio. This is the deals, blah, blah, blah. So spent 2015 to about 2016 was me just learning and doing follow-ons and stuff like that. In 2017 in earnest, we started the whole process of spinning out. So that took about 2017 and part of 2018 where you're just putting together the packages and trying to understand and explain why we should spin out. What are theses? How do you launch a new fund? Who do you launch a fund with? What companies exist? All of that. We spun out in mid 2018 to launch Amplitude, me and three others. We were fortunate enough that we had a term sheet for the new fund and that we had a commitment from BDC to kickstart the fund, but no other dollars and no dollars in the bank. We were still managing the portfolio for the BDC and we were getting some income from there in order to support our lives and all of that. So that was 2018. We spent about a year and a half fundraising, but the first fund takes forever to close because no one knows who the hell you are, whether your thesis works, et cetera. But we were lucky that the two partners were well known in the ecosystem. I was starting to become well known in the ecosystem and the packages that we had put together resonated and our thesis resonated. And so we did our first close

30:07 in 2019, November. Then did subsequent closes to get to the rest of the money by 2020, 2021. You followed a path that in my limited knowledge is not traditional, where most people will start an initial fund, five to 10 million, then 30 million, and then go to the nine-figure fund. You started at the end, Barth, or you jumped to one, two, three, and you started at step four, it looks like. And your first raise was from institutional investors or LPs, which is incredibly rare and only a very select few are able to do that. What made you in particular so good at that?

30:54 Why were these institutionals willing? What did you prove to them or show them? Well, it's not me. I can't take the credit for this. This is my team that did it. And the two partners had been in the industry for 20 plus years, so they knew a lot of people that trust existed. But I think what allowed us to be more successful in spinning out was when we started or when we were at the BDC, what existed in the Canadian ecosystem in terms of VC investments then was microchecks and the death by a thousand cuts. Here's a hundred thousand, here's a million, here's a two million. A very strong sense of risk aversion and spending dollars towards doing deals.

31:41 What we did at the BDC that was different, and everything is timing, everything is luck, everything is not really in your control. But what we tried to do was say, look, that strategy doesn't work. Let's do fewer deals, but let's put a lot of money behind those deals. Because if we think they are going to be successful, let's give them the best chance of success. If it fails, you know what? It's fine. But if we're successful, we'll be successful. We did that at the BDC. A company called ZymeWorks, which we led the crossover around and took public. We put 10 million US as a first check that had never been done in BDC's history until then. The IPO, we put another 10 million in and everyone said, wait, it's an IPO. You should be exiting. You're like, no, no, no. Biotech is different. IPO is where you invest and have the companies get up. So 20 million US in one company out of $135 million Canadian fund. It's a lot of money. Another company called Climantia, one of the partners that founded from scratch, really strong management team. But everything was chugging along, doing well. We had, I think, close to $20 million in that company when they went public, US again. And everything worked out. Company went public. Ipsum ended up buying them for 1.3 billion and we made effectively the entire fund and more with that.

33:06 Now those companies and a couple of others were also the first companies in 10 or 12 years in Canada to go public on the US stock exchange and not the Canadian stock exchange. So we were always driven towards, let's try to do something different. Let's not follow routine just because it's been done before. Let's change the status quo. Let's see what happens. Let's put more money into fewer companies. Let's really give them the best chance of success. Let's take them public. If it works out, it works out. If it doesn't, whatever. You're smart enough, we'll find another job. That's when it worked out. And so that allowed us to go and talk to our LPs, talk to our VCs, do all of that and actually raise fund one. What we also had was, again, timing. The BDC was looking to spin out a couple of funds, the healthcare fund and the IT fund. And they gave us a cornerstone check that was effectively 50% of our first close. Because they said, look, if you were internally, we'd have to give you double that. If you're external, we'll give you half of that, but you have to raise the rest of the money. So we'll give you a chance, go figure it out. So we did that. And again, we had the knowledge, we had the track record, we had the experience in order to get that done. And it's still in the process. So we've closed fund one.

34:25 In the process of raising fund two, we did a first close late last year. I haven't disclosed much about that, but now investing on a fund two, that'll be bigger than fund one. Congratulations. You know, marrying what you said before about not everything is a hell yes, and 80% is good for an investment, to investing in a few select companies at these massive massive eight figure checks is very scary, to be frank. And I wonder if your 80% is a hell yes for 90% of the people. I won't ask you to comment on that because it's a very loaded question. But what I will ask you to comment on is, is it harder to get access to great deals, or to recognize them when you see them? And what makes a great deal obvious? And how fast can you recognize one at this point? I mean, there are some great deals that are obvious. The problem is the valuation for that are going to be ridiculous. Right? And if your job is to make multiples of your dollars, that's going to be difficult by going after only great deals and paying at that valuation. So by default, I think this is maybe it's a mindset thing, but by default,

35:57 I know that there is a very high probability that the company I'm going to do will fail. And so when I make that investment, I have that in the back of my mind, but I try to think of what are the reasons it'll fail and try to backfill that. So for me, when I say diligence, I am nowhere close to being an expert in the science. So I, to some extent, will trust what the CSO, the scientific team, et cetera, tells me. And I'll verify it. So I'll trust, but verify, and then spend more time thinking about the potential downsides and how to account for the downsides. And so for me, when do I ever say, hell yes, I don't know why, but there are some technologies that I look at and I'm like, holy shit, that's cool. And so for me, I maybe that's my, I haven't really thought about this, but to me, maybe that's my criteria. If I look at some science and I say, holy shit, that's cool. And I want to spend time learning about it, that gets me excited. Whereas if I see a company and we see like a hundred companies, 200 companies involved, there are majority of those companies are just me too's or they say, look, somebody else did that. We can do that. Somebody else did that. We can do that. That's just not exciting. So when I see something that's really cool, that automatically gets me excited and makes me want to work on that.

37:12 And does it happen often? And if I think something is cool, there's definitely somebody else who thinks it's cool. And so then again, you're getting into this valuation game and all of that. So when you build a portfolio, you have to balance out sort of good companies, D-list companies, and some more risky companies. By default, when I say risky, D risky, it's more higher valuation, lower valuation in order to make sure that's successful. What I have done more recently is just started my own companies. I've been the CEO of one, I'm the pseudo CEO of another and working with an EIR for the third one all at the same time. Because I saw some science, I thought, holy shit, that's really cool. Let's try to start a company around that.

37:56 And then raise the capital, build the team and do that. So I did that once, handed it over to our full-time management team. Doing that for another company at the moment now. And then the third company in EIR, so an entrepreneur in residence came to us and said, I've got this idea. So that sounds interesting. Plus you've got the experience. Let's go figure it out. This is going to sound terrible as VC, but I am okay losing $500,000 a million in an early stage idea. Because if it's successful, it'll pay out a lot. And it'll allow me, because in the end we're money managers, I have to be able to put 20 million into a company to make 50 million. And so I'm okay losing 500K with the option to put 20 million if it's successful versus putting 20 million at a high valuation. Because biology is biology and the risk of biology is always going to be the same.

38:49 So let's just do that. And what's your deal flow like Parth? Are most of your deals through warm intros the ones you do invest in or is it cold outreach? How are you getting deal flow? I mean, I don't think I've ever done a deal that came out of a cold outreach. It's difficult. There's a lot of other things that play there when something comes in as a cold outreach that makes you question it. There's almost always warm outreaches, people that I know, people that I trust, academics that I trust, etc. That usually lets me do a deal or drives a deal. I'll ask a selfish question. Recently, I've come across a couple startups that I'm excited about, but they were born out of university accelerators. So the university itself collects royalties, 2% to 5% for 7 to 10 years in my case. How do you look at that? And is that a positive or a negative in your mind if a startup is born out of a university accelerator?

39:58 No, I mean, if the biology of the technology, whatever is good, I think that's fine. Royalties, 2% to 5%, 7%, okay, how you negotiate that is important, but that's pre-market. And I have no issues with that. For me, again, it boils down to what's the biology and how cool is it? Again, I say biology because we do more biotech, but how is the technology? And is that solving a problem? And is it differentiated from the others solving a problem? Because in the end, what you're paying for and what you're buying is that differentiation. And so is that differentiation truly worth it? And does the management team know how to solve that differentiation problem?

40:45 So where it comes from, it doesn't matter. Any legal contract can be renegotiated. And so if it needs to be, it can be. Again, then the relationships matter and that's something that we'll figure out over time. Okay. Let's talk about founder equity. I recently passed on a deal that looked great on paper. They had a good sales pipeline coming up, good contracts already. They were being valued at 10x their ARR, which is for a pre-seed. I think that's pretty good. But the founder and the CEO was brought on and only had 2% of equity and they were going to be diluted across further rounds because this is a seed at a 10 million valuation raise.

41:33 What is your first impression on that? And how much do you bank on founder or CEO equity? And how little is too low at a seed stage? I mean, it really depends. Let me flip that question around. To me, it doesn't matter how much equity you own in the beginning, because like you said, that will be diluted over time. For me, what's more important is how comfortable are you with the inevitable dilution that will occur? If you tell me I want to own 60% when this company sells, that's a non-starter for me because I assume that this company will need over 100 million in order to get to that stage, two, three rounds, multiple valuation bombs over time. You'll probably end up owning whatever the ownership is. It's hard to tell.

42:30 So I don't really care about what you own at the beginning. What I care more about is, are you willing to, are you accepting the dilution? One, more importantly, do you have protections that you have embedded in the term sheet that make sure that you have a veto on around the financing or something like that? As in you're so hell bent on that ownership that you will block anything in order to maintain that ownership. That's a non-starter. So that's how I'd answer that piece of the question. The CEO question, people need to get paid what they're worth. And if the CEO thinks she or he is only worth that 2% equity and they're still willing to do it, okay, that's fine. What will happen eventually is that CEO, if they are smart enough, will look at coms over time and will realize that they are underpaid and will ask to be made whole or equal.

43:32 And if they are good enough to be worth it, if the board thinks that the other investors think that they're worth it, it'll happen. They'll get that equity and they'll be happy. If the board or the management or whatever things they're not worth it, they will leave and a new CEO will be brought in and that new CEO will get whatever market comes up. So the market never lies. And in the end, compensation for management will always be similar to or closer to what the market can bear. And I say that because when I started one of my companies, we were hiring a head of R&D. And I looked at the market comp for Canada, for this person's role. And it was, I'm not going to say numbers, but it was a certain value.

44:16 And when I told this person that value, they effectively said, yeah, that's nowhere close to what I'm making right now. Because they were looking at the market comp in the US, which was double what I was offering. So I'm like, okay, do I take a hit of two, three months of my runway in order to pay this person? Or is this person worth it? Because they will get me the two, three months of runway because they're better and more efficient. I ended up paying this person the US market comp and it's been amazing decision ever since. So no way of saying the market comp is the market comp and if management will get that eventually. Okay. Let's go deeper on that. Oftentimes, and maybe it's not often, but at times you will see the people who started the company are not the people who will scale it. Initially, commitment to the idea is critical as you have to be scrappy, you have to figure things out.

45:11 But as you grow and there's a clearer vision, you want to bring in industry experts or people who have done it before. Or in some words, people say private equity people almost. When do you have that decision or that talk with the initial team that you might need to be replaced as the company grows? Do you have it at the first meeting when you meet them or do you have it later on? And just talk me through about that scenario. Yeah. I mean, management is usually smart enough to realize what they know and what they don't know. And when that transition happens, management will also tell you they can figure it out. But I think pretty quickly they realize that it's not going to happen or that they are not the best suited person for that. If it's the former, it tends to be a more friendly handover. If it's the latter, then it tends to be a bit more painful handover. But I think when we invest in people who are also backing these technologies, we tend to invest in people that have experience, that understand why, what, when, and therefore it's not been that painful of a discussion to have. And sometimes they bring it up themselves.

46:23 Like, look, my passion lies in early stage stuff. I have zero interest in doing commercialization. So I have it over to somebody else. I still have my equity. I still have my calm, blah, blah, blah. And I can go back to doing that. So it's come up rarely, but when it does, it's not tend to be a pretty painful experience. It happened once where we had to let a CEO go because they didn't get that message. But that company had a whole other host of issues. That's a whole other long story. Yeah. It's good to hear that it's happened rarely. The last recession saw the birth of multiple unicorns, Slack, Uber, WhatsApp, Square, Airbnb, Dropbox, Fitbit. How has your investment strategy changed given the quote unquote looming recession?

47:13 So we tended to, well, let's take it step back. Biotech, if you look at the Nasdaq stock index, it has been extremely volatile. And so there's a pretty bear market for biotech right now. There's been a bear market. There was a bull market for the last two years. There was also a bear market in the early 2020 during COVID when no one knew what was going to happen. What we did then was, and something we probably continue now, is back science for the sake of science and for the sake of making a difference in patients' life. And that science, that technology, it doesn't care about the recession. People are still getting sick. People are still getting hurt. People are still getting diseases. And the recession is not going to change that. I'm not talking about the financing and the insurance market. That's a whole other bull game. And they're always looking for new therapies. And our current war chest of therapies is good, but it's not great.

48:16 And so if you are continuing to, and what we believe in is if you're continuing to invest in companies that are advancing biotech, that will make a difference in patients' life. And I talked about that through either clinical trials or through preclinical studies, whatever it is, then those will continue to be successful in the long run, because pharma is always looking to buy them. Patients are always looking for them. And VCs have so much drive power that they're looking to invest in them. So that's still a continuation of our thesis. We look for biology and start from there. And recession or no recession, that doesn't really change our mindset in terms of what we look at. From a company level, it's a little different. In the past, we might have spent a bit more in order to get some data or hire somebody because speed was of the essence, whereas now cash is of the essence. So we try to give them that extra few months of runway in case something goes wrong, or in case they need additional data to prove that or raise an extra amount of financing.

49:13 So that's the mindset more than what we invest in. Okay. Let's go deeper into biotech. What in biotech are you most excited about? And then I have a few questions about timeline with that investment philosophy in mind, because inherently or intuitively, I'm finding that it may not fit the traditional venture return time scale. But let's initially talk about what you're more excited about and what are you most excited about in biotech? Yeah. Biotech, again, I'm biased. I'm in the sector, but biotech has had a renaissance in terms of discoveries over the last five to 10 years as technologies have improved and allowed us to really understand biology from a very granular perspective.

50:06 And I don't talk about technologies to understand biology, but also technologies to process biology, stuff like computational biology, AI, et cetera, et cetera. So what we're seeing now are better tools to go deeper and deeper into understanding what makes cell stick, process stick, protein stick, et cetera, but also to do it at a scale where you don't have me or another PhD or another scientist trying to say, oh, I'm trying to figure that out. You let AI go and figure it out and spit out what you think the pathway is. So that confluence has started to really come by. And for me, that is really exciting. The ability to go really, really granular into a cell specific level or even into a DNA specific, RNA specific. So what's happening in this disease with this RNA splicing as an example.

50:53 And then understanding that in terms of its disease causing capabilities, and then also processing that level of information from an AI perspective in order to say this gene is in order to say this gene is involved or these cells are involved in healthy versus non-healthy. And then using AI, using other capabilities to develop diagnostics in order to better select those patients in order to enhance their chance of success, precision medicine at an overall level. That's what gets me excited. I think, if you look at the history of biotech or history of biology and therapeutics, it was a whole body. Your leg is broken. Let's fix your leg. And there's miasmas that we can solve. Going to an organ specific, you have a heart disease, you have a lung disease, you have a kidney disease. Going to tissue, this part of your lung is affected. This part of your heart is affected. Going even deeper now to the cell level and saying your cells here are affected. So you have single cell genomics where you can say this subset of cells within the tissue, within the organ, within the body is affected and is driving the disease. And then going even deeper down that level. This DNA fragment is different from that and therefore driving that home. That gets me excited. When I was graduating undergrad, I guess when you were graduating undergrad as well, in 2008, translational medicine was all the rage.

52:24 So exactly what you're saying, how that translates to clinical practice. In clinical practice, there isn't much precision medicine from what I've seen in my clinical practice. The antibiotics we use are broad. We throw steroids at everything and everyone feels good in steroids and it's not targeted at all. What has happened in the past 15 years that that hasn't translated into clinical practice? And what do you think needs to happen differently over the next 20 years to have that precision medicine? Now it has happened a bit in cancer. Now with immunotherapy, it's happening a bit more, but it really hasn't panned out and we're still using the same penicillin and steroids that we used 50 years ago. So it boils down to, this is a broadly capitalist society.

53:20 And what gets paid is, what gets advanced is what gets paid, right? Effectively. And who's willing to buy something at the other end and who's willing to fund it in order to get it to a stage where you can buy it at the other end. Cancer, rare diseases, all of that. There are a lot of, it's more, what's the word, something like cancer. It's painful. It's really hard. And it's also got a lot of sort of attention towards it, right? Versus something like heart disease, kidney disease, all of that. I mean, you're a doctor and I can ask you so many questions about this because I'd love to learn, but the biggest killer of people is heart disease. It's not cancer, right? But the dollars going towards cancer is significantly higher than heart disease. And so what's effectively happened over the last five, six years, and we're starting to see that now is cancer, precision medicine approaches are abound. You can go after, if you have an MMR plus disease, you can get this therapy. And if you have MMR negative, you can get this. So it's really sort of driven by precision medicine. And that's primarily because of dollars going into that sector. Like VCs, pharma is buying cancer therapies at a much higher rate than cardio and some of these other indications. VCs are therefore saying, I need to make a return. So I'm going to fund cancer because it generates a higher return than cardio and the trials are shorter for cancer versus cardio, et cetera, et cetera. And so

54:54 there's more interest going towards that. My broader thesis and at least what I'm hoping for and what I'm trying to drive is at some point you can only do so much in cancer because you've got into that 80%, right? And how much more dollars do you want to spend to go from 80 to 100? Because how much are you solving? Do you really need a 10th line of therapy when four or five lines is enough? And at some point the patients themselves are saying enough, but I'm not. So I'm hoping that this precision approach that's now been tested and validated with oncology applies to some of the other indications like cardio and neurology and stuff like that. And that's what I'm trying to drive. I'm trying to say, if I start a company, can I look at a cardio based approach to infectious diseases? Can I look at a cardio based approach, a precision based approach to auto immune conditions, to neurology and to drive that forward? That's what I'm trying to do. Can we learn from that and apply it to somewhere else? Yeah, this is an interesting question and surprisingly I haven't thought much about it. So I'm going to think kind of on the fly here.

56:00 I think part of it is cancer is such a scary diagnosis and it usually is indolent for a long time where you don't have symptoms for a long time and then you have them and then you know you have cancer and then it's an urgency. There's a sense of urgency with cancer that there isn't with diabetes and high blood pressure, which are the drivers of heart disease 10, 20 down the line. The other answer I would give is the treatment for heart disease and diabetes quite a bit as diet and exercise, which people don't like to hear and there's not much money to be made in terms of this is this one novel diet we can develop through research and clinical trials. We know the Mediterranean diet is the best diet from a clinical perspective and exercise, go for walks, exercise. There's not much there in terms of from a capital perspective, but cancer, there is no diet and exercise that's been proven so far to be effective for cancer treatment and therefore rely on drugs. I think that sense of urgency, if you go through the marketing principles and again I might butcher this by Robert Kaldini, he wrote this book, Influence Persuasion. He's kind of the guru of marketing. He talks about scarcity, urgency, social proof, there's five of them, I'm forgetting the other two, but they apply to cancer, they don't apply

57:31 to heart disease. There is no sense of urgency. There aren't people suffering from diabetes and physically it's not the same way, you're not shaving your head. A lot of biases against diabetes affects the low SES population more significantly. I think that creates a bias towards who gets diabetes, who suffers from it, which is not fair and I see this in my patient population a lot, but from a purely evil capitalist perspective, they don't have good insurance, they're not going to pay hundreds of thousands of dollars for treatment, so why put money in there? It would be amazing to have therapies for heart disease, heart failure, hypertension, diabetes that are more targeted. The ones we have right now, they are dealing with the end results and most of them are, they're focusing on symptom management and preventing disease or progression, but they don't reverse the disease, almost none of them do because even the pathophysiology is so poorly understood that we don't know how and I think there's a gap here for precision medicine, but I don't know if just the principles of marketing allow for that gap to be filled without a shift in our mindset of what diabetes and heart disease is and how much it actually damages our society and ourselves.

58:57 Yeah, I think it boils down to incentives as well. The heyday for diabetes and cardio research was the, I'm probably going to say this wrong, but let's say the 80s and 90s when Lipitor and Metformin and all of these came out and when they first came out, they were priced quite high. I mean, I have no idea what Lipitor was and all of these other what's the class? The statins. There was a lot of money that went to them. They had a lot of benefit and the low hanging fruit of the disease was broadly treated with that and people just assumed that should be enough and now do we really want to do that? And I think that's the biggest problem. We really want to run a 10 year, five year, three year clinical trial where we think the outcome is going to work or not. It's difficult. The same issue with vaccines. The same issue with antibiotics. Whereas precision medicine, because by nature it's fewer patients, you can charge more per patient, but it's not going to be enough. It's not going to be enough. It's not going to be enough.

1:00:10 So precision medicine, because by nature it's fewer patients, you can charge more per patient and you have a good sense of if this is positive, I can sell this. I can raise money. I can do X, I can do Y. It's driven the market towards that. Now at some point, a majority of the small molecules and even some antibodies that came out in the 90s, the 2000s, the 2010s will go generic. And they should go generic. And I'm hoping that the wave that you saw in the 90s and early 2000s with the Avastans and the statins is what you will see with the precision cancer approaches and the precision other approaches that exist right now that are high priced. And then eventually the field will move towards changing other things. Now what we are seeing is we are starting to see some precision approaches in diabetes, some precision approaches in cardio. The problem is that I talk to doctors about this all the time.

1:01:06 Like, look, if I'm creating an antibody against PCSK9, which is now approved, who will you give it to? And every single doctor has said, I will only give it to X percent of my patients because statins work so well. And if statin one doesn't work, I'll give statin two. If statin two doesn't work, I'll give statin three. Or I'll give combos of statins and really try to drive that forward. And so for me, I have to deploy my capital and I have to return money for my investors. So why would I try to do a drug that's competing for such a low value of patients, such a low number of patients, but also I can't charge as much as I can in order to maximize what I can during the patent life.

1:01:49 So that's part of the miscued incentives that exist. There's a book by RA Capital founder, blanking on his name now, but it's called The Great American Drug Tool that talks a lot about what we as an industry need to do because we are working in innovation. What the market needs to understand in terms of the price that comes in for that innovation, in terms of the nine failures for the one success and what the government needs to understand in order to pay for that. So it's a way too complicated system that we can't really solve now. But I'm hoping that even if those problems don't get solved, the learnings tend to be more universal.

1:02:39 And those learnings apply to other indications that allows us to get better treatments for patients that actually make a difference. Because I'm sure you're telling me statins work in 60% of the patients, but 40% of the patients have no benefit from throwing a number out there. So how can we solve those 40% of the patients? How can we solve the 20% of the patients that don't work with current therapies? And I'm hoping that eventually we'll get to that stage. You know, like for better or worse, there's just been such a focus on diet and exercise for heart disease and diabetes that, and this is from both physicians and patients, that we're moving away because most patients, you know, they don't want to be on medications.

1:03:20 For cancer, there's just an acceptance that you have to have medication, radiation surgery. Because it's usually for a short period, right? Like apart from some leukemias and lymphomas, like you have medication for six months to a year, and then you're done, you're in remission, you get monitoring. Diabetes and heart disease isn't like that. If you're diagnosed at 30, you are on medication forever. So the goal is always to get off medication. And I don't know if that lines well with creating drugs, if the goal is to get off them. And maybe it does with a higher price. And if they are, if it's precision medicine, it's actually reversing the disease.

1:04:01 And I think we need to learn more about hypertension and how, like right now we have what we call the Virgo's triad, which is there are three things that lead to plaque formation. It's hypercoagulability, so genetic states like factor V, I'm losing every listener right now. Endothelial injury, which is turbulent blood flow from hypertension and stasis, or blood is not flowing well, which happens in irregular heartbeat or atrial fibrillation or heart failure because your ventricle expands as well. We don't know more than that. And that is not a molecular explanation, right? That's not a cellular explanation. That's just these three things can cause plaques, which can lead to heart attacks, which can lead to arrhythmias, heart failure, lots of different things.

1:04:51 In cancer, there's just a lot more research in understanding the genetic and the molecular pathway. And I know those are two different things, but I just, I don't see that from my perspective in cardiology and diabetes. And I would love for you to correct me. Where is the molecular research in that? And will we move to a better understanding of why these diseases happen so we can reverse them with precision medicine? Maybe PSK9 inhibitors is a good example. Primary hyperlipidemia or primary elevated cholesterol, we don't treat anymore unless the exception would be your triglycerides are 10, which is very high, and you risk a pancreatitis, but that's a separate conversation.

1:05:33 I'm going to stop because I'm just going to lose everyone the deeper I go into the science of this. But give me your understanding, and I'd love for you to challenge me. Is it more research being done or is it being done and I just don't know about it in the path of physiology behind them? Yeah, I mean, cardiology, PCSK9 is a good example. There's a number of, was it, I'm going to butcher it. I think it's ETFR or EGF, no, not EGF. There was, so PCSK9 and another genetic component to cardiac disease was studied at the same time. PCSK9 won, this one didn't really work out and then failed. And this was about 10 years ago. Obesity, there's a lot of work going into obesity. But I mean, I think you know this better than me, obesity is not one disease, it's multiple disease.

1:06:24 It's symptom is common, but the path of physiology is different. And you probably, I'm sure, gotten a lot of requests from people asking for that anti-obesity drug on label as well as off label. So there is some work going into that. And then diabetes as well. I think, you know, you can't give one medicine and fix diabetes. I think diabetes tends to be a little bit more complex, but it's also more approachable. So we have looked at a number of companies that are creating 3D organoids for diabetes or 3D pancreas as a 3DX and 3DY in order to produce insulin and do that.

1:07:05 So there is some work going there. I think the issue and the reason, you know, if someone comes to me and says, you know, I'm starting a, I'm starting, I've identified this genetic mutation for cardiology. Give me money. My first question is, what's the clinical trial plan? And if you tell me my clinical trial is five years and it needs 10,000 patients, I'm trying to calculate, okay, so that's a $50 million trial. So do I really want to deploy my money for five years where the outcome could be a yes or no? Whereas in cancer, I know because in a phase one trial, I will get some semblance of tissue cancer reduction.

1:07:50 Patients will start feeling better, blah, blah, blah. So I can see positive outcomes immediately. And therefore I can raise additional capital on that. I can sell it to somebody. I can do that. So if you were to take a complete step back, one of the biggest criticisms about public companies and going public is that you're very hell bent upon your quarterly reports and making sure you hit that. Diseases have started to have a similar outcome as well. What is the fastest way I can get a data point that I can then go out and raise additional capital, additional, you know, a transaction around? Because that's the currency for the VC. It's currency for pharma. And the patient is a part of that process, but it's not a core component of the process.

1:08:35 Now in cardiology, if someone has to come and tell me, look, I have discovered this gene. I know that if I modulate that gene, I will have this endpoint. I can study this endpoint. And I know that, you know, the FDA tells me that this endpoint is sufficient to get the phase two whole, the whole process. That gets me excited because I know that there's a short term outcome for my dollars, but I'm willing to lose it all. But I don't want to wait for five years to know if I've lost it or kept it. I want to wait a year in order to see that. And there's a couple of companies. So there's World Therapeutics in Boston. There's a couple of other gene therapy companies looking at cardiology and sort of precision cardiology in order to figure out whether it works or not.

1:09:18 We have a portfolio company that's looking at long QT syndrome and sort of the driver, the genetic drivers behind that in order to see if you can modulate that and get an outcome one way or the other. So there is that still there is a lot of work going into that, but it's not in the umbrella of cardiology or umbrella of diabetes. It's in small subsets because the best way to what is that phrase? The best way to eat a pie is to cut into small pieces. And that's what we're trying to do. That goes back to what I said, the precision approach. You're trying to get smaller fragments and solve for that versus getting the bigger picture. Yeah, I think long QT syndrome is something that is worth fixing. There's a lot of medications we use, anti-nausea medications, mental health medications, methanol that prolong it more.

1:10:05 And it's a problem. So I think something to fix that would be a great part. I mean, that conversation is exactly what we have with academics. Look, before we made the investment, we talked to 10 cardiologists, 20 cardiologists, like, tell me about your process. How are you treating these patients? Right. So that goes back to about when we started on what we see. How do you do diligence? If you were to do 100 percent of your work, you would talk to a thousand cardiologists or a hundred cardiologists. Stupid. You talk to 10. At some point, the answer is repetitive. But for me, it was, OK, how do you understand the pathway for patient treatment? So what's the diagnosis process? How many are diagnosed? How many failures? What's the treatment?

1:10:48 So if you had told me, listen, I think you said methadone, but I could be wrong. They said methadone works in 95 percent of the patients and we never have a problem with that. I'm like, OK, so 5 percent of the patients, is it worth me investing 100 million or raising 100 million or others to solve that problem? Unlikely. It solves for 30 percent of the patients. And, OK, you can figure out what's the right fragment. How do you price that and how do you. No, I so methadone makes it longer, makes it worse. The only treatment we have is magnesium and it's temporary. But let's go back to investing before everyone leaves. Tailwinds drive a considerable amount of success. Do you agree or disagree with that? And what early tailwinds are you banking on right now?

1:11:32 And another way to answer this question is what emerging markets do you think are growing that are good to invest in startups in right now? Emerging markets in the market definition or emerging markets in the science and the science definition and also what tailwinds. So a couple of tailwinds like COVID would be a tailwind. Obviously, it's impossible to predict that. But what are some you're predicting or work from home would be possible to predicting right now or education moving away from knowledge base to application based? So. One of the one of the tailwinds, I don't know if it's a real one, I'll just talk about how I think about this.

1:12:17 One of the things that I saw a couple of years ago was that everyone's talking about AI and everyone's talking about figuring out what cats look like. Sure, that's important, but. Could you use it in other areas? There were a lot of not the first person I think about this. There was a lot of AI interest in biology. But for me, the question was, OK, how important is AI in biology and how important how important will it continue to be before it becomes a commodity? So there's a small window where new technology is really new technology before it becomes a commodity. How long is that space and how do you invest in that as quickly as possible in order to come to that table?

1:12:58 And so I led our team's investment in deep genomics out of Toronto. I led our team's investment in a company called Celsius out of out of Boston. And both of them are, you know. Biology companies that use AI to process data and do X, right, in the case of deep genomics, it's identify steric blocking oligos against rare diseases and Celsius's case, it's looking at single cell genomics in order to understand how one set of patients reacts to therapy or does not react to therapy versus other in order to find that genetic component to disease and vice versa. I continue to think that that would become that that will that will that will stay an AI enabled biology will become a core component of biology.

1:13:49 But I think we're already getting into the point where it's starting to become commoditized. Every company will use some form of AI or the other in order to drive that forward. That's one that we still we still got that window before it started to become commoditized. So that's something that we're looking at in great detail and going into more and more subsets. The other one that I think will become really cool and we talked about a little bit is, you know, there is you there is nothing new in the world. There is only stuff that can be discovered and used in a different area. And that could be new by definition, but if you look at it, it probably has a history of how it is developed and how it is how to identify.

1:14:30 And so for me, that applies to oncology and neurology, like we talked about. I think that we will be moving towards more precision based approaches in neurology. So we won't treat autism, which is an umbrella term, but we might treat some aspects of autism, some genetic drivers of autism in order to get to that, get to better treatment. And the best example of that is cystic fibrosis, huge gene, multiple mutations, vertex started off with five percent of the patients and now covers about 95 percent of the patients. So I think that's going to apply for neurology and going to apply for other other areas as well. The other one that I think could be really interesting, and I don't think we've even scratched the surface of that, is we talk a lot about genetic drivers of disease.

1:15:15 And every single gene therapy at the moment is saying, I will go and change that one gene and it'll solve all problems. It's never going to work. So how can you develop combination gene therapies in order to drive that forward? To say to almost get to the C word, the cure word, right, there's still probably 15, 20 years out from there. But there are starting you're starting to see a lot of these trends towards CRISPR based approaches or gene editing based approaches that are starting to move in that direction. But we still know in these days. So again, it goes back to we're in that phase where it's new technology and it's exciting. And let's see if we can maximize that before it becomes a commodity. You know, it sounds like you're exciting, you're banking on the product or the technology itself and the market is almost secondary.

1:16:02 And I might not be reading this right. In venture, the timeline is generally five to ten years. Is that your timeline as well in terms of returning capital? And how do you balance that with biotech, which the timeline might be 15 to 20 years at times? Yeah, so the good thing and the bad thing for therapeutics is the market exists. There are patients with that disease, you're not having to create a market of sorts. And so, I mean, it's still a core component of our diligence. Are we solving a disease that affects 10 people in the world, a thousand people or a hundred thousand people? That's a core component of our diligence. But the market exists.

1:16:43 And so for us, it's a question of what is the proportion of market that is best suited for the technology and how do you solve that first before you can expand? So that's how I think of it. So it's not about the market doesn't exist. I don't care about it. Let me look at a technology, but let me look at this technology. How is it differentiated from the other technologies out there? And how is it truly solving the problem for X number of patients that have this disease? And then as a company expands or gets acquired or whatever happens, how do you scale that up? We've been in a bull market for the last four or five years, whether for good or bad. But a lot of companies have gone public with preclinical data or even earlier data.

1:17:28 And there's going to be a culling of that over the next couple of years, for sure. But going back to timelines, we have the same, say, five years of investment, 10 years of 10 years to return the capital. So we tend to drive our companies to go public once the data is appropriate, when appropriate, when the market is ready for it. Because our job as money managers is to enable these companies to grow up and become self-sustaining in some capacity or the other. And that could be in either their biology works and it's got some validation, they've got capital and they've got a management team. And if you can solve those three problems and the company can go public, then they will need to raise additional capital from the markets.

1:18:14 But they have the capacity to do that. And there are other investors that go and invest in that sector and we can hand it over to them and we can go back to what we enjoy doing, which is starting companies and investing them and getting them to the stage where they're ready. It often works out in the seven to 10 year time frame. That's what I hope it does for the past, it will continue to do for us. And so that's the place we play in. And I think the market is big enough that there are people in every sector and play in different areas that will continue to allow these companies to scale up and get products to patients. Yeah, again, this is another differentiator you have where most investors would want an acquisition and not to go public and deal with banks.

1:18:57 How is that because you have just perfected a process of going public by not more M&A activity, which is what most investors from my knowledge go towards? Yeah, I mean, so it's not like we will say no to an M&A, right? The price has to be right. I think what we've seen and what we saw with the BDC fund and the current fund is if you are building a company to get it sold, then you are a hell bent on somebody else buying that company. So it's almost like you're putting the responsibility on someone else. And if that person or those people don't buy it, then what?

1:19:40 You're screwed. Whereas if you can build a company to, I mean, it's like a kid, right, if you raise your kid to be a doctor only, and if they're not a doctor, what happens then? Right. Are you disappointed? Are you disowning them? What happens? Right. It's not going to happen. So you build resilience in the company when you build optionality and you say, look, we will enable you to get to a stage where you can go public. After that, you're on your own. If you choose to buy another company, go for it. If you choose to sell, go for it. If you choose to do X, go for it. It's really up to you. And what we have seen is that creating that optionality where the company can say, listen, M&A buyer, your offer is not good enough.

1:20:25 So I'm going to go public tends to drive up the price because M&A buyers will say, yeah, you know what, actually, fine, I can pay more because you have optionality. And so that's how we think about it. Now, that also was a thinking when the markets were hot and any company could go public. That's obviously changed now. But I think the code is if you can build good technology, good management and good data, good things will happen. That's a very interesting take, but it makes complete sense. I'll ask you one last question. Ikigai is this Japanese concept of purpose for being. It's the intersection of what you love to do, what you're good at and what the world will pay you for.

1:21:09 Have you found your Ikigai and what is the end goal for you personally, Bharat? That's way too philosophical a question. For me, it's, you know, well, since it's your last question, I'll loop it back to your first question. You said what drives you as a kid and what allows you to stay, be who you are and what have you pushed out? And I told you then curiosity was what I had as a kid and what I think continues to drive me. And that still that answer now. But for me, I won't say it's a love for learning because that's just too cheesy, but it's more a sense of I want to know how things work.

1:21:50 I want to understand how, what, when, where, why. And so for me, what I enjoy doing is talking to smarter people, way more smarter people than I, and wondering what they're doing, why they're doing it and why they've dedicated so much of their life to do just that one thing and that one thing. And just by talking to them for me is exciting and energizing. And the positive outcome of that, because of the sector that I've chosen, is it benefits patients because you're developing new therapies. And so that's one positive. And then the other positive is the best way to do it. I don't have the 200 million dollars to go do it by myself. I need to raise it from other people.

1:22:31 And so if I enable them to deploy that capital and generate a return for them, then that makes them happy because they have pensioners and all of that. They're paying that money out. So there's sort of that multitude of effects that come that I think can only be that for me personally can be done because I'm curious and I like learning about new stuff. And as long as I can keep doing that, I'll do it. Talking to smarter people is what I'm trying to do with this podcast. And I'm very lucky to have people like yourself join me. So thank you so much, Bharath, for coming on. And you and I went to autograph together. You know that there were way smarter people than I, than you and I.

1:23:14 But you have I think smartness and intellect and intelligence is hard to define. But I would define it both by inherent talent and how you apply it. The application of that talent is more important than that talent. So by that metric, I would qualify you as very smart, Bharath. Right time, right place. Market has been good. Well, thanks so much for coming on, man. We'll have to do it with you sometime. Thanks, Rishabh.