Insights from Biotech Investor and Pioneer Ron Shigeta
Ron Shigeta is a serial entrepreneur & startup biotech pioneer. He’s also been a serial founder having run startups in AI drug tox detection & synthetic biology. Ron holds a PhD in Chemistry from Princeton University, where he spent his academic research career focusing on secondary metabolic biosynthesis, diabetes, genomics, genetics, structural biology and systems biology.
As an entrepreneur, investor, scientist, and mentor Ron shares some great insights to anyone who wants to contribute to life sciences.
- Starting a biotech company today is much easier and cheaper than at any other time
- Advice to founders to gain relevancy and trust from investors and get funding
- Biotech investments now are where software was 2+ decades ago
- The Bio Revolution by McKinsey Global Institute
Robert Fenton: [00:00:22] Ron Shigeta is a serial entrepreneur and startup biotech pioneer. He's also been a serial founder having run startups in AI drug tox detection and synthetic biology. Ron holds a PhD in chemistry from Princeton university, where he spent his academic research career focusing on secondary metabolic biosynthesis, diabetes, genomics, genetics, structural biology, and systems biology.
Outside of work, Ron spends his time at Laney College establishing the world's first community college program dedicated to synthetic biology. Ron also serves on the advisory board for the center for food, innovation and entrepreneurship at the business school at Santa Clara University. As an entrepreneur investor, scientists and mentor Ron shares some great insights to anyone who wants to contribute to life sciences.
And I'm incredibly excited to have the opportunity to chat with him today.
Welcome to the show, Ron, incredibly excited to have some time with you today and ask you some questions and learn a bit about your, journey, which is definitely an interesting one.
And I think you're at a very exciting space at, a very exciting time. So thanks for joining us today.
Ron Shigeta: [00:01:27] Thank you. Thank you, indeed. It is. It really is.
Robert Fenton: [00:01:31] I'd love to kick off briefly with, if you could give us a really short introduction of, your work you're doing with ALIX.
Ron Shigeta: [00:01:38] I'm an investor. ALIX is just a seed fund. It's a small fund and we're here to help, some really promising biotech companies start to make those, make their dream a reality. we are working within biotech platforms. so we prefer really deep biotech.
We've invested in DNA writing. We've invested in promoter control of genes and libraries. We've got an organoid company that's really hot right now that's trying to do deep clinical like therapeutic research and discovery. We really want to get a handle on the technologies that are gonna make the next 10 years different for pharma than it has for the previous 10 or hundred. You might say
Robert Fenton: [00:02:21] I was just going to say a previous a hundred. I think as aspirin was on the market a long time before the semiconductor revolution. And I said, move forward as pure tech has
Ron Shigeta: [00:02:31] That was like the only drug for quite a while.
And that was a different time for sure.
Robert Fenton: [00:02:35] Maybe an unfair example to use because of that. And maybe before we dig into the trends what's happening right now, which is a definite hobby horse of mine in an area I love to talk to people about, I'd love to go back a bit and know what were your influences, what or, who influenced you and made you want to take this path.
Ron Shigeta: [00:02:52] I have to, I'm going to start in a very sort of typical place. I have a PhD in structural biology and protein structure, and I love deep science and I got a great job coming out in a startup coming out of my PhD experience. And I just, it just kept getting nicer and nicer. And I stayed there for 12 years and I was running a team doing bioinformatics and genome analysis, all this great stuff.
But at some point I just realized, this is not what I want to do the rest of my life. And I could not see what I was going to do next. And I think a lot of people getting their PhDs now feel that way, much younger than I did. And so this being San Francisco, I just decided I'm just going to do something.
And I just started networking. There's lots of networking events here, and I ended up opening a biotech innovation space called Berkeley Biolabs as a garage. You could come in for a hundred bucks a month and have a biotech bench, and that quickly turned into getting hired by SOSV, which is a venture capital fund and going to build indieBio, which is the world's first biotech accelerator.
I built, I was a scientific member of the staff. So I built the lab and the companies came in. We funded them when they had three months to get some good scientific ammunition for demo day. And so I did that for a few years and then I, did a startup and now I'm working with ALIX. But, and I do advise several investors.
I met so many investors once in indieBio, and help a lot of funds get started. So it was a great place to, it was a great place to start to create a new career. And it happened just like this, like that.
Robert Fenton: [00:04:33] Looking at your background, it looks like a straight line as often it can do from the outside. But the reality when you're driving is you don't exactly have the map, figure it out. And indieBio is fascinating. And I could spend a bit of time on that if you don't mind, because you know that Sean O'Sullivan is from Cork, Ireland, and I'm also from Cork, Ireland. So I got to fly the flag and represent there, but that was the first I at Berkeley Biolabs. I was aware of that really before indieBio kicked off.
Ron Shigeta: [00:05:00] Wow. Yeah. Yeah.
Robert Fenton: [00:05:02] But the SOSV thing. And indieBio in particular was the first time I noticed, and I could be so wrong here. You can correct me. I decided not to research before this, so I could be a novice on air with you here. That was the first time I saw, startup accelerator model, getting applied in a space which felt like the only companies that could win are like back in the day you had SAP, IBM and Oracle and a few companies like that. And there was impossible to get to market without being as big vertically integrated stack. Now, across bio like funding companies as swollen with capital and making progress, I felt like new science, I think even five years ago.
Ron Shigeta: [00:05:41] It was really, act to say I'm really proud of indieBio and I'm proud. I am like totally grateful to Sean O'Sullivan because he let us do it. Being the first person on the dance floor is the hardest thing in the world. I think biology had been there for a couple of years. But we got in there and the lab was not, reasonable for the fund to build.
And, biotech is simply gotten cheaper over the past 20 years. If you think about it, the typical PhD thesis you're looking at scores of genomes in a typical data write up of the thesis. 20 years ago there was one genome in the entire world. And so there has been, it's been really interesting that nobody was aware of the cost drop of actually building a biotech and now 50 to $70,000 will get a biotech off the ground. A lot of founders can pull that money and start doing work, get some crummy data and they're on the road. But indieBio helps people get started basically from zero. Yeah, that was, it was different. And it's really caught on. I'm really excited about it.
Robert Fenton: [00:06:48] Even five years ago. Looking back, it looks like, obviously this was a good bet, right? Even what you were doing at Berkeley, all this looking back, but yet obviously this was the tipping point was starting to happen back then. was this,
Ron Shigeta: [00:07:00] it was totally, you know what, Sean's SOSV is in a position to let try do experiments and let things fail.
There are few funds will do that. And, that was, that's the main reason that they are where they are. I think there are other biotech celebrators going on, but there's just a handful in the entire world, still. Building the infrastructure up front with the money from a venture fund before you make an investment is something a lot of people are prepared to do.
I think that structure will change. That will become more common in the future, but it's still not very common.
Robert Fenton: [00:07:33] We have public biotech companies, pre-market still like we're working with them as customers. We love to support them. We've noticed this incredibly interesting is we live by biotech company, different products and slightly for therapeutic areas, but like categorized as a biotech company, public market cap , 50-100 people and we'll work with, like a indieBio style like maybe a more, I won't necessarily say more modern, but like a new wave biotech companies. Like we've a couple of million dollars and I'm like, wow, this is, this is a really interesting.
Ron Shigeta: [00:08:05] Like the mix, like just, if you can do geographically in the Bay area, that's, probably the more pronounced, but like how many small companies versus do you have percentage wise in the Bay area?
Robert Fenton: [00:08:18] Oh, we, definitely skew towards we, we call this and, like the emergent ecosystem and we have a really strong thesis as a business, which goes back to why did we start this company? And I won't go too much in depth because your story's more interesting here, is that there's a, you think like once upon a time you had Oracle SAP, IBM. And that was like what I took and. And there's a democratization of the technology and go to market. And now look at all the public, like everything now is a multi-billion dollar business and it's, that's how technologies work. I think we're at a tipping point. That's when it can hit faster and as pure software industry tipped over and it's happening this decade.
Is going to completely change how this world looks like. That's what I love. I love the companies that are at that point because
Ron Shigeta: [00:09:08] Right. And it's really super great that you structured the company to handle this stuff from the get go. It's hard to switch into that market once you've started with the big players.
And I, I, commend that. And I think a lot of companies are doing software as a service for biotech should really understand that. I actually, when the advisory board for Laney College and they are creating the first synthetic biology program for, for community college, so innovating on the educational space too.
I think 38% of the graduates go to companies under 10 people. Yeah, they're putting out all these tech level trainees. It's a great program. But like it's, increasing how many, these small company they're going to be dominant very shortly, I think in terms of hiring.
Robert Fenton: [00:09:55] And it comes down to the speed these companies can move that being reversed constrained have to find novel ways. I guess I wasn't around when servers went from $10 million to purchase to free. Imagine those people who can like, look at both of those would go, wow, this is so similar. It's amazing right now. So like that's why we love what we're doing.
Ron Shigeta: [00:10:16] I don't know if you've seen it, but actually even McKinsey published a report that said the 21st century is going to be dominated by a biotech economy.
I'll send you that link and maybe you can put it up, but said that public like that it is so bloody obvious. You're a smart guy for a quality is pretty smart for sending up the way it is because you are getting ready to ride the wave and that's the kind of investment I like.
Robert Fenton: [00:10:41] We hope so and it's fun right now. And we look at all the other things we see, and I want to get your thoughts on the trends that you look at. And I see things like YC Bio. I believe it's public nowadays say that's their biggest bet is they're not the next Dropbox or Stripe it's the bio bet they think is going to be their next big.
Andreesen who very famously said, software is eating the world. And I love this phrase because they, have, they just say trademarks, everything they say becomes like a phrase for the tech industry. But they said software's eating the world. It had been doing that for a while. And the set in January to launch bio fund three it's $750 million fund.
And the phrase that's always stuck with me is his bio is not the next new thing. Bio is becoming everything. And you couldn't miss that.
And people who are repeatedly smart and successful in firms and if you look at the signals now, it's, I think it's, starting, it's not quite obvious yet, but if we meet again and have another chat like this in three years time, there'll be yeah, of course.
Yeah. How could you not it was always there, it's like looking at your background, it looks like a straight line towards where we are right now, but you never really know. Just like
Ron Shigeta: [00:11:47] Just like stocks. And I remember seeing the first, surf web browsers. Dating myself. But I remember seeing the first web browser and going huh? That sounds interesting. But you just, it just couldn't, we couldn't tell how you can say it's going to be ubiquitous, but you don't feel it in your gut. When you, feel it, the reality is emotional and that emotional transition is the hardest thing to do if you're trying to be visionary. Like you can understand it, but the rational doesn't create action.
Actually, I know a good friend, a good phrase that popped in my mind, this software is getting full.
The ROI of most of the companies actually flattening out now, and that's why the funds are moving over. There are a few extremely powerful investments to make in software still, but the number of them are smaller. And so in order to, the statistical average of return on investment for the funds mean that they're going to move to biology.
They all have Khosla. We have worked with Khosla, we have worked with Innovation Endeavors. We work with, we worked with, YC, all of these, funds are moving to bio. And interest it's interesting to see how they feel about it. I think the one thing that they've done is they've been, it's hard to retool in midstream and, Paul Graham started YC based on the idea that the Y Combinator is this exotic piece of exotic piece and upon of computer science about the accelerator. And he just, he only wanted people who understood that to come in, but it's hard to understand biotech that same way and create an accelerated the same way. And, I think the YC is still in transition there in terms of really understanding the culture they're trying to invest into.
Yeah. A lot of us are. even me. There's a lot of things I'm still learning, it's, a big change.
Robert Fenton: [00:13:34] So we covered several really big trends. What else do you see is there anything that you're seeing now that's a trend that people should be paying attention to. And again, like one of the things we were trying to do with this podcast in particular is healthcare feels impenetrable. Like how do you understand it. It's hard to conceptualize, but I think there's a lot of things happening that everybody can see. And hopefully as people look at, I can use something in this space. What was happening, you were seeing.
Ron Shigeta: [00:14:01] I want to say, I think there's a topic that we're probably not going to talk too much about, half of my time is associated with the fact that biotech is democratizing into every other field. Just like computers. Biotech is now starting to get his fingers in and increasing and improving the products in almost every, manufacturer good. Yeah, including, in some cases, things like metal and mining, we have a company that we had a company that had a microbiome that would actually suck the extra atoms of metal out of the, slag and return it back to the mine.
And so you just, we just don't know where the limits are there. But within biotech for healthcare, I think that there is the same impact is happening. Healthcare, you go back actually, what you said about aspirin really still is still striking, right? There were no drugs in the early 1950s.
Penicillin had just showed up and like the three drugs out there would improve the lifespan by several years. Or the average lifespan, and now we have thousands of drugs. But we don't have control. We can't see disease. We cannot treat most disease. There are too many genetic factors. In some cases it's not a disease we're just fighting our own biology. And the goals have become loftier life extension, neuro-regeneration, organ growth. All of these things are completely different ways of thinking about medicine and we talk about them, but, it's, a completely different world for a doctor after these technologies become available.
And, I think, and so, there's a lot of exciting investments out there. I think what we have to focus on is that technology enables medicine, but the treatments are still really expensive. And so what do we do? How can we change the regulatory system? How can we change the way that we treat medicine as a technology to try more things, because there, these are, these fields are unprecedented and they really can't be treated the same way a small molecule could be. So I think, that will be interesting to watch and it may not happen in the United States.
Robert Fenton: [00:16:15] Yeah, that's a great point. There's one book. I recommend people always. We talk about this because everyone's always excited about going to Mars, deepest trenches in the oceans. The amount, the we understand so little about our own bodies. That it's actually amazing. We're not, we don't, I should spend more time as, it, as a species kind of digging in. I always recommend a really accessible book. It's by Bill Bryson that's called The Body: a Guide for Occupants. I'd recommend anybody to read it as accessible by anybody.
And every chapter almost ends with the statement of, and we've no idea why that happens. This seems to work great. We don't know why it happens. And after a certain after you get hit in the face of that, so many times you go, wow, we do, we have opportunities here. And I always think that's a really great intro.
How are we applying all this at ALIX? So you've only on learnings now.
Ron Shigeta: [00:17:06] We are, learning a lot. I think what we're doing is actually ALIX is an unusual fund and I love working with Chas, the GP, because I think he's really got the vision of what's happening in venture capital. So other things happening in venture capitalists. There is a lot of money now.
There isn't any there aren't just and a lot of people see venture capital and they're starting to participate. The 10 years ago, 20 years ago, there were a handful of funds down in Palo Alto. Now I haven't found an accurate count of the number of funds that are global, but I think it's well over 1,500 funds.
Robert Fenton: [00:17:41] Oh, wow. Yeah.
Ron Shigeta: [00:17:42] There's a lot of them under $25 million. But, but the problem for a startup now is not getting access to an investor. The problem for a startup is convincing investors that you are going to return. And that is still very rare. And when a really good investment comes along, everybody jumps on it.
What's really great about ALIX is that we are building networks of, that are going to help people find the right investment find, the right help. And the real, the information that they need. The experience, the average level experience of these startups is also lower.
And so we have to deal with that. We have to make sure that people are are prepared to deal with a partner that they're prepared to talk to somebody about helping with the clinical. And people are just a couple of years out of their PhD or even young fac, or even faculty members the first time.
They've never, you don't get that being a professor. And so there's, huge gaps still to cover it. And I think that the social network will do that.
Robert Fenton: [00:18:52] I think it's, it sounds like a great solution.
with all the experience for people who are listening, what's one thing you think, as an industry or an ecosystem we should start doing to help the progress.
Ron Shigeta: [00:19:02] Let me ask you, Robert. Who, has helped, who is trying to help here cause there's somebody from parties, right? Yeah.
Robert Fenton: [00:19:08] Yeah. that's fair. I guess where I spend my time is it's the people that you mentioned. And the example we always use is phenomenal engineers or biochemists. They figured something out or they believe X and Y will equal this up, but how do they get that?
Ron Shigeta: [00:19:28] Yeah, you actually get it going. I think, one of the things I was talking with, the guy, a friend of mine, who's a, who did clinical diligence for one of the big companies. And he would sit on this committee, he saw 200 potential partners go by in a couple of years. And I think the biggest challenge facing any startup that I've ever worked with is they don't know who else is out there and they don't know what they're saying.
You think your pitch is pretty good, but you didn't see the other 250 pitches this quarter a bit that the VC saw. You didn't know how common your idea is. And the same is true when you go and talk to a clinical partner. Until you have some insight dope. You don't know what they're looking for. You don't know what they really think.
And I'm just going to let everybody in the audience in on a clue. Academia is not a good place to get that. And I you, I went through that. I think you went through that, nobody ever said, this is what the, this is the clinical process of nobody ever tells you, have to go there.
Well fortunately, there are a lot of people who are interested in talking about it. So the podcast is great, a place for that to happen. And so we're, ALIX's sort of community built in communities that we're doing. So I think it's a matter of getting out there, realize that you have a deficit of experience. And there are resources starting to come about now where you can pick that up, but do not assume that you're, that you are too hot to trot.
Like it's not a good attitude because that the process for pharma is just so expensive, so complicated. Anybody that thinks that they can handle it just from where they are. No one's going to, I would never fund you if you. That I know you're smart, but that's not the point.
Robert Fenton: [00:21:07] Yeah. That's a good answer to the next question which is what should people stop doing. And I think people should stop overestimating the impact they have when they walk in front of people like that. Yeah. It's, tough
Ron Shigeta: [00:21:18] You may even have a PhD from MIT and you will get a lot of attention for it. But being, honestly smart is, not just where you've been and what you what you know.
Robert Fenton: [00:21:28] I get that. Ron, you've been really awesome today. Just before we close off, I want to ask, is there any information that, for people listening to this, you want to get in touch with ALIX or you or anything you want to make sure that we share. We can edit to the show notes at the end.
Ron Shigeta: [00:21:42] I'm on LinkedIn and I love people to connect and I, love, that's a great place to get ahold of me.
I think you have my profile. I'd love to talk to talk to you if you think you have a great idea and you just want to get some advice, happy to help.
Robert Fenton: [00:21:55] I'm sure people would love to chat with you as well. I've really enjoyed this, Ron. You've been really awesome. Thank you very much for joining. I appreciate it.
Ron Shigeta: [00:22:00]Thanks Robert. Pleasure to be here.