Gerry Brunk, Managing Director Lumira Capital #smartmoneysv

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I interviewed Gerry Brunk, Managing Director Lumira Capital @NVCA Venturescape. Despite the fact that Gerry was losing his voice we had a very interesting conversation.  Lumira Capital is a Health Care Life Science dedicated venture firm founded in the late 1980s started in Canada. Gerry opened up the office in Boston in 2002.  They invest across the board in Life Science companies primarily developing bio-therapeutics or therapeutic medical devices.  They also invest in diagnostics & occasionally health care IP companies.  He has been on the business side of the pharmaceutical industry all of his career. He started out in investment banking doing health care investment banking. He was drawn to the startup world to the translation of innovation to the market place fundamentally which is easier to see @small companies often than at larger companies. That continues to be something very rewarding about the venture business especially where the fruits of their companies labours are a cure for cancer for example.  He spoke about the startup ecosystem in Boston.  There is no lack of innovation & no lack of startups but there is less capital to go around to fund the startups both coming from the NIH which has been a traditional source of support for early stage companies in their industry.  But also among the venture industry as well.  The statistics are very sobering across the US. Several years ago there might have been 25 to 35 new Health Care Venture Funds formed every year to invest in new companies.  For the past 4 or 5 years that number has been 8 or 9 (so 50% to 70% less capital to move innovation forward).  That means a lot less focus from their firm & their peers on earlier stage companies. They have found a great deal of success outside the markets of Boston & San Francisco – the South East, the Mid West, the Great Lakes & the Pacific North West. He spoke about the changes in the venture industry.  They are very optimistic about the future, not just in terms of innovation but also in investor returns as well. Although its difficult in the short term when there is a consolidation & a right sizing, its probably for the best for the industry in the long term.  It’s not easy to go through these types of transitions that any industry goes through. They have to adapt their business models as venture investors the way that any startup has to adapt to a changing environment. Some of that is going back to some of the premises of the early days of venture capital focusing on companies that were incredibly capital efficient, able to do what they need to do on fewer dollars not an abundance of dollars. When there was a lot of capital companies would get over funded & returns suffered for that. Theres a higher hurdle for the definition of innovation for example an innovative new therapy today maybe one that provides no better efficacy as a drug therapy than something that is on the market now but if it delivers that efficacy at a 1/10 of the cost that’s highly innovative. But its a different definition & maybe its not as sexy an innovation as the next big cure or the next big quantum jump in clinical outcomes but that innovation is shifting more towards cost or equally towards cost as opposed to just outcomes with no respect for cost. Health care systems globally are running out of money so we have to be responsive to that when we invest & allocate the dollars that we invest. Its taken them in some new directions & honing in on some of the biggest cost drivers in health care.