A VC who's backed some of biotech's billion-dollar-plus startups explains why he sees disagreement about an investment as a sign it's a killer deal
- GV general partner Krishna Yeshwant uses a healthy amount of skepticism when vetting potential companies to invest in.
- His favorite time to invest is when one of his partners at the fund is excited about a particular company, even if nobody else is. "That's universally where we've had the best returns."
- In one instance, the GV team couldn't agree on its plan to invest in Foundation Medicine - recently acquired by Roche - and the skepticism from partners within the firm didn't stop. "We continued to disagree all the way through investing in the company," Yeshwant said.
Krishna Yeshwant is no stranger to skepticism.
Yeshwant is a general partner and head of the Life Sciences team at GV, formerly Google Ventures. GV has invested in a number of life sciences startups that have made it to $1 billion-plus status, including Clover Health, 23andMe, Grail, and Oscar.
In February, one of GV's life science investments, Flatiron Health was acquired by pharma giant Roche in a $1.9 billion deal. A few months later, Roche acquired the rest of publicly-traded cancer genetics company Foundation Medicine - one of GV's early investments - in a deal that valued it at $5.3 billion.
Along the way, the high price tags have drawn skepticism from not just outside the walls of GV but also among its ranks. But Yeshwant doesn't shy away from that skepticism. Often, he said, he'll run into instances when one member of his team is really excited about a company but someone else is less jazzed about it.
"If the one of us who's really excited is the one who spent the most time on it, and they're excited - despite the fact that we're giving them a hard time, they continue to be interested in it - to me I always want to pay attention to that," Yeshwant said. "That's universally where we've had the best returns."
GV's life sciences team all have second jobs practicing medicine or working at a university. That sets a high bar: If the partner's willing to devote free time to advise the company, it has to be worthwhile.
One example in which the GV team couldn't agree on an investment was over Foundation Medicine. Around 2010, GV team members were at a barbecue in Mountain View, California. Foundation had come to present and the life sciences team was excited about investing in the company.
"Half the team, the life sciences team, was like, 'This is why we're here, we have to do this. If we're not doing this we're all leaving,'" he recalled. But there was one partner who had a more skeptical view. The team went into his office and had an argument about it. "It was just this crazy argument we had internally and then I think our team just felt so passionately."
GV ended up investing in Foundation Medicine, but there was still disagreement about the company the whole time the firm had a stake in it.
"We continued to disagree all the way through investing in the company," Yeshwant said. "We don't have to have consensus internally to move forward on something, we can still disagree and make the investment."
Ultimately that bet paid off. In 2013, Foundation went public, and in June, Roche - which had a majority stake already in the company - bought the rest.