A top investor at Pfizer's $1 billion VC arm reveals the 2 biggest mistakes startup biotechs make when trying to win her cash
Barbara Dalton is senior managing partner of Pfizer Ventures, which has more than $1 billion to invest in startups on behalf of the drugmaker Pfizer. Dalton says she often sees two big mistakes when startups try to convince her to invest. The biggest mistake startup biotechs make is failing to appreciate the competition, she said Tuesday at the BIO & CEO Investor Conference in New York. Biotech companies often think too narrowly about potential threats, Dalton said. Given rapid scientific progress, especially with gene therapies, a viable market today can disappear in a matter of years. Startups also frequently lack an understanding of who they are pitching, she added. Dalton said she still receives pitches related to erectile dysfunction, given Pfizer's blockbuster pill, Viagra. "That was us 20 years ago," she said. "That's not us moving forward. So do your homework." Click here for more BI Prime stories.
In running giant drugmaker Pfizer's venture-capital arm for the past dozen years, Barbara Dalton has received a deluge of pitches from startups hunting for money. Pfizer Ventures invests about $100 million per year and has a portfolio of roughly 50 companies, mostly early-stage biotechs. Pfizer committed an additional $600 million to the venture arm in 2018, bringing the value of its assets to over $1 billion. As Dalton sorts through pitches, she said she often sees two mistakes that instantly sink a startup's chances of landing a deal. Dalton shared those biggest mistakes in a fireside chat this week at the BIO CEO & Investor Conference in New York. Mistake #1: A short-sighted view of competition "One of the biggest mistakes that a lot of startup companies make has to do with their analysis of the competitive environment," Dalton said. These firms think too narrowly about the risks they might face, particularly given the lengthy timeline of drug development, she said. It can take a decade to bring a new treatment to market. "The world may change in the 10 years it's going to take you to get anywhere with that product," Dalton said. She singled out rapid advancements in gene therapy as an example. The space has exploded in recent years with dozens of ongoing gene therapy trials testing treatments for patients with hemophilia, sickle cell disease, phenylketonuria, and other rare diseases. "If you are creating a therapeutic that is going to help a patient who is also being targeted by gene therapy, suppose that gene therapy is quite successful," Dalton said. "Your patient population can go away." "You need to be paying attention to not only the direct things that are happening, but the big picture going forward," she added." Mistake #2: Pitching the Pfizer of 20 years ago, not the Pfizer of today The other mistake Dalton commonly sees from startups is a lack of awareness of who they're pitching. In the case of Pfizer Ventures, she still sees a flood of pitches related to erectile dysfunction, given the pharma company's well-known blockbuster pill, Viagra. But Viagra now faces competition from generics, and is no longer a focus for Pfizer. "I see business plans for products in that space all the time because they think: Pfizer, Viagra," Dalton said. "No, that was 20 years ago. That's not us now moving forward. So do your homework." Pfizer Ventures largely follows the parent company's interests, she said. Areas of focus now include oncology, rare diseases, and vaccines. A rare exception for the venture group is neuroscience. Even as Pfizer made a high-profile exit from research in the space in 2018, Pfizer Ventures has earmarked approximately 25% of its funds to neuroscience, Dalton said. Read more: Drug giant Pfizer isn't ready to abandon neuroscience — here's its $150-million 'star cluster' strategy for betting on promising brain drug startups She recommended startups review Pfizer's pipeline and the venture group's recent investments to get a sense of their interests. While she cautioned this can equate to "an archaeological dig of the interests of the corporation at the time the investments were made," it still is helpful in understanding a prospective investor, she said.
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Chasing a virus, glass shortages, and cold storage: 4 top execs leading the coronavirus vaccine race reveal how they're tackling the greatest challenges standing in their way
A coronavirus vaccine faces several major challenges to actually end the pandemic, top pharmaceutical executives said...A coronavirus vaccine faces several major challenges to actually end the pandemic, top pharmaceutical executives said Thursday. Execs for four major pharmaceutical companies working on vaccines — Johnson & Johnson, Pfizer, AstraZeneca, and GlaxoSmithKline — outlined key problems. A vaccine needs to be tested, mass-produced and globally distributed to halt the coronavirus crisis. Each of these steps will require efforts that will test the world. The companies plan to chase the virus around the world, package multiple doses into each glass vial, and work with global nonprofits on a fair distribution plan. Visit Business Insider's homepage for more stories. A widely available coronavirus immunization faces a slew of challenges that will test the world over the next year, top pharmaceutical executives said Thursday. Determining if a vaccine candidate actually works in humans is just the first step. Other significant hurdles include mass-producing an effective vaccine and then distributing it around the world. Four leaders at some of the largest drugmakers in the world — Johnson & Johnson, Pfizer, AstraZeneca, and GlaxoSmithKline — revealed how they are now planning for these challenges at a Thursday press conference hosted by an industry trade group. Across the pharma and biotech industries, dozens of companies are aiming to develop a coronavirus vaccine in record time. There are 125 ongoing vaccine research efforts, with 10 now being tested in humans, according to the World Health Organization. A Business Insider review found nearly 30 experimental vaccines are slated to be in clinical trials by the end of 2020. In condensing the develpment timeline, these companies are now simultaneously thinking through issues that will arise from each stage of vaccine development: how to rapidly test a candidate in humans, how to manufacture hundreds of millions, if not billions, of doses, and how to distribute an effective vaccine to the world. Read more: The untold story of Moderna as the biotech's coronavirus vaccine faces a test that could make it one of the most consequential startups of all time Problem #1: Chasing the virus First and foremost, researchers need to vet the potential vaccines to see if any of them actually work. A good vaccine will have to clear two bars. First, it will have to be safe and tolerable for healthy humans to take, without causing serious side effects. Secondly, it has to either prevent infection, or at a minimum, reduce the likelihood of severe disease. In order to demonstrate a vaccine works, researchers need to test large numbers of people in areas where the virus is actively spreading. As clinical trials often require months to plan and run, that is turning into a major issue for testing a vaccine against a fast-moving virus. "The problem we will all have, I think, is we are running against time a little bit," AstraZeneca CEO Pascal Soriot said. AstraZeneca has partnered on a vaccine candidate developed by University of Oxford researchers. Soriot added that there will soon be data available from the first phase of its UK-based clinical trial, which is now working to expand into a 5,000-person trial. Recently, the researchers running the UK study have warned there's now a 50% chance it won't be able to determine if the vaccine works because of the dropping rate of new infections in Britain. "Very soon, the disease intensity will be low and it will become difficult, so we have to move quickly," Soriot said. The Oxford candidate will also be tried in several other trials around the globe. Soriot said studies in Kenya, South Africa, Brazil and several other countries will start soon. A 30,000-person trial in the US will likely start in July, he added. The other executives also raised this concern, including Johnson & Johnson Chief Scientific Officer Paul Stoffels. J&J, the largest healthcare company in the world, is aiming to start human trials of a vaccine in September to be ready for potential emergency use in early 2021. "We plan to do two large Phase 3 studies, as typically is required in the world to get to full approval," Stoffels said. "Hopefully that can be done in the north. If not, we'll have to go to the south." Read more: Scientists are racing to create a coronavirus vaccine that can halt the pandemic in its tracks. Here are the top 3 candidates from Moderna, Pfizer, and AstraZeneca aiming to be ready this fall. Problem #2: Running out of glass Before knowing if the vaccines work, the leading programs are already ramping up manufacturing capability. A critical constraint to producing hundreds of millions or billions of doses in such a short amount of time will be a final portion of the manufacturing process of putting the serum into glass vials. Several of the executives raised concerns about simply running out of glass. Pfizer's Bourla said they are now talking with government officials to see if they could put five or 10 doses into a single vial. Traditionally, vaccines are delivered in single-dose vials. Bourla said this could "resolve a significant part of the bottleneck in manufacturing." J&J's Stoffels added that it will "probably be essential" to put multiple doses into each vial. "The capacity is not there to do it in the billions otherwise," he added. Problem #3: Distributing a vaccine, particularly to lower-income areas of the world In working through the first two problems, the world could have hundreds of millions, or potentially billions, of doses of an effective vaccine. But there still needs to be a plan on how it will be delivered to people across the world. In particular, there's been a rising fear of 'vaccine nationalism,' where each nation's leaders will try to secure a vaccine for its country first instead of pursuing a global approach. GlaxoSmithKline CEO Emma Walmsley said the drug industry is "committed to access," in particular by working with a new World Health Organization group called the ACT Accelerator. She emphasized the role of leading nonprofits like the Bill & Melinda Gates Foundation, the Coalition for Epidemic Preparedness Innovations (CEPI), and the global vaccine organization Gavi. "That is going to be a mechanism with multiple stakeholders, whether it's heads of state or organizations like CEPI, and the Gates Foundation, Gavi and others, and the WHO of course, where we can actually look at these principles of access," Walmsley said. But demand is still expected to vastly exceed supply for coronavirus vaccines. This will be an even tougher challenge for some vaccines that require cold storage. Pfizer's Bourla said its experimental vaccine will likely go to the "Western world" first, mainly because it needs to be stored at -8 degrees Celsius (about 18 degrees Fahrenheit). "It's a technology that is not very convenient for Africa, for example, because they will likely lack basic infrastructure that can be applicable," Bourla said, adding Pfizer would work on a second wave of products that wouldn't require extreme temperatures. AstraZeneca's Soriot said the US government has effectively placed an advance order for 300 million doses of its experimental vaccine, as part of $1.2 billion in funding made available to the company by the US Biomedical Advanced Research and Development Authority.Join the conversation about this story » NOW WATCH: Drugmakers are developing coronavirus vaccines in record time — but it will still be months before one is available
Tech startups have a new 'exit' strategy. Why private equity firms have started plowing billions into acquiring startups.
Among startups that don't fail, most are acquired instead of going public. Although most startups that...Among startups that don't fail, most are acquired instead of going public. Although most startups that are acquired are still purchased by other independent companies, a growing number and proportion are being snatched up by private equity firms. In the past, private equity firms were largely considered bottom feeders, buying up companies on the cheap for their cash flow, but increasingly, they're buying companies with the intent to help them grow or to combine them with other startups to reach a larger scale — and they're more willing to pay up for them, industry experts say. The trend is being driven by a surge of cash into private equity firms and the growing number of companies that are avoiding the public markets, they say. Click here for more BI Prime stories. It used to be that the goal of every startup founder was to take their company public. That may still be the goal for most, but in the last several decades, a much more realistic option for startups that managed to stay afloat was to be acquired by another company in the same sector. In recent years, though, a third option has emerged for startups — being purchased by a private equity fund or by a company owned by one. Those kinds of buyouts now far outnumber IPOs and account for one out of every five so-called exits for venture capital-backed companies in the US, according to data PitchBook compiled for Business Insider. The growing influence of private equity on the startup market has "really reshaped the industry," said Wylie Fernyhough, a senior private equity analyst at PitchBook. The kinds of startups being targeted by private-equity firms likely would have gone public 20 years ago, industry experts told Business Insider. But today, they're generally considered too small or don't have bright enough prospects to hit the public markets. For such companies, private equity has become "an attractive exit opportunity," said Pete Flint, a managing partner at venture capital firm NFX. The vast majority of startups that don't fail are acquired Venture capitalists back startups with the intent of cashing out those investments at some point in the future, either by being able to sell their shares to public investors when or after the companies go public or by selling the startups to other companies. While initial public offerings get lots of attention, they've become relatively rare. In part that's because many startups never make it to the exit stage at all, because they go out of business first. But also it's because the vast majority of startups that don't go out of business are acquired instead of going public. Last year, for example, of the 934 startups that had some kind of exit event, 853 — about 91% — were acquired either by another company or as part of a private equity-related deal, according to PitchBook. That rate has been relatively steady over the last 18 years. "The vast majority of exits that all of us are thinking about are things that are not the public markets," said Sean Foote, a member of the professional faculty at the Haas School of Business at the University of California, Berkeley. Acquisitions, he continued, are "the major way in which companies find their home." While such deals have long been important, what's changed over the last 20 years is the growing influence of private equity. In that time period, private equity firms have gone from bit players in the startup ecosystem to major actors in it. In 2003, just 17 startups were acquired by private equity firms or companies owned by them, according to PitchBook's data. That amounted to just 5% of total exits that year. By 2012, 88 startups were snatched up in private equity-related deals, accounting for 10% of all exits. Last year, 186 were acquired in private-equity deals, amounting to 20% of all exits. Private equity firms are big players in the acquisition market In 2004, IPOs outnumbered private-equity buyouts by a ratio of 3-to-1, according to PitchBook. But private equity acquisitions have outnumbered IPOs every year since 2008, and for the last three years, there have been more than twice as many of those kinds of deals as public offerings. What's more, even as startup acquisitions of all kinds have skyrocketed — jumping from 279 in 2002 to 853 last year — private equity-related ones have accounted for a growing portion. They accounted for 22% of all startup acquisitions last year after making up less than 7% in 2002, according to PitchBook. "I think it's a trend that's going to keep growing," said Lanham Napier, the cofounder of startup investment firm BuildGroup. The amount of money startups are seeing from selling to private equity firms is still a small portion of the total value of all exits, varying from less than 1% to about 8% annually over the last 10 years. But it's grown significantly, going from just $690 million in 2012 to $6.3 billion last year. And some individual deals have become quite large. In 2017, for example, private equity-backed PetSmart bought online pet supply retailer Chewy for $3.35 billion. And last year, PE firm Thomas Bravo acquired ConnectWise, a maker of mobile device management software, for $1.5 billion. Generally, the private-equity firms are snatching up more mature startups. On average, the companies they're acquiring are around 10 years old, according to PitchBook's Fernyhough. By contrast, startups that went public were about 9 years old at the time of their IPO and those that were acquired by other companies were about 7 years old, he said. But increasingly, private equity firms are backing more mature companies and using them to buy younger startups, creating larger companies or "platforms" that potentially offer better growth or market prospects, the industry experts said. "You can sell early stage companies to PE-backed platforms," said Dan Malven, a managing director at 4490 Ventures. "I think we're going to see more and more of that." Fewer companies are going public Part of what's driven the surge of private-equity buyouts — and acquisitions overall — is that fewer and fewer venture-backed companies are going public. That's a trend that dates back to the 1990s and one that's linked to the growing dominance of small numbers of firms over large sectors of the tech industry, according to research by Jay Ritter, a professor of finance at the University of Florida who has been studying the public offering market since the 1980s. But that trend has arguably been accelerated over the last 20 years by regulations that added to the costs and burdens of being a public company and, conversely, made it much easier for companies to remain private for far longer periods. "The public market has evolved to a point where it's not that you couldn't have these companies go public, but there are significant regulatory costs that you can avoid if you stay private," said Robert Hendershott, an associate finance professor at Santa Clara University's Leavey School of Business. "Private equity is a natural way to give someone an exit." The kinds of startups generally favored by the public markets these days are those that are growing quickly, operate in a large market, and are either profitable or have a clear path to profits, NFX's Flint said. Unfortunately, there are lots of good companies that don't meet all three of those criteria. But they can be a good fit for private equity firms, because such firms can invest in their long-term growth or combine them with other startups to give them the scale they need to be more attractive to public investors, he said. "They are perfect opportunities for private equity rollup or acquisition," Flint said. Private equity firms are swimming in cash The surge in private equity buyouts has also been stoked by a huge gust of money into the industry, particularly in the last 10 years. In 2010, US-based private equity firms raised $59.2 billion, according to PitchBook. Last year, that amount had swelled to $301.3 billion. While only a portion of those amounts are going to tech-focused funds, that portion has been growing. Tech-focused private equity funds based in North America and Europe raised just $3.7 billion in 2010, according to PitchBook. By last year, that amount was up to $68.3 billion. By contrast, the US venture capital industry raised $46.3 billion in new funds last year, according to PitchBook. Private equity funds have access to "a staggering amount of capital," said Mike Smerklo, a managing director at Next Coast Ventures. But another reason why private-equity acquisitions have become increasingly popular for startups and their venture backers is because the deals can be more attractive than either going public or being acquired by another operating company, industry experts said. It used to be that private equity firms acted kind of like bottom feeders in the startup market, paying relatively small amounts for firms that had few other options and focusing on the cash flow those companies could generate for them. But that's no longer the case. Private equity firms — particularly the tech-focused ones — are increasingly looking at companies that can offer revenue growth and they're often willing to pay top dollar for them, the experts said. Startups used to see the biggest exits by going public or by being acquired by an operating company, said BuildGroup's Napier. Now, though, "some of these private equity firms have gotten so good at [buying startups], some of their valuations are just as big as those other things," he said. PE firms can move quickly and offer fewer restrictions Private equity firms also tend to be far less bureaucratic than corporate merger-and-acquisition departments, they said. Such firms also can often throw far more resources to bear on analyzing potential deals than corporations can. And the deals they strike typically don't have to go through the kinds of shareholder votes or board approvals that corporate deals often require. "They're able to move a lot more quickly," said PitchBook's Fernyhough. What's more, venture investors and founders often confront more obstacles to accessing their promised returns when they sell to corporations or take their companies public than when they sell to private equity firms. Typically in an IPO, there's a lock-up period of up to six months during which early investors are barred from selling the company's stock. Meanwhile, in corporate acquisitions, there often are conditions put in place that allow founders or early investors to see the full value of the buyout only if the startup hits certain financial or performance targets after the acquisition. "When I sell a company to a private equity firm, it's clean," said Foote, who in addition to his role at Berkeley is a managing director at venture capital firm Transform Capital. "There's often very few strings attached." It's not unusual for acquirers, whether they are large, independent enterprises, other startups or private equity-backed conglomerates, to pay for their purchases with shares of their own stock. But the private equity-backed roll-ups often are perceived to have greater prospects for growth than big, established corporations, potentially making their shares more desirable. "We try and analyze that growth potential," said 4490's Malven. They try to figure out if "we want to ride on their equity." The fast pace can also cut against startup founders and VCs To be sure, the growing influence of private equity does have some drawbacks for venture capitalists and startups. The fast pace of those firms and their large research teams can go against founders and their backers, Malven said. The private equity firms can have their teams analyzing multiple companies and potential deals at once, he said. If a startup doesn't act on an offer quickly, the firm can threaten to move on to doing a deal with a rival company, he said. "They can put you in a squeeze," said Malven. And the firms can have their shortcomings when it comes to evaluating startups, industry experts said. Because they're typically focused on analyzing the financial health of companies, they can be very good at evaluating companies that already have established a market for their products and have a revenue stream, they said. But they're not as good at sizing up companies based on the potential of their technology or their intellectual property or their unproven ideas, they said. "They're much at better looking in the rear-view mirror than they are in through the windshield," Malven said. Still, by and large the venture capitalists and other industry experts said the venture ecosystem has benefitted from private equity firms providing more exit options for startups. Venture capitalists are often looking for home runs with their investments — companies that have the potential to deliver huge returns on their investments. That remains the primary focus of firms like his, said NFX's Flint. But not every startup is going to be a home-run investment, and having the ability to get a modest return on those kinds of companies is a good thing, he said. "More options for more capital is great for the ecosystem," Flint said. "It's great for founders, it's great for early stage VCs, it's great for customers." Got a tip about the venture-capital industry or startups? Contact this reporter via email at firstname.lastname@example.org, message him on Twitter @troywolv, or send him a secure message through Signal at 415.515.5594. You can also contact Business Insider securely via SecureDrop. Read more about the venture-capital industry and startups: SoftBank's $100 billion Vision Fund had a no good, very bad year in 2019, but was still in the black overall. Here's why experts are still struggling to make sense of it. Here's why Casper's disappointing IPO could spell disaster for other unicorns This LA founder just raised $40 million for his startup. Here's his unconventional advice to founders on putting together a pitch deck. Stunned venture capital investors say the government's move to kill the $1.4 billion acquisition of shaving upstart Harry's is a 'wakeup call' that could leave some types of startups unviable SEE ALSO: Here are the top 10 best performing venture funds that launched at the turn of the decade, which posted returns as high as 50% Join the conversation about this story » NOW WATCH: Watch Google reveal the new Nest Mini, which is an updated Home Mini
Austin is seeing a startup boom. Meet Austin's top VCs, giving Silicon Valley investors a run for the money.
Austin, Texas, has long been a hub for sales and customer service outposts for some of...Austin, Texas, has long been a hub for sales and customer service outposts for some of Silicon Valley's largest tech companies. In recent years, the city has seen a revival of entrepreneurship, and with it, venture capital. The city's ecosystem was long dominated by Austin Ventures, a major venture capital firm with significant influence over Silicon Valley's traditional VC firms. Several Austin Ventures alumni left to start their own firms, which has helped breed healthy competition among investors to the benefit of founders across many industries. Here are some of Austin's most notable venture capital firms. Click here for more BI Prime stories. Austin has yet to land an outpost of popular fitness studio Barry's Bootcamp, but that hasn't stopped venture capital from creeping into the Texas capital. Once a long-time sales hub, Austin is just as awash in entrepreneurs and venture capital dollars as it is in slow-smoked barbecue and live music venues. The arrival of major tech companies like Amazon and Google has spurred the shift along as entrepreneurial employees leave the mothership to start their own companies, and increasingly find the funding they need right at their doorstep. "We often get criticized for not thinking big enough," Tom Ball, cofounder and managing director of Austin VC firm Next Coast Ventures, told Business Insider. "Frankly, our job is to make sure entrepreneurs do think big enough. There are instances where there are $1 billion things created here." Read More: Female-led robotics startup Diligent raises $3.15 million in seed funding to bring its hospital assistant robot Moxi to Texas hospitals Austin's venture capital scene was once dominated by Austin Ventures, the "800-pound gorilla in the room," as Ball described it. Ball said that, because Austin Ventures was the only major investor in town, it put a lot of pressure on partners to find every good deal coming out of the city before founders went to fundraise in Silicon Valley. It was a lose-lose situation, and Austin's startup scene suffered. "Austin has changed quite a bit relative to the VC ecosystem that's existed here" Silverton Partners general manager Kip McClanahan told Business Insider. "Back in the day, Austin Ventures [was] kind of like the only shop that existed," he explains. "It was sort of a traditional old school firm, raised very large funds and larger funds and over time, fell out of favor." Today, Austin Ventures is mostly focused on private equity investing, leaving the venture capital opportunities wide open. In fact, many former Austin Ventures partners have formed or joined their own venture firms in recent years, creating what is now a legitimately competitive VC landscape. But this time, investors and entrepreneurs win. Meet Austin's top venture capital firms betting on the Lone Star state's next billion-dollar companies:SEE ALSO: The flopping of the IPOs: Tech's biggest investors came to San Francisco for a major startup conference, and one topic stole the show BuildGroup BuildGroup was founded in 2015 by Jim Curry, Peter Freeland, and Lanham Napier, former executives of Texas-based RackSpace. Because of the team's expertise with enterprise software coming off their time with RackSpace, BuildGroup tends to focus heavily on investing in enterprise startups like data analytics startup Anaconda. "So when we were building Rackspace, we had Norwest and Sequoia," BuildGroup partner Klee Klaber told Business Insider. "To be honest, I mean, they came to board meetings. They could give us a number of somebody to call, but they didn't have any idea what we did." The firm focuses on making a handful of Series A investments per year, and currently has $330 million assets under management, according to PitchBook data. Capital Factory Austin has an answer to Silicon Valley's most notable accelerator Y Combinator, and that is Capital Factory. The 10-year old accelerator operates much in the same way as Y Combinator in that startups participate in a batch, and Capital Factory provides seed funding upon graduation. Several investors that spoke with Business Insider credited Capital Factory with almost single-handedly nurturing the burgeoning startup ecosystem in the city. And because it doesn't have a specific industry of focus, graduates are successful in everything from consumer packaged goods to robotics. LiveOak Venture Partners LiveOak Venture Partners was founded by three former Austin Ventures partners Benjamin Scott, Venu Shamapant, and Krishna Srinivasan in 2013. In the six years since founding, LiveOak has become a major investor in early-stage startups and announced its second fund in April. The majority of LiveOak's portfolio companies are based in Austin, but the firm has a global presence, according to marketing and business development associate Mayra Del Bello. Next Coast Ventures According to Next Coast Ventures cofounder Tom Ball, the venture capital ecosystem in Austin is to Silicon Valley as college football is to the NFL. And, he alleges, Next Coast is the Nick Saban, head coach of the University of Alabama's star football team, of Austin venture capital. "It's a different game and we love our game," Ball said. The firm is one of the largest in Austin, and has some of the closest connections with Silicon Valley's venture firms. It has invested alongside Accel, Andreessen Horowitz, Floodgate Fund, and others, over the course of its 4-year history. "I moved here four years ago from the Valley, and I ran a company there," cofounder Michael Smerklo told Business Insider. "What Austin was offering, and has gotten better, was a lot of the goodness of markets like the Valley. Anyone who says we're trying to create the next Silicon Valley, just give up because it's like trying to say Hong Kong or London or whatever prominent city you think of." Silverton Partners Silverton Partners was one of the earliest spin outs of Austin Ventures in 2006, and has maintained a prominent position among early-stage investors in the decade-plus since. As managing partner Kip McClanahan described it, Silverton fits in to a company's funding strategy post-accelerator, around the Series A period of quickening growth. Silverton Partners is similar to other venture firms in Austin in that it works closely with other investors on deals, a world away from the backroom deals and competitive board rooms on Sand Hill Road. "In Austin, the ecosystem for startups is so rich that we really don't, it's not a competitive environment," McClanahan said. "That's worth saying because I think if you look at the West Coast, it's a highly competitive environment." Silverton's general partner Morgan Flager is a Bay-Area native, but permanently relocated to Austin with Silverton because the risks of doing so have decreased. In his role with Silverton, Flager has used his experience as proof when recruiting San Francisco-based executives to Austin-based startups in his portfolio. "I mean, it's still not the Bay area in terms of the volume, of companies but like that complaint's kind of gone away," Flager said.