Women Leaders In Biotech VC

Insight by

Abbie Celniker, Partner at Third Rock Ventures, and Nina Kjellson, Partner at Canaan, spoke with Cowen biotechnology analyst Yaron Werber about their outlook for company formation and financing in FY23. They also discussed how companies are adjusting to new market realities and their experiences as women leaders in biotech venture capital. While there has been great progress toward gender equality in the industry, a lot of work remains to be done.

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Transcript

Speaker 1:

Welcome to Cowen Insights, a space that brings leading thinkers together to share insights and ideas shaping the world around us. Join us as we converse with the top minds who are influencing our global sectors.

Yaron Werber:

Thank you for joining us for another exciting episode in our Biotech Decoded podcast series. I’m Yaron Werber, biotech analyst at Cowen, and I’m super excited to be joined by Abbie Celniker and Nina Kjellson in this episode, Women Leaders in Biotech Venture Capital, to discuss their outlook for company formation and financing in 2023, how biotech companies are adjusting to the new market realities, and their experiences as women leaders in biotech venture capital.

Abbie has over 30 years of experience in venture capital, senior R&D and executive leadership roles. As a partner at Third Rock Ventures, she focuses on the formation, development and strategy of new companies. She was previously CEO of Eleven Biotherapeutics and Taligen, and was a senior executive at Alexion, Millennium and Novartis. Abbie sits on multiple boards.

Nina Kjellson invests in biotech and digital health companies that serves unmet therapeutics and access needs. She has a long career as a venture capitalist at InterWest Partners and Canaan Partners, and has served on multiple boards. She’s highly involved as an advocate for women entrepreneurs and investors, and also serves as a mentor and board members of several non-for-profit boards. Abbie and Nina, always great to see you, and thanks for joining us.

Nina Kjellson:

Great to be here.

Yaron Werber:

Yeah, I’ve got to tell you, we do these a lot. I think this is going to be our 11th or 10th episode, and this one I’m particularly excited about, both because I’ve known you both for a long time. I have a huge amount of respect for both of you. We’re obviously really trying to increasingly feature women who are really leaders in biotech, and you guys, both of you immediately came to mind. Funny enough, I just saw both of you separately, literally the same week. Abbie, I know you just moved offices in Boston. How is the new spot, and do you miss Newbury Street? That’s the huge question.

Abbie Celniker:

Yeah, we are ecstatic with our new offices in the Fenway, we wanted to sort of move to the Fenway so we had an opportunity to kind of catalyze some more biotech moving in that area and more of our companies able to move in. What we didn’t realize is how all of us being on one floor and being together was going to completely change the energy, and Newbury Street was great, it was a moment in time, but anybody who had visited our offices knew that it was sort of divided up across floors and across buildings, actually. So this is everybody all in one place. It’s lovely, it’s fantastic. The energy in the Fenway has been great. Just the ability to collaborate impromptu has been changed so much, so especially post COVID, it’s been amazing.

Yaron Werber:

We have to be honest, the real reason you’re moving is because you guys all want to be closer to the Red Sox.

Abbie Celniker:

We look out our window, we can see the jumbotron, we can’t see the game. That’s evidently a building policy that you can’t see the infield, but yeah, that’s it. We’re all big Red Sox fans, except for the Yankees fans.

Yaron Werber:

Yeah, I have such a huge sweet spot for your old office, because it was so iconic. It was a workout when you kind of move around from one fourth to the next.

Abbie Celniker:

It also was a workout in the sense that the elevator often didn’t work, and you were constantly trying to find a room with good temperature regulation when you were in hundred year old offices that were cobbled together, but it was a great place to be. So many amazing companies and amazing people were there. So it’s a little bit sad, but this new space has created an energy that I don’t know that we’ve had before, so it’s great.

Yaron Werber:

That’s great, and Nina, how is the best dog in the world, Fauci? How is he doing? Is he still getting compliments with the name, or is everybody sort of over it?

Nina Kjellson:

People are still very much amused for Fauci’s name, and I think it places him in his age cohort, because everyone knows that he’s a pandemic pup, and he’s living his best life. He’s spoiled rotten, he’s a happy and lazy dog. He’s more worried about his next liver treat than vaccine misinformation or a grand jury investigation. So my Fauci is really quite happy, and I’m still very proud that he carries a name of someone that I think of as a national hero.

Yaron Werber:

Abbie is a big Fauci fan, as we learn. Look at this right here. She’s holding a… Go for it, Abbie.

Abbie Celniker:

This is my Fauci bobblehead that sits on my desk and has been with me since the start of the pandemic. So I share your respect and appreciation for Dr. Fauci’s contributions, Nina.

Nina Kjellson:

You should not have been so descriptive as to the location of the new offices, because I’m going to separate you from that Fauci bobblehead.

Yaron Werber:

I’m going to go on Amazon and probably try to see if I can get one of those. Send it.

Abbie Celniker:

We’ll protect him.

Yaron Werber:

Thank you, Nina. All right, so let’s talk a little bit. There’s a lot to talk about in biotech. For those of you who are listening later on, we’re in mid-December 2022. The market is been choppy. To say the least. It’s been a rollercoaster overall, and certainly in biotech. Biotech frankly bottomed out in June, and has been massively outperforming. We’re actually sort of in line or maybe even slightly better than some of the indices, depending what you’re looking at. It certainly doesn’t feel like that at all.

You’ve both been around for a while, seen many bull cycles and bear cycles. The bear cycles always come hot and heavy after a bull cycle, and obviously, you always have time to, or we usually don’t have time to adjust, but this one definitely feels a little worse, just given how fast valuations dropped and just how quick this happened. Maybe, Abbie, let me start with you. How is this impacting your outlook for a new company formation and financing for next year?

Abbie Celniker:

I would start off by saying our outlook is still relatively positive. Company creation is still something where you can have a lot of control over the kinds of companies you build, and you’re not just inheriting a company to invest in, but really forming a business plan for companies to maybe be more responsive to this environment, and so we’re really building companies where we have clear line of sight to clinical catalysts, because we know that that’s really what the investment community is looking for, but we’re also looking to bring the disruptive technologies that we think are so value-creating into the fold as well. So we’re taking a little bit longer to consider how we’re going to build these companies that combine the disruptive technologies with line of sight to the clinic for game-changing therapies. It’s really what we do, and we’re continuing to do it.

I think that we’re pressure testing more, as we’re forming companies, how pharma and big biotech are looking. The strategies that we have for our companies, are they engaging? Do we see a pull there? We’re certainly early socializing with equity investors to make sure that, again, we’re putting together things that the market’s going to appreciate in the future, and we’re building plans that really sort of combine both risk reduction and value creation in a timeline that coincides with where we think the capital that we can raise is going to get us. So making some hard choices, maybe not doing certain projects that we would’ve done before, but still really optimistic about what we’re going to be able to do with company creation in the next couple of years.

Nina Kjellson:

I would just add to that, and I would acknowledge, Yaron, again, thanks so much for having us in this conversation, because I do think it’s so important, and I think you were deliberate in choosing two people who have been in this business for a couple of decades plus with some perspective on multiple cycles, but we are both cup half fulls and funds that are pretty much a hundred percent in the business of company formation, or at least seed and series A companies, and to maybe compliment Abbie’s comments a little bit, I do want to acknowledge that there are a lot of funds who were dipping their toes into this early stage company formation space that, for the moment, are not there a hundred percent wholesale out. And that’s public funds and crossovers that we’re reaching into early stage company formation that are not. That should definitely leave some entrepreneurs out there feeling a little bit anxious.

I would say for us at Canaan, we think about company formation as taking a few different ingredients. There’s the great science and technology, there’s the formation capital, there’s the talent to execute, and then a business plan that meets the markets, and Abbie touched on a bunch of those things, and then there’s our internal bandwidth to help shape and support those ventures, and for us at Canaan, we see absolutely no change in the science and technology momentum. In fact, it’s better than it’s ever been.

The amount of venture fundraising for healthcare over the last three or four years is simply staggering. If we just think about 2019 through the first half of this year, some $70 billion was raised for venture for healthcare. So there’s more than enough dry powder in venture funds, even if we discount the public and crossover folks.

So what we’re really focused on, like Abbie was saying, is what kind of business plan will resonate with the more challenged follow on funding and the IPO markets when they do return, because for the moment, they’re not here, and will resonate with the exit markets. The other thing we’re about is given the time that we’re spending on our existing portfolios and their refinancing to meet the markets as they are, what kind of bandwidth and availability do we have to be shaping brand new ideas? Then, of course, and maybe we’ll talk about this too, the talent market is still incredibly difficult and hard to access in this environment, but perhaps for some different reasons than that there’s so much company formation and everyone is looking for excellent executives.

Yaron Werber:

So that’s terrific, and you both brought a lot of really important points to really focus on. So the time to IPO, obviously, is going to get more protracted, valuations now, obviously, are a lot thinner, so it’s harder to raise capital, and it’s harder to raise the amount of capital you need, depending on what the business plan is. So maybe Nina, to you, are you doing more product companies now or more technology companies, or are you agnostic? Because it really has to do with what’s the ultimate opportunity set.

Nina Kjellson:

I think on the margin, since I would say slightly on the margin, we’ve preferred to have a little bit of pipeline opportunity. So I wouldn’t say that we were platform investors that were developing the platform itself for science’s sake, but we’d like to think about if we have a lead product, we don’t necessarily want to make an entirely binary bet.

That being said, we do really product stories, and every investment that we make tends to be tied to the thesis of the lead program, and I think in this market, in this environment, what’s old is new. I feel like this is even true in department stores. With puffy sleeves and puffy pants and leather jackets, we’re back in the eighties again, and so what’s hot as an investment thesis is drugs, and preferably ones with clinical data. So I do think we have a more product orientation or more proximal to clinical validation orientation, and that is because of the timelines, and that is what the exit markets are favoring, whether that’s the public investor or strategics. Strategics are looking to fill loss of exclusivity revenue gaps. The bigger the market, the bigger the revenue, the better, and so we’re tending to follow the puck of what strategics are looking for.

Canaan has always had a thesis to invest more towards the strategic exit than to IPO. We believe that great companies with great teams will always have the IPO opportunity, but that the strategic exit is the more reliable one. So that does shape our view, and probably now more so than ever.

Yaron Werber:

To your point about the eighties, my son actually used my Top Gun costume from 15 years ago. I couldn’t believe it. So we’re definitely going round circle. Abbie, what about you? Products versus platforms?

Abbie Celniker:

We tend to look at platforms as a means by which to create a pipeline. We really do want to be developing companies that have a pipeline of assets. That’s both from a value creation and risk reduction sort of perspective. So the idea of platforms for platforms’ sake, and sort of doing lots and lots of deals around a single platform and monetizing a platform in that way, that’s not how Third Rock has typically used platform technologies, but rather creating what we call product engines, which is really where you’re putting together the right technology and biology to really create efficient drug discovery, efficient sort of translational strategies, and you do need technologies in place. So you could say you have a platform but the platform’s not what drives the value, it’s the products that are driving the value, and that’s something we’re still very, very focused on.

The good news is that often, the platforms are such that you can do some non-dilutive financings with the strategics around a specific platform that maybe isn’t an area that’s non-competitive with the pipeline that you’re building, but I think that the days of really big platform deals, they’re gone for now. That was a real Celgene sort of approach, and then it was really Gilead, sort of coming and did a bunch of those. We’re not counting on those types of deals anymore, and as a result, really sort of inward focused with how the platform is going to change our ability to create a really differentiated pipeline.

I think that very much what Nina was saying, as far as line of sight to the kinds of transactions that pharma and big biotech are doing, there’s a lot of strategy that goes into how you build these pipelines that allows you to still have ownership of assets such that you’re creating value for your company, but then also developing assets that might be better developed in collaboration with a partner or sold to a partner, and offsetting the need for equity capital with those strategies being built in a little bit more as well.

Yaron Werber:

What about… When you’re thinking about capital, there’s plenty of capital, but capital is getting more expensive. The time to IPO is going to get protracted, which means you might need to really support your portfolio longer. Are you syndicating more, or are you still taking down most of the seed yourself, and maybe Abbie, and then Nina?

Abbie Celniker:

Yeah, so I would say since the start of our fifth fund, which was opened up a few years ago, we started a strategy to syndicate more in our early programs. We’re still doing most of the seed ourself, but our series As, we’ve been very much looking to build strategic syndicates that we think will increase the ability to raise in the B, also bringing people into the syndicates that bring more than just the dollars, real experience in some of the areas where we’re building the companies, looking more holistically at how we’re building the syndicates, but definitely doing more of that.

I would say our early fund history, we did take most of the As, actually, not just the Cs, but most of the As. That’s changed in fund five, which we’re just finishing investing in, and we’re starting to invest our six fund, and syndication is a big strategy there.

What it’s also allowing us to do is invest a little bit later as well. We’re not having to put everything upfront early in the series As. We can take things into the companies for their series Bs, and even into the Cs, still maintaining the kind of ownership that we’re looking for, but also seeing opportunities to offset the risk completely being in our hands. I think it’s getting us further with private financings, but we still definitely have to be building the kinds of relationships that will get us to the clinical readouts. They take a long time, and we have to build companies and build syndicates so that we’re getting to that clinical data, because the market is telling us that’s what they’re going to invest in, and so the early investors that we bring in have to have those deep pockets as well.

Yaron Werber:

What about you, Nina?

Nina Kjellson:

We tend to syndicate early and have done… I think we very much like high ownership and we very much like to have influence over capital plans and strategy and clinical and regulatory, especially, and that does favor going it alone and going in early, but because we find that at the next round, typically half or more of a financing, especially in an environment like we’re in right now, needs to come from the insiders, and although we’re a large fund on the whole, our allocation to healthcare as a diversified fund is not more than a third to 40%, we just appreciate the importance of having a syndicate member or two at the beginning, and as Abbie said, there’s a tremendous amount of virtue in having thought partnership in the build, the network for recruiting early on as well. So on the margin, while it’s great to have that early influence and that really early high ownership, we’ve, from experience, realized that in going long, it’s great to have a syndicate partner, and at tough times, that’s especially true.

Yaron Werber:

Absolutely. So when we look at the IPO class of the last few years, and even depending on which cadence of IPOs we’re thinking about, which vintage, which year, they were a little different, but targeted oncology, cell therapy, genetic medicines, neuro, were all fairly hot. What’s going to be hot next? Is it inflammation? What technologies? What are you thinking?

Abbie Celniker:

I’ll start. I think that we are looking a lot towards what the next generation of some of the transformative technologies are going to be. I think cell and gene therapy is still an incredibly hot area and will continue to be, but we’ve been looking for really big steps towards the next generation, not incremental, and I think that we will see more of that in the next three to four years, but it’s going to take time. It’s definitely going to take time. The academics that are working on the technologies initially, they’re just starting to come out with some of the early data that gives us high hope for cell and gene therapy 2.0. So that’s an area that we’re focused.

I still think neuro is hot, and I think neuro will continue to be hot. Neurodegeneration, as well as neuropsych, I think these are areas where there’s just been such an explosion in the understanding of the science. There’s been changes in an understanding of what could be reasonable biomarkers in some of these indications that gives you an opportunity to take a little less risk of your clinical development, and I think that the unmet need is just unbelievable. We hear every day about the mental health crisis that the world is facing right now, and I think being able to take a fresh look at what can be done in the neuropsych area is something that we’re pretty passionate about.

I also think it’s pretty interesting to see a little bit more of biotech playing in metabolism and cardiovascular disease really coming forward with a new way of looking at things, previously undruggable targets that now can be hit because of second generation, third generation drug discovery technology. So I think that there’s a lot of things that… Maybe we go back to what’s old is new again, that there’s a lot of happening that gives us hope that we’re going to see these next generation of things that we’ve worked on before really finally hit the mark and make a big difference.

Nina Kjellson:

I would agree. I would just double click on immunity, inflammation, neuro, and the intersectionality of the three, inflammation fibrosis, also as we’re moving forward, and especially improved biomarkers, helping us understand and really trial in that biology. I would also agree that unfortunately, the epidemics of cardiovascular disease and obesity have opened them up now that you can do early reads and with biomarkers and healthy volunteer populations. So that’s making it tractable for us as venture investors, because we don’t necessarily have to take it all the way into large phase twos or phase threes before you know what you might have, and regulatory, I think, has helped open that up as well.

Next generation, I think the other place, there’s no question, RNA is huge, and really next gen RNA therapeutics and small molecule modulation of RNA, and all of the ancillary things that we need to make RNA, better vaccines and drugs beyond what was seen in the pandemic special black swan event, and then AI and symbio will continue to be buzzwords, but within all of that buzz and that cloud and smoke, there is some real stake and some real reality that will be investible.

Yaron Werber:

Yeah, no, absolutely. AI, and if you look at the data from relay, AI has come on the scene in a major way. It’s one of our big themes, actually, for next year. Inflammation fibrosis is a huge theme, and I agree with everything you said. The big question with cell therapies now that we’re beginning to really see a differentiation between the winners and the not-so-winners, and the big challenge that I was going to ask you about next is competitive intensity and therapeutic density, in a way that anybody that has a good target or seems four different modalities are hitting the same target.

So as you think about private companies and new company formation, where is the pressure points? Nina, you mentioned talent. Capital doesn’t seem to be the big issue. Is it trying to find novel science? Is it trying to find novel targets? Is it in licensing from academic organizations? What are the main pressure points?

Abbie Celniker:

Yeah, so first of all, I wouldn’t say that capital is not an issue. Capital continues to be something that we’re very focused on, but maybe I’ll get back to that in a moment.

I do think that the founders and the academic institutions, the tech transfer offices, they have become incredibly business driven. They really have a different mindset than they had years ago, where somebody wanted to just see their technology make it to the next steps, and they were willing to be very collaborative and somewhat generous with bringing both their time and their technology into a company, and now we’re seeing a lot more negotiation with the tech transfer offices, a lot more dollars upfront, the need to do a whole lot more deep dives into the IP opportunities, and that’s getting competitive too. You see, “Do you have freedom to operate?”, whereas before, you were pretty sure you were going to find an asset with good FTO, and it’s getting harder. So I think that that’s one area that is different than it used to be.

I do think the war on talent is getting a little bit better, but the interesting thing is that a lot of people are taking themselves out of the operating roles. They’re really either retiring or stepping back into consulting roles or something. So it is harder to form teams. It really is harder to form teams. I think that the area where I’m still pretty confident about is that if you take time, if you’re able to bring the right groups together early, and you take time and you’re able to do some experiments during your seed stages, you’re able to actually get some data around what the clinical hypothesis is, and you launch a company in a manner that gives you that line of sight to the clinic, you’re able to then deal with the capital issues. You’re able to attract more sophisticated team members.

There’s just a lot of people looking for that line of sight to the clinic, and that’s one of the things that I think we have to continue to challenge ourself on and understand how you would differentiate, how you would move a target. If you’re working on a target that somebody else is working on, how can you actually demonstrate differentiation before you’re launching the company, so that you’re going out with that thesis and you’re able to really talk about that, and sort of encourage people to come in, and even if they’ve invested in another company that might be working on a similar target, they might be interested in doubling down. Because they see true differentiation in the approach.

Nina Kjellson:

I think in an risk off environment, which I think is really what we’re in right now, the challenges are many because it’s so easy to say no, and so I think for private companies to get investors to part with a capital, investors are looking for perfection. So even though there is talent and there is capital, you really, really have to stand out from the crowd. So there is that challenge.

I think the two places that we spend the most time, one is, as Abbie was saying, really validating new target biology and really showing that it is high veracity, likely to translate to the clinic and would be differentiated from what else is being proffered, is very difficult, and the scrutiny, there’s always another experiment that you can ask for is one.

Then the other piece is trying, especially for early stage science, early preclinical or late preclinical, even early clinical, trying to adjudicate whether it’s worth doing in the context of crowded categories, where there already are a lot of products, and then there are a lot of other products that may be similar stage to you. Late discovery, early translation. It’s very difficult to crystal ball how that will all shake out, and so it’s easy to be risk off in that setting. It’s trying to predict the future, and I think we have to try to put on pharma’s hat and pharma’s commercial hat to say, “What will be the competitive profile and the target product profile in future state?”, and you spend a lot of your time doing that year round, you and your team, and especially, I think, important now as the markets that we’re serving are getting more competitive.

Abbie Celniker:

If I could just add to something that Nina just said, this concept of commercial viability, the target product profiles that you’re going for and really understanding, is this a really important indication, and do we have a path to get into that indication in a differentiated way? We are spending a tremendous amount of time having those conversations actually even before the science starts, and that’s a little bit different than how we used to do things. I think that is something that has always been done, I think more in pharma, but I would say, with as discerning as these markets are right now, that is something we’re doing as well, spending a lot more time sort of focusing on that.

Yaron Werber:

Yeah, because if you look at biotech, we all know that there is the early risk, and then there’s the later risk. The later risk is obviously execution, but increasingly commercial, but as valuations happen and as investment trades happen on the public side, there are the themes, and then there’s the reality, and they’re not usually matched up, and I think that’s a lot of the challenge, and depending if the market’s hot or not, you’re sort of getting left at the altar at different stages according, and in this market, people are just kind of getting out early, realizing there’s not going to be a market at the end. In a hot market, they kind of wait, and then they exit before it launches.

So it’s very hard for a company to kind of know where you are, and I think companies oftentimes are struggling to understand why did things shift so quickly. On our side, we all kind of know where we are. We know there’s 90 minutes in a soccer game and we’re in minute 78, you just don’t know if they’re going to score three goals next or not, so to speak, and I think it makes it very hard on your side. So I’m really happy you’re doing that.

One of the questions that I was going to ask, also, are you seeing a lot of attrition, a lot of people moving from one company to the next, or are people now more likely to stay in their seat because things are not as easy?

Nina Kjellson:

We are finding people a bit more risk averse to move, and for two reasons, and we do a lot of company building and recruiting, as does Abbie and the Third Rock team, and we saw an imperative when looking at a new position that there be a certain balance sheet for a seed stage company in order to move, and so we see a reluctance for people to move, because series seed or series A are not routinely now 75, a hundred, 200 million, which we saw a lot of in the last three years. So people are concerned about runway to jump, they’re concerned about the risk and what’s the capital market for early seed stage and venture-backed companies versus the company that they’re with, particularly if they’re coming from big biotech or pharma.

Interestingly, and sort of sweetly, some people, even though they may be companies that are more troubled or where they’re fully vested, they’re staying out of a sense of loyalty, because they want to manage out and support the teams that they’ve built and see things through, even if there’s a high probability that their company may not make it or that they may be the last wave of a reduction in force, but it’s kind of nice to see that sense of loyalty. So they want to wait and see how things play out.

So certainly, there’s downsizing and there’s rifts and there’s shut downs, more so, quite honestly, than what is on the front pages of our industry newspapers and journals. It’s happening quietly, and it’s definitely shaking the space and shaking folks. It’s a tough time in all corners of our sector.

Abbie Celniker:

It’s been really interesting to see, as Nina was saying these, the rifts or the shutdowns, they’ve just given people pause. So I think a year ago, there was a… I don’t want to say an arrogance, but a little bit of an arrogance, right? People were really playing the game. They’re like, “I’m two years vested, I can go someplace else and diversify my own portfolio by moving from company to company.” We’re definitely seeing less of that right now, and I think that, quite honestly, there’s a bit more talent out there because of this, and so we’re able to fill positions a little bit quicker than I would say we were 18 months ago.

The big change I would say over the last 18 months is positions aren’t staying open for a year or longer like they were during the sort of peak of things from 2020, ’21. They’ve definitely come down in the sense that you can find people a little bit quicker.

I just wanted to comment on what Nina said about the loyalty of people to these companies as they’re going through these transition times. It is remarkable, and I think that it’s gratifying. It just gives you such a sense of connection and confidence in the kind of people you’ve brought into these companies, but I think it’s also because they have trust for us and that people do help them find soft landings, and they understand that there is still company creation going on, and so when they’re in a big ecosystem like Boston or San Francisco, I think that they’re feeling pretty confident that by staying around for an extra three or four months, it’s not going to change their ability to get that next job, and it might make all the difference in the world in how a company comes down. So it’s definitely been a touching thing to see, for sure.

Nina Kjellson:

I don’t want to speak for Abbie here, but we’ve been in an unprecedented 10 year bull run. The biotech cycles used to be more like every four or five years, and so most people that were in it knew that we go through these feast or famine periods, and so much of the recruiting that I’ve done in my life in the industry is recruiting not just to a company, but recruiting into the Canaan family or the Interwest family or the Bay City Capital family, where part of the dialogue is early stage venture-backed biotech is a really risky business, and you’re going to work really hard, and if you’re a talented and diligent contributor, we don’t know if the complexity of preclinical pharmacology or human physiology is going to turn out such that this is a successful venture, because there are so many externalities that we can’t control, but you’re joining a family, and we will help you land in another member of that family or this ecosystem that is venture-backed biotech.

We went through this long 10 year period where you were recruiting to what people thought were just, everything is a rocket ship and it’ll raise an A and maybe a B and then go public, and so now we’re just back to a period of, I think, people joining families and ecosystems of the venture funds and the venture collective, but it’s just that people have forgotten or may never have seen the prior downturns.

Yaron Werber:

So I want to, maybe… I’ll make a quick comment. We’ve actually been looking internally and thinking… To your point, it’s very hard to call the winners early on, and even if you think about the hot companies that are private in each area, very rarely were the hottest ones the ones that actually cracked the code. It’s actually very, very hard to know, so I can imagine being an entrepreneur in that environment is not easy.

I have both of you, and we definitely need to talk about the role of women in biotech and how that’s evolved. You both have very different, but very symbiotic, and at the end, obviously, fairly confluent kind of backgrounds. Abbie, you’re a scientist, and then an executive and then a VC. Nina, you’ve been a VC pretty much most of your life. How is the role of women… Let me actually maybe start with a personal way. How has your career as a woman sort of changed over time? Did you ever feel that being a woman made things harder, and is that getting easier? I know it’s controversial, so whoever wants to start first.

Abbie Celniker:

I’ll jump in. I have to honestly say probably because of being a scientist and starting my career in a scientific environment where really, the sort of initial levels in scientific settings, it’s about 50/50, right? You don’t have this sort of N of one type of phenomenon, but then you see the attrition, and that’s what’s just been weird for me throughout my career, is just to understand, why is it that women say no? Because it’s not just that they’re not given opportunities. It’s sometimes that women are deciding not to take the risk or not to fight the battle, to move into the next levels, and when you’re moving out of the scientific structure and into more of the business structure, whether that’s to be a general manager in a company or whether it’s to move into venture, you’re seeing some women who are just not even pushing themselves to get into that area.

That’s something that I feel like we have to find a way to encourage the younger generation of women who are coming in now to be patient, to be resilient, to know what they want and find the sort of grit, if you will, to fight the battle a little bit longer, because then you find yourself in a position where, yeah, you might be an N of one, but your voice is equally heard, and you can influence at a sort of equal level, and I just think it comes down to people wanting it badly enough to continue to push the limits. It’s not easy, and I’m not trying to suggest in a Pollyanna-ish way that all you have to do is want it. That’s not what I’m saying, but I am saying that if you’re patient and sort of able to withstand a little bit of the ebbs and flows of acceptance in the roles that you’re moving into, I do think that we’re going to crack the ceilings and see more women in these positions in the coming generations.

Yaron Werber:

Is it a self selection, or is there that there is just fewer women and there’s been fewer examples of success or role models?

Abbie Celniker:

I think it’s all of those things. There’s a lot of studies that have said that people are willing to move into a role where they see people like themselves, whatever the diversity category is, and if you don’t see anybody like yourself, you’re not going to push yourself in there, because you’re going to say, “Well, how could I succeed if nobody else has?” So that’s why I’m saying it’s a combination of all of it, Yaron.

I do think that that’s one of our obligations, as senior women who have made it into these roles, is to be present, to be vocal, to go and sponsor women coming in, not just mentor, but sponsor women coming in, because then the next gen and after that is going to see even more people in the role. So they have to believe that people haven’t been artificially placed in a sort of quota type of mode, and that there’s an authenticity to why they’re there.

Yaron Werber:

Nina, go for it. This is an area of passion for you.

Nina Kjellson:

It sure is. So stop me if my stumping or soapbox becomes overwhelming. For me, it’s been really a both and. In my own career I’ve been unbelievably lucky from the first to have been in firms and organizations with a lot of diversity, with a core philosophy of meritocracy, and also with a lot of women and women leaders. At Canaan, we’re almost 50% female, and right now we have five female general partners, which is just extraordinary as a peer cohort and comradery. So I feel very, very blessed in that regard, but when I think about when I started in life science investing at a hedge fund in New York in 1999, and I think we’re coming up on JP Morgan here around the corner, and attending my first JP Morgan, and the experience of being a young woman in that sea of pinstriped suits at that conference, and the trajectory of experiencing which one of these is not like the others, and the arc of that throughout my career, there’s an enormous amount of conscious and unconscious gender bias and other bias in the industry.

When I think about how many times I felt how the men in our industry pattern matched me against other women, and that pattern matching wasn’t as a professional or intellectual peer, giving me a full and equal seat at the table, I still think we have an awful long way to go before it is an even playing field, and that has a lot to do with things that are really, really important to being successful in the business. It has to do with the clubs you get inside access to for deal flow, for the conversations that you get to be fully included in for power brokering how a transaction gets done, a hire gets made, a fire gets done, a syndicate gets allocated. Things that are really essential to being successful as a venture capitalist or as an executive or a scientist or a researcher in the industry.

Some of the things that I get involved with, to that end, have very much to do with creating the comradery among women to provide that inside club and that power brokerages and those conversations among women. It’s a little bit like, if you can’t join them, beat them, or create your parallel networks, while at the same time, how do we work for inclusivity and diversity and really co-mingling so that we can have an industry that really plays well together?

One of them is Woven, the platform that we created to create a place for women executives and investors to come together and convene in all sorts of different ways, with the premise being, this is sisterhood, share deal flow, share ideas, get each other on boards, get each other into roles that advance the careers.

The other is one of my partners’, more on the tech side, but it now has a healthcare angle as well. It’s AllRaise. It’s specifically for investors. It’s a great organization, a not-for-profit that really helps raise up all check writers, and hence raise up, also, women who get backed as investors.

Man, these things are important, and I would just say, just as a side note, I won’t quote the specific statistics, because I haven’t seen the primary research, but I saw some really disheartening data. During the pandemic, there was a lot of emphasis on diversity, equity, and inclusion, a lot of it focused on race and ethnicity, and not just on gender, but I think rising tide lifts all boats, and it showed in our industry and venture that we’ve actually gone backwards in terms of the numbers of diverse entrepreneurs that were backed in terms of either founders or executive teams between 2021 and the first half of 2022.

A concern is that this might be more of a moment rather than a movement, and that DEI was maybe something that was a perk or a marketing initiative rather than something that’s a true and enduring commitment, and I just raise that as something that we should be mindful of, make sure that we keep beating the drum, because it’s a business imperative. There’s so much data now on performance statistics for diverse businesses making better decisions, having better revenue performance, better governance. So it’s not just a moral imperative, but really a business imperative that we do this.

Abbie Celniker:

Just to double back on what you just said, Nina, it can’t be a moment. This has just got to be woven into the fiber of everybody’s business. You can’t get lethargic, you can’t get bored with it. It really just has to be something that we integrate into how we recruit, how we develop, where we recruit. There’s just so many different aspects of it that we worry a lot about this moment in time type of thing as well, and it just can’t be that. It just cannot, and so people are like, “How long do you have to stay in your role?” I’m prepared to stay in my role into my nineties if I have to, just to make sure that create the environment that makes other people want to try it. So could not agree more that you’ve got to just make this a part of the business period.

Yaron Werber:

Where are we? Which inning are we in right now?

Abbie Celniker:

Gosh, the second?

Yaron Werber:

We’re early.

Abbie Celniker:

I think we’re not in the first anymore. I feel good. I feel like there’s been some progress made, but there are phenomena that are very hard to describe that drive this sense of being excluded. So we’re looking for inclusion and belonging, and it is very hard for any person of color, a woman, other diverse characteristics, to not feel excluded when 75% of the people around the table are listening to each other differently than they’re listening to the ends of one that are around the table with them. That’s just all still very, very real. It will take a long time for that to change enough for there to be real and durable change. It’s just going to take time.

Yaron Werber:

So let’s move next, and that was very useful. Thank you for that. I was hoping you’re going to say we’re a little bit more advanced, but the reality is we’re still early. The good news is there’s a lot to change and a lot of time to change. So hopefully the next time we’ll speak, hopefully we’ll be in the fourth inning, but we’ll see.

Okay, so this is my favorite part of the podcast, as we’re getting to the end. A little personal touch and humor, and I was actually going to ask you a different question, so I’m going to change the question and kind of shock you. Maybe Abbie, to you, what was your first job, and what did you like or didn’t like about it?

Abbie Celniker:

This is going to sound so strange. My first job was applying linseed oil to shake roofs in Phoenix, Arizona to sort of keep cedar shake roofs healthy and happy, and my brother got me the job, and so I stood on roofs and linseed oil shake roofs.

Yaron Werber:

Yeah, that is awesome. I did not expect that answer. That’s important, though. It’s like 20 year life versus about 40 year life or so.

Abbie Celniker:

Yeah.

Yaron Werber:

What about you, Nina?

Nina Kjellson:

Well, I don’t know what this says about me, but my first paid job that wasn’t under the table babysitting was actually in the legal department of Tyco Grinnell, filing compliance documents. So most of the listeners may be too young to know about Tyco and their legal troubles, but we’ll leave it there.

Yaron Werber:

Yeah, that was a landmark. For me, I actually grew up working in… My dad had a small factory, and I was making antennas for the Israeli army. That was my first job, back in the days when people actually needed antennas for their tanks.

Nina Kjellson:

There were countless things. It was sort of like, what didn’t you do to hustle as a kid to make a buck? Restaurants and babysitting and any kind of odd job to make something to supplement.

Yaron Werber:

It’s amazing. My kids are early, sort of mid teenagers, and colleges are now putting a huge emphasis on kids actually getting jobs. That’s just kind of the things we all grew up with. That wasn’t a part of something you did to get into college. That was just life, which is the best lesson of it all.

Nina Kjellson:

That’s how you paid for college.

Abbie Celniker:

Well, when you tie it back to what we all do for a living here, hiring people who are scrappy, want to roll up their sleeves, are willing to do the time and not necessarily sort of anticipate a promotion within a year just because they stayed at their job, I think a lot of that mindset comes from the fact that tons of people just never worked until they graduated from college, and you just didn’t understand that concept of really learning and gaining confidence so that you could actually do something better and then demand something more.

Yaron Werber:

Nina, have you ever skydived, or would you ever skydive?

Nina Kjellson:

I have, and I would do it again.

Yaron Werber:

Wow. You’re the first one. Ding, ding, ding. What about you, Abbie?

Abbie Celniker:

I have not skydived out of a plane. I did the sort of inside fake skydiving, where they blow a lot of air up so that you can float.

Yaron Werber:

Yeah. Nina, is it fun to jump off a plane? By the way, if the plane is fully functional, I’m going back to the runway. I’m not jumping out.

Nina Kjellson:

Fun is not quite the right word. It’s really fun when you’ve safely landed and when all of that adrenaline leaves your body, but there’s something sort of spiritual about doing something really terrifying.

Yaron Werber:

Absolutely. Great. Nina and Abbie, so great to see you. Thank you so much for joining us. It was really great.

Speaker 1:

Thanks for joining us. Stay tuned for the next episode of Cowen Insights.


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