January 27, 2023

Bloomberg Begins Fund to Invest in Start-Ups

On Wednesday, Bloomberg will announce the formation of Bloomberg Beta, a $75 million venture capital fund, which has already begun using Bloomberg L.P.’s money to place bets on young start-ups like Codecademy, a Web site that provides online coding tutorials, and Newsle, a Web service that alerts users to news about friends.

It is not the first time that Bloomberg L.P. has put its money in technology companies. It is a limited partner in Andreessen Horowitz, a venture capital firm with investments in technology companies like Facebook and Twitter. And until shutting it down recently, Bloomberg also ran its own incubator, Bloomberg Ventures, which helped build new businesses that could later be folded into Bloomberg products.

But Bloomberg Beta is the first time that Bloomberg L.P. will reap profits from direct investments in some of the technology companies that its news operation covers.

It is already an awkward time for the company, which is under fire because its reporters used Bloomberg’s financial terminals to snoop on companies they covered, including Goldman Sachs, and the fund raises questions on journalism ethics.

“This puts Bloomberg News’s credibility at issue,” said Edward Wasserman, dean of the Graduate School of Journalism at the University of California, Berkeley. “Reporters will not only be held to standards of accuracy and the like, but scrutinized for evidence of self-dealing and self-interest, which can be toxic to a news organization.”

Bloomberg Beta’s partners say they will operate as a separate legal entity from their parent company, which is Bloomberg Beta’s sole investor. The firm will be based out of Bloomberg’s offices in San Francisco, where many of its technology reporters are also based.

Bloomberg has been aggressively expanding its technology news coverage in recent years, hiring technology reporters and editors from The Wall Street Journal and The New York Times, and last month it doubled programming hours for Bloomberg West, a television news show on tech that regularly hosts executives and start-up founders like Jack Dorsey, a co-founder of Twitter and the payment service Square, and Elon Musk, the co-founder of PayPal and Tesla.

A Bloomberg News official said the company would follow existing rules on conflicts of interest, which forbid the company to cover itself. In cases where reporters cover companies or investment firms in which Bloomberg has interests, investments will be disclosed in disclaimers.

The New York Times Company has invested in some technology start-ups, lists them online and discloses the stakes in related coverage.

Mr. Wasserman questioned whether Bloomberg Beta’s access to technology executives might give Bloomberg News a competitive advantage in its reporting, and whether those executives might be willing to accept an investment from the firm, over others, with the hope that they might get more positive coverage in exchange.

Similar concerns were raised after Michael Arrington, the founder of TechCrunch, a popular technology blog now owned by AOL, announced the formation of Crunchfund, a venture capital firm. Mr. Arrington subsequently resigned from TechCrunch (though he recently surfaced as a columnist).

Such worries also came up when a former TechCrunch writer, Sarah Lacy, announced that she was beginning a new blog, called PandoDaily, to cover start-ups using money from prominent start-up founders including Peter Thiel of PayPal and  Tony Hsieh of Zappos and venture funds including Accel Partners’ Seed Fund and SV Angel, a prolific investor in early stage start-ups.

Roy Bahat, the head of Bloomberg Beta, said the firm was set up as a separate legal entity in part to anticipate such fears.

“If an entrepreneur wants Bloomberg Beta’s money because they think they’ll have a higher chance of getting covered by a Bloomberg journalist, then they shouldn’t take our money,” Mr. Bahat said on Tuesday. “We were set up to have confidentiality protections, and we will only share when appropriate.”

“The way Bloomberg reporters look at me should be the same way they look at any other outside investor or entrepreneur,” he added. Mr. Bahat said he was first approached by Tom Secunda, Bloomberg L.P.’s co-founder, and Daniel L. Doctoroff, its chief executive, who, he said, “wanted a window into the world of start-ups.”

Mr. Bahat, who previously ran IGN Entertainment, an online media company previously owned by News Corporation, quickly began putting together a team of investors. He brought on Karin Klein, head of Bloomberg’s new initiatives, to run Bloomberg Beta’s East Coast operations, and James Cham, a former principal at Trinity Ventures, a Sand Hill Road venture capital firm.

Together, the three have already invested in Nodejitsu, a provider of cloud computing; Errplane, which monitors app performance, and ProsperWorks, which makes employee management software. It has also invested in MkII Ventures, a small venture capital firm run by Ron Palmeri, an early investor in the technology behind Google Voice.

“This would have been crazy a decade ago,” Mr. Bahat said. “But as companies try to figure out how to buy innovation, this is one experiment in which a company is trying to figure out a new way.”

Article source: http://www.nytimes.com/2013/06/05/technology/bloomberg-begins-fund-to-invest-in-start-ups.html?partner=rss&emc=rss

M.I.T. Lab Hatches Ideas, and Companies, by the Dozens

Dr. Robert Langer, 64, knows how. Since the 1980s, his Langer Lab at the Massachusetts Institute of Technology has spun out companies whose products treat cancer, diabetes, heart disease and schizophrenia, among other diseases, and even thicken hair.

The Langer Lab is on the front lines of turning discoveries made in the lab into a range of drugs and drug delivery systems. Without this kind of technology transfer, the thinking goes, scientific discoveries might well sit on the shelf, stifling innovation.

A chemical engineer by training, Dr. Langer has helped start 25 companies and has 811 patents, issued or pending, to his name. That’s not too far behind Thomas Edison, who had 1,093. More than 250 companies have licensed or sublicensed Langer Lab patents.

Polaris Venture Partners, a Boston venture capital firm, has invested $220 million in 18 Langer Lab-inspired businesses. Combined, these businesses have improved the health of many millions of people, says Terry McGuire, co-founder of Polaris.

Along the way, Dr. Langer and his lab, including about 60 postdoctoral and graduate students at a time, have found a way to navigate some slippery territory: the intersection of academic research and the commercial market.

Over the last 30 years, many universities — including M.I.T. — have set up licensing offices that oversee the transfer of scientific discoveries to companies. These offices have become a major pathway for universities seeking to put their research to practical use, not to mention add to their revenue streams.

In the sciences in particular, technology transfer has become a key way to bring drugs and other treatments to market. “The model of biomedical innovation relies on research coming out of universities, often funded by public money,” says Josephine Johnston, director of research at the Hastings Center, a bioethics research organization based in Garrison, N.Y.

Just a few of the products that have emerged from the Langer Lab are a small wafer that delivers a dose of chemotherapy used to treat brain cancer; sugar-sequencing tools that can be used to create new drugs like safer and more effective blood thinners; and a miniaturized chip (a form of nanotechnology) that can test for diseases.

The chemotherapy wafer, called the Gliadel, is licensed by Eisai Inc. The company behind the sugar-sequencing tools, Momenta Pharmaceuticals, raised $28.4 million in an initial public offering in 2004. The miniaturized chip is made by T2Biosystems,  which completed a $23 million round of financing in the summer of 2011.

“It’s inconvenient to have to send things to a lab,” so the company is trying to develop more sophisticated methods, says Dr. Ralph Weissleder, a co-founder, with Dr. Langer and others, of T2Biosystems and a professor at Harvard Medical School.

FOR Dr. Langer, starting a company is not the same as it was, say, for Mark Zuckerberg with Facebook. “Bob is not consumed with any one company,” says H. Kent Bowen, an emeritus professor of business administration at Harvard Business School who wrote a case study on the Langer Lab. “His mission is to create the idea.”

Dr. Bowen observes that there are many other academic laboratories, including highly productive ones, but that the Langer Lab’s combination of people, spun-out companies and publications sets it apart. He says Dr. Langer “walks into the great unknown and then makes these discoveries.”

Dr. Langer is well known for his mentoring abilities. He is “notorious for replying to e-mail in two minutes, whether it’s a lowly graduate school student or the president of the United States,” says Paulina Hill, who worked in his lab from 2009 to 2011 and is now a senior associate at Polaris Venture Partners. (According to Dr. Langer, he has corresponded directly with President Obama about stem cell research and federal funds for the sciences.)

Dr. Langer says he looks at his students “as an extended family,” adding that “I really want them to do well.”

And they have, whether in business or in academia, or a combination of the two. One former student, Ram Sasisekharan, helped found Momenta and now runs his own lab at M.I.T. Ganesh Venkataraman Kaundinya is Momenta’s chief scientific officer and senior vice president for research.

Hongming Chen is vice president of research at Kala Pharmaceuticals. Howard Bernstein is chief scientific officer at Seventh Sense Biosystems, a blood-testing company. Still others have taken jobs in the law or in government.

Dr. Langer says he spends about eight hours a week working on companies that come out of his lab. Of the 25 that he helped start, he serves on the boards of 12 and is an informal adviser to 4. All of his entrepreneurial activity, which includes some equity stakes, has made him a millionaire. But he says he is mainly motivated by a desire to improve people’s health.

Operating from the sixth floor of the David H. Koch Institute for Integrative Cancer Research on the M.I.T. campus in Cambridge, Mass., Dr. Langer’s lab has a research budget of more than $10 million for 2012, coming mostly from federal sources.

The research in labs like Dr. Langer’s is eyed closely by pharmaceutical companies. While drug companies employ huge research and development teams, they may not be as freewheeling and nimble, Dr. Langer says. The basis for many long-range discoveries has “come out of academia, including gene therapy, gene sequencing and tissue engineering,” he says.

He has served as a consultant to pharmaceutical companies. Their large size, he says, can end up being an impediment.

“Very often when you are going for real innovation,” he says, “you have to go against prevailing wisdom, and it’s hard to go against prevailing wisdom when there are people who have been there for a long time and you have some vice president who says, ‘No, that doesn’t make sense.’ ”

Pharmaceutical companies are eager to tap into the talent at leading research universities. In 2008, for example, Washington University in St. Louis announced a $25 million pact with Pfizer to collaborate more closely on biomedical research.

But in some situations, the close — critics might say cozy — ties between business and academia have the potential to create conflicts of interest.

There was a controversy earlier this year when it was revealed that the president of the University of Texas M.D. Anderson Cancer Center owned stock in Aveo Oncology, which had announced earlier that the university would be leading clinical trials of one of its cancer drugs.  Last month, the University of Texas announced that he would be allowed to keep his ties with three pharmaceutical companies, including Aveo Oncology; his holdings will be placed in a blind trust.

Article source: http://www.nytimes.com/2012/11/25/business/mit-lab-hatches-ideas-and-companies-by-the-dozens.html?partner=rss&emc=rss

DealBook: A Myspace Founder Builds Again, Buying Game Companies

Chris DeWolfe's new company, MindJolt, has more than $20 million in revenue and 20 million monthly users.Monica Almeida/The New York TimesChristopher T. DeWolfe, a co-founder of Myspace, has a new company, MindJolt.

Just days after the online game company MindJolt moved into its Los Angeles headquarters in March 2010, rain started to pour through the ceiling.

Christopher T. DeWolfe, the chief executive, and his small team of engineers frantically grabbed towels and buckets to protect the computers.

“When you’re working with a big company, you’re used to having a facilities manager and assistant,” said Mr. DeWolfe, who bought MindJolt in March with the help of the venture capital firm Austin Ventures. “It reminded me that you have to dig in and you have to do a lot of work yourself.”

Mr. DeWolfe, 45, is a long way from his days at Myspace, the once dominant social network that he co-founded and later left abruptly in 2009, a few years after it was bought by the News Corporation. Instead of a plush executive suite with a view of the Beverly Hills sign, he now sits two miles away, in a bare-bones office facing a parking lot.

He has also traded the challenges of a fallen social networking giant for a small upstart at the beginning of its life. While Myspace continues to lose money, MindJolt, a profitable enterprise with more than $20 million in revenue and 20 million monthly users, continues to expand its base.

In the latest sign of its ambitions, MindJolt acquired two game companies last week, Social Gaming Network and Hallpass Media, effectively doubling its staff to 80 and adding mobile games to its stable of Web offerings.

And more acquisitions will come, says Mr. DeWolfe, who is considered to be one of the many bidders weighing a purchase of Myspace, according to one person close to the deal, who asked not to be named because talks are private.

“The deals diversify us in a huge way, and it positions us very well for the future, in terms of the growth of the smartphone market,” Mr. DeWolfe said. He declined to comment on a possible takeover of Myspace but said it was a very “interesting” asset.

The News Corporation ousted Mr. DeWolfe as the chief executive of Myspace in 2009, as revenue fell and Facebook rose. While Myspace was losing momentum when he left, it still had more unique visitors in the United States than Facebook. In 2008, the Fox Interactive division, largely Myspace, posted revenue of $856 million.

Since then, Myspace has tumbled spectacularly.

After losing the social media crown to Facebook in late 2009, Myspace hemorrhaged users and cash, prompting its parent company to cut its staff and, finally, put it up for sale this year. While there are several bidders, few think it will fetch more than $100 million, according to two people familiar with the negotiations, who spoke anonymously because talks are private.

Although the capricious nature of the social Web led to the rapid descent of Myspace, its founders hope the same fluidity will work in their favor. MindJolt is an underdog in a multibillion-dollar online game market dominated by names like Zynga, the creator of Farmville, and Electronic Arts.

With its latest acquisitions, MindJolt is building its user network and breaking into the increasingly lucrative mobile entertainment market.

Hallpass Media, a game portal, will add four million monthly users and about 1,500 Web-based games to MindJolt’s portfolio. Its other purchase, Social Gaming Network, a creator of several popular iPhone and Android games (with 30 million downloads), will give MindJolt an edge in mobile devices. The deals will also push the game portal into the business of creating its own games, making it a closer competitor to larger, hit-driven studios like Zynga.

The acquisitions come as more publishers are trying to increase their footprint in mobile entertainment, which also represents an opportunity to be less dependent on social sites like Facebook. The mobile entertainment industry is expected to grow 15 percent, to $38 billion, this year, according to a recent report by Juniper Research.

“Initially, a lot of energy was spent on games on the Web, through platforms like Facebook,” said Shervin Pishevar, the founder and executive chairman of Social Gaming Network. “But over the past year, what we’ve seen is that a lot of that activity is going into mobile. We’ve reached a tipping point.”

Founded in 2008, Social Gaming Network had previously raised $18 million from several prominent backers like Google’s executive chairman, Eric Schmidt, and Amazon’s chief executive, Jeff Bezos.

As young game companies like MindJolt rush into the market, some analysts say, it will be difficult for them to compete with well-capitalized giants. Now, mobile makes up only a sliver of Zynga’s revenue, the bulk of which comes from Facebook. But Zynga, which has raised hundreds of millions of dollars from big investors like Google, is spending heavily on the area.

“It’s early in mobile, but Zynga is going to be a big player in mobile, period, end of sentence,” said Lou Kerner, an analyst at Wedbush Securities.

Despite the challenges, Mr. DeWolfe is taking a lesson from his experience at Myspace as he moves forward with MindJolt. In a recent interview by phone, Mr. DeWolfe and Colin Digiaro, the chief operating officer and a fellow Myspace founder, were quick to offer a list of Myspace errors, including the early focus on revenue and undisciplined expansion. Since taking the reins at MindJolt, the team has invested heavily in an analytical technology that can measure users’ reactions to ad placements.

But Mr. DeWolfe says perhaps his greatest insight comes from selling Myspace to the News Corporation in 2005, just two years after Myspace began — and all the distractions that came with being part of a public company.

“Facebook didn’t have an arm tied behind their back. They didn’t have the same pressure,” he said. “Myspace prioritized revenue and profits over user experience.”

That is not to say he would not consider selling MindJolt at some point.

“We are in no hurry with this one. We really want to get it right,” Mr. DeWolfe said. However, “If there was a right time and right price down the road — definitely down the road — we would look at it.”

Article source: http://feeds.nytimes.com/click.phdo?i=b509740eb1f4508a4caefc761525b724