Episode – 20

Biotech Entrepreneur Shares Secrets of Multi-Million Dollar Deals

Description

Peter Blaney is CEO of Induran Ventures, a Venture Philanthropy General Partnership. He has been an entrepreneur and venture investor across the spectrum of biotechnology for over 30 years. He was involved in the launch of BIOX, a $125M build of the world’s first continuous processing biodiesel refinery. He focuses on direct investments in projects aimed at specific human problems.

In this interview Peter shares nuggets from his 30 years of experience in doing multi-million dollar biotech deals. He talks about the 3 aspects he considers when looking at a deal. He explains why sometimes getting a good deal is better than getting a great deal. He talks about the qualities he looks for in the principals of a company. He explains how he keeps his pipeline full of quality deals. He talks about how he deals with failure and adversity. He explains why deals should be more than just about the money.


What You Will Learn
- How Peter keeps his deal pipeline full
- 3 important aspects of every deal
- Peter’s unique way of dealing with business stress
- What determines a good market
- Effects of Covid-19 on the biotech market
- and much more


Connect with Peter:
LinkedIn

Full Transcript

JP Maroney:

Hello, and welcome to another episode of the deal flow show. I'm JP Maroney, your host, along with my co-host for this episode, mr. Paul Nicoline, and we have a very special guest, Peter Blaney from Indorama ventures and super excited. I've heard about you. I've heard from George about you as well as the interview and pre-call that you had with our team, super excited to get to know you and your company a little bit better. Some of the deals that you're working on and really tap into your storehouse of knowledge over the years of doing lots of deals, because the deal flow show is not only to introduce people to great guests that have an interesting background and good stories to tell, but it's also to share with others about how you vet a deal, what you look for in great people, how you put together deal teams, the whole process. So we're going to be asking some of those questions as well, but I'd like to start by finding out the way back as far as you can. And talk about how you got started in the business. Can you share with us a little bit about that?

Peter Blaney:

I G I got started in the business, um, almost 40 years ago, um, because I decided that being a foreign correspondent was very hazardous as an occupation. I might get killed. I was in a couple of war zones and made the decision that I wanted a lot of adventure. So I did an MBA and started my own company right afterwards. Um, that's 40 years back and it was basically I wanted an exciting life.

JP Maroney:

What were some of the early deals that y'all did when you got started?

Peter Blaney:

Well, the first thing I did when I got started was shortly after graduating from an MBA, I started my own company, um, and it was in an industry, um, that I had a fair amount of experience in because of family, um, and commercialize some technology that came out of the university, um, and started my own company. Um, and that was my first deal. Um, so over the 40 years I've been on all sides of the table, an investor, an entrepreneur, a fund manager, and so on, but I started out, um, as a, you know, an entrepreneur starting up a little company,

JP Maroney:

Peter what's the largest deal that you've been a part of

Peter Blaney: 

The largest one I've done, uh, was a company called Bionics BIOX. It was the world's first continuous process biodiesel plant. And that was $125 million. Um, we ended up, um, taking the company public for awhile on the Toronto stock exchange. And then after that, it was taken out private again, but that was the largest single light deal I did. And what year was that? That would have been in the, uh, late nineties. Can

JP Maroney:

You describe where the company is today? The kind of things that y'all are working on and what you're looking for in terms of the future?

Peter Blaney:

I've always been in the biotech space, um, and across the spectrum in biotech. So, um, one of the earliest projects I did was a company called performance plants, which was an ag biotech play in that situation. What we were trying to do was get, um, crops ready for climate change. So we were making major agro crops, drought, tolerant, salt, tolerant, heat, tolerant, cold tolerant, whatever nature was going to throw at them. And we ended up licensing most of that technology out to major agro companies in Europe, the United States and Asia. Um, but it was kind of a start getting ready for climate change. We were concerned about what was happening socially. Um, something like the club of Rome was very popular at the time telling us that we weren't going to have enough to eat. Um, so we were trying to get ready and, um, it was, uh, driven in part by, um, adventure, but also driven in part by a desire to make a contribution to pressing global needs for humanity. It sounds very, um, noble, I suppose. Um, but actually that is what we were trying to do.

JP Maroney:

Well, that's a good point. We talk all the time when they are in fact with the team the other day, we were doing a video and that said one of the greatest ways to build something truly extraordinary is to find a big problem and find a solution for that problem. So that that's obviously where you guys have found a place to plug yourself into. Um, how do you see going forward? We're obviously hearing related to the, whether it's the pandemic or the, the plan DEMEC or whatever people want to call it right now, but what's going on. Um, how do you see things working out agriculturally? Because I keep hearing rumors about shortages and things like that. So what is, what is the perspective from, from you and your company?

Peter Blaney:

I can't really comment on today, whether food shortages are going to be a big concern in, in the near term or not. Um, I think that we have made enormous advances over the last couple of decades in biotech, and that would include certainly agricultural biotech, so we can do a lot more than anyone would ever have imagined. Um, in terms of developing functional foods, putting proteins into foods that aren't there now putting the vitamins and so on, essential nutrients. So I think it's, it's making a very positive contribution to the world, um, and, and playing out honestly pretty much the way I expected it to. How do y'all keep your full

Paul Nicolini:

In terms of deal flow for your organism?

Peter Blaney:

That's a critical question. And, um, you know, you have a couple of options. One of them is to wait for someone to throw a business plan over the transom and you take a look at it and it looks cool and you want to do it. That's really not the way I operate. Um, I identify problems I'm interested in. And then I find the first thing I look for is the people that can do something about it. Then I look for a technology technological fix that we can use to address the problem, but I don't wait for things to happen. I sort of identify what I'm particularly interested in solving in terms of big social problems. And a few years back, we started referring to ourselves as venture philanthropists, partly that reflected our age, um, being closer to the exit and the entrance, but it also just seemed to be consistent with what we had done over the 35 years. So yeah, I don't have any trouble whatsoever with deal flow because we create our own deals.

Paul Nicolini:

Yeah, yeah. Uh, Peter being in biotech, how has, or have you seen an uptick in the business? Uh, due to COVID?

Peter Blaney:

Oh, I started seeing a down tick for sure. Um, I had spent two years, um, getting a deal negotiated with an investor, first of all, finding the right kind of investor for the project. Um, we got through extensive, um, diligence with them. We even got to the point where every single document in the deal had been vetted and we'd gone through it line by line. Both the investors and ourselves were happy with it. Um, we didn't have to dot any more I's or cross any more teas, but we got to that finish line on March 15th of this year, and there's a French term force measure or, um, which I'm sure many entrepreneurs have become familiar with. So that deal got shelved. Um, and I had to go back and start over again. So that was very discouraging. And that was an outcome of, um, the, the COVID pandemic.

Um, I N I noticed it about that time of year. We like to try and get our money from family offices as much as possible. And the doors closed everywhere for several months. There was just nothing happening at all. And in many people headed to the sidelines and wanted to be, um, cash, you know, heavy on cash because no one was sure how it would play out and people weren't sure what they might need to be doing next. But I have noticed, um, along with the sun, um, a lot of light has come since, and I think the markets are opening back up for early stage investment. I think it's, it's getting reasonably good again as, as an environment. So while it started out doing something that was very difficult for entrepreneurs, I think it shut the markets right down. I think there's just a lot of demand now for, um, alternative investment and for early stage and it's coming back and particularly biotech. Um, it's, it's becoming much more, um, in fashion than it had been in previous years,

JP Maroney:

You said something about family office and the money we've experienced, the exact same thing. Uh, George, who, uh, I, I know, you know, and set some of this up with you with the show, but, uh, you know, we've had the same conversations. So much of the family office money is just sitting on the sidelines and very opportunistically waiting for what are very likely going to be some good opportunities coming over the next 18 to 24 months. But you also talked about that being a setback, hitting that wall and having to basically start over my assumption is over the last 40 years, that's not the first time. How do you walk through the mental process? What do you do when you hit the wall to reset and kind of get yourself prepared to go back again for another deal?

Peter Blaney:

Well, it's tough. I mean, it's, you're talking about, you know, really tough experiences. Um, but I think most, most entrepreneurs can bounce back pretty quickly. That's I think being able to the buzzword today is resiliency. You've gotta be able to come back from adversity. And, and I, I mentioned earlier, you know, we call our company, um, indirect ventures and it came from Miguel Indurain the Spanish cyclist, uh, at any stage of the tourist, very tough experience. The entire tour is unbelievably tough. I think business is the same, especially when you're in early stage, you're just going to have constant ups and downs, um, and huge disappointments. And you have to be able to pivot on a dime and it takes great mental flexibility, which is really one of the things I appreciate about the occupation, the fact that you have to be flexible. Um, so it's, I think a trait that sort of comes naturally to me.

Um, but if you start, uh, believing in the proposition and I said, I like to solve a problem that, that I think is really important for humanity. If I get an adverse shock. Um, yeah, it's very disappointing. But given that, I really believe in the mission and believe in what I'm trying to do. Um, a setback like that. It's not so hard to recover from because you just keep your eye on the prize. You keep a look on the, on the end zone where you want to go, and if it's solving a big problem, a setback, isn't that hard to deal with.

JP Maroney:

You mentioned prior to your entrepreneurial world, um, prior to the MBA being a foreign correspondent, any of those skill sets are connections or any of that history support, you are skills that you've been able to adapt to the deal-making process.

Peter Blaney:

Well, communication is really important. Being able to express yourself clearly, um, and being able to write it's also pretty valuable. And, and it's, it's a skill that a lot of entrepreneurs come from a technical background, a science background. So communication and writing is probably more of a challenge for them. Uh, if you love to write, which I do, um, you know, writing business plans can be a lot of fun because you can put some really positive stuff in, in, in it, um, anecdotes and stories and frames of reference and conveying information, all of that stuff, you know, it came out of, I suppose, in part a journalism background, but, um, I really came to the conclusion that journalism was like making sausages and I did not want to do it. So, um, I didn't spend a lot of time, um, working as a journalist.

JP Maroney:

Great. Peter, can you talk to us about the evaluation process you go through when you're looking at a deal and your due diligence process that you might have?

Peter Blaney:

Sure. I can do that. And so many people find this difficult. Um, for some reason, people find it often the most challenging part of the whole investment cycle. I think that's unfortunate. There's really how I deal with it is through frame, my frame of reference. There's only three aspects to a deal. You need to be concerned about three broad aspects. The first and foremost is the people, the people you're investing in. The second thing you need to focus on is the technology and thirdly, the markets, and I recommend you start with people. Um, a lot of people in the venture business have a science or, or an engineering background, and they tend to focus on the technology first. And I've seen a lot of people fall in love with a molecule or a formula and get into a deal because they loved the technology and they look at the people later.

Um, and I think it's just getting it completely backwards. You need to focus on the people. Are they competent? Are they honest? Can you get along with them? Do you want to spend time with them? Um, are they team players, you need to really focus on the entrepreneur first and foremost, before you ever look at what they're trying to sell, you try to get an assessment of the individual. Then I recommend you look at the markets, um, because if they're characterized by low entry barriers, heavy competition and not much profit, um, it's a mistake. Look at the technology at all. Um, and then thirdly would be the technology, which is where most people start. And I think it's backwards. Um, but as good as the technology is, that's fine. The reason why I say focus on the people first is in almost every case I've been involved in within six months of getting into the project, the initial technology's out the window and gone, and you've made a pivot to something else it's a new technology or an adoption to the technology that no one foresaw and what makes the difference there, the entrepreneur, the guy that you should have, or gal that you should have been focused on in the first instance.

So that's kind of my approach to diligence. I just look in those three broad categories and I start with people and just sort of work my way through it.

JP Maroney:

I love it. Bet the jockey, right Dan, on the jockey. Once again, this is JP Maroney and Paul Nicoline, and this is the deal flow show. If you're watching or listening to the deal flow show, you can get additional episodes previous and future episodes by going to the deal flow show.com. Um, our guest today is Peter Blaney. And Peter, you said something talking about, um, a lot of people look at the technology first and I've heard many, many entrepreneurs over the years, 30 years of building companies, myself, I've advised a lot of other entrepreneurs set on boards. And a lot of times people go out and create the solution and then try to figure out who's willing to buy it. And it's a, it's like backwards, right? And many years ago I heard one of my mentors said never, ever, ever sell something people don't already want to buy.

And it made a lot of sense and it'll serve, serve you well for a long, long time. So I love your idea of finding the great people. How do you keep your pipeline full? I got a text message from one of my buddies. He puts together, um, boards and he invited me to come on another board and, uh, today, and he's like, you're a perfect fit for that. And he's got this little deck of cards, right? Every time I talked to him, he's looking to place people and things like that for yourself. How are you keeping sort of a portfolio of contacts over the years and figuring out who would be best placed or best suited for a certain deal that you're putting together?

Peter Blaney:

Um, I start before the back of the envelope in a deal. So, um, if, if the back of the envelopes already out and there's writing on it, I'm getting there late. That's my first point. Um, I, uh, because I start there and usually go all the way through to if the exits in IPO, I'm all the way from the very, very beginning to the very end. Um, I don't really have a problem with deal flow. I think the later the stage, the investment you choose to make the more deal flow gets problematic. Um, so if you're a late stage investor, I probably don't have a lot of advice for you. Um, if you're early stage, you don't have a problem with deal flow. Um, there's a bazillion deals out there. In fact, there's way too many deals. I would think a question I'd be more expecting would be, how do you possibly deal with the deluge?

There's so much stuff coming at you. Um, that's, that's more of a problem, I think for early stage investors, the deal flow. Yeah. I think it reflects stage of investment. Um, and so since I tend to define, you know, sorta what's problems, I want to get involved with in the first place, um, and then look for the people to do it. I don't really have a problem with deal flow as for a stable of people that you can rely on. Um, you know, I certainly have a stable of accountants and lawyers and people that I've relied on and worked with over decades that are certainly there for me when I need them, but the specific entrepreneurs or board members, um, you know, if I was looking for a board member for biopics, which was the biodiesel company, not likely that, uh, a director from the agricultural biotech company performance plants is going to be the right fit. Um, so I, I don't really find, I can pick people out of one previous situation and drop them into another one very much. I pretty much looking for new, new, new blood. And one of my first, um, chairman, um, Jeff Island, who was the CEO of shock, or he, he made a point of telling me that, um, you need fresh blood. You always need to be bringing in fresh blood. So rather than look for people that have been tried and true as entrepreneur somewhere, I I'm more apt to go for a fresh jockey.

Paul Nicolini:

What are some of the characteristics of a deal or a person that would lead to a great deal for you? What do you look for?

Peter Blaney:

I start with people, um, w when I'm trying to raise money and I've been doing fundraising for decades now, um, so it's an activity I've been doing for a long time, and no matter what technology I'm in, I'm in the fundraising business. I start with the people and I try to make a connection with the people on the other side of the table. Um, try to find out what they want, what they need, what they like, what they don't like. It's a lot like selling really, um, one of the first mistakes that everyone makes when they sell is they present their goods immediately. They say, hello, hi, how are you? Here's my pitch. And I think it's a huge mistake. You got to qualify the buyer. That's just basic sales training. You really need to understand the people on the other side. So I started with that approach.

Um, and I look for people that I think I can form a connection with, um, the concept of negotiating terms with, um, a blank slate. On the other side, someone, I don't know, someone I haven't made any contact with. I have established no understanding with, honestly, I wouldn't know how to go about it, and I wouldn't recommend anyone do it. So how do I start? I look for people that I can connect with, and if they strike me as good people and they genuinely interested in what I'm doing, and there's a genuine fit with what they've done in the past or what they want to do and what they need. Um, then the terms, the next thing I look for is somebody who can share. And I often ask people this whole question, do you want a great deal out of me or a good deal? And if they say a great deal, I say, Hm, that means there's not much room for me. Um, if they say they're looking for a good deal, I think they're probably playing win-win and I'm more inclined to go. But yeah, I look for people that, um, I can connect with. And I look for people who are open to win-wins genuinely open to win-win where they want me to do well as, and they want to do well themselves. So I don't know if that's a great answer for you, but it's my answer.

JP Maroney:

Let's turn the tables for a moment. So what would your peers or business associates see in you? What would that sound like? Your characteristics? What do you bring to the table?

Peter Blaney:

Another tough question. I don't know how much time. I don't know how much time I spend in the mirror, but, um, I think people appreciate my determination and perseverance. Um, I think they appreciate the fact that I only come to the table if I genuinely care about what you're doing. So there's some passion there. I think there's an honesty there, but, you know, it's kind of lame for me to say, Oh yeah, I'm honest. Um, I believe I am, but I think that's it. That's what people look for. They're looking for some integrity and hopefully they've, they've seen some in me and they haven't been disappointed.

JP Maroney:

So last night I was watching the series Cobra, Kai, you know, are you familiar with it? No, it's a, it's a spinoff from the old karate kid movies. So, and it started on YouTube and they put it on Netflix. And so I've been watching these episodes. So anyone who's ever watched the old karate movies we'll know Ralph macho or whatever, that was the kid that mr. Miyagi trained and the blonde headed kid that he fought at the very end when he did the bird thing, you know, and kicked him. Those two guys are grown men in this new series and their fathers. So it's a very interesting, uh, interesting show, but you have a background and an interest in karate, anything from karate, um, discipline thought, processes, mindset, anything like that, that you felt like has carried over into the deal-making process. You felt like is applicable.

Peter Blaney:

Karate is not the only sport I do. Um, I do cycling, I do swimming. I do weight training. And over the last 40 years, I have never missed the minimum bar per year. It was 250 workouts. So I've done that for 40 years and karate is a big part of that, but it's just keeping yourself as fit as you possibly can because we're in a very stressful business. I found the best way to deal with stress is things like karate, karate is, um, you know, you might spend a thousand hours getting the techniques down the blocks, the kicks, the punches, the basics, um, to be any good at it. You spend probably 10,000 hours polishing it. And the next nine to 10,000 hours is training the brain, the mind, not the body. So keeping yourself really clear, um, in your thinking. Um, I find that athletics, karate, and other things really good for that. It's really good for the stress, um, karate itself. Um, it's really good for giving you mental focus.

JP Maroney:

I love it. Great answer. Peter, what kind of people would you like to connect with from our audience? And also from our past guests,

Peter Blaney:

You know, my ideal investors, let me talk about biopics. For an example, when I came to the deal, um, to be entrepreneurs, I came very late to this one. They had a working prototype going and it looked like a Rube Goldberg machine. It had binder, twine and duct tape and, you know, pipes all over the place in it stank, um, because they were converting animal renderings into fuel. So they had a signed term sheet from the largest venture cap group in Canada. And I came to them and I said, look, I think I can do something more for you than they can. Well, what's that I brought two strategic partners to the table. One was an oil and gas pipeline company that makes oil and gas pipelines for 40 or 50 countries around the world. The other was, um, a chemical processing company that makes car interiors for every major auto maker on the planet.

I recruited those two companies and their CEOs to get involved in the project. So what I had was companies that had their head office down the road from me, it was close by. I had access to the top level management in the firm. I had access to their scientists. I had access to their engineers and we also had access to their finance people and their bankers. And they brought all of that together. Um, and the large venture capital firm was kicked out of the deal. They said they wanted in the deal and they would take my term sheet. And I said, no, you can't come in because you will not have the courage. You will not have the stability or the intention to stay through to the end, because we're definitely going to hit problems in this. This has never been done before in the world.

So it's going to be tough. So we didn't let them in. Um, they were wiped out, um, in Oh eight and no longer exist. The VC firm I'm talking about. Um, so, you know, the families that I were dealing with was dealing with, they have family offices, but it wasn't just about the money. I could bring them in because they had expertise. They had interest, they want it to be involved. They cared about the projects. That's the kind of thing I'm looking for from investors. And that's part of the reason why I say it has to be a problem that I really care about. And I want to recruit investors who also really care about the problem. Do I want to make money? Yes, of course. I want to make money. Everyone wants to make money or almost everyone, but it can't be the only motivator they have to care about the problem. And you have to balance your concern about making money with your concern about solving the problem. And no one of those things should override the other. That's the kind of thing I'm looking for in investors. People who can do that. Well,

JP Maroney:

Hopefully some folks will be reaching out to you once again, if you're listening to this episode or watching it, this is the deal flow show, and you can get more episodes and also subscribe or follow us for future episodes@thedealflowshow.com. I'm JP Maroney. This is my co-host Paul Nicoline. We have Peter Blaney on the episode with us. And what I'd like to do as we finish up Peter is if you could give out whatever the best way is for people to get in touch with you. If it's email phone going to the website, what would be the Westway for people to reach out?

Peter Blaney: 

Email's probably the easiest it's Peter Blaney, um, all lower case. Peter P E T E R Blaney B L a N E Y. Add Indorama I N D U R

Paul Nicolini:

A N. ventures.com. Peter,

JP Maroney:

Uh, once again, we appreciate you being on the deal flow show on behalf, upon Nicoline myself, our team here at Harbor city and the deal flow show I'm JP Maroney. And once again, if you're watching or listening to this episode, you can get more episodes@thedealflowshow.com. We'll see you in another episode very soon, take care

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