Founding a successful biotech startup requires not only a good idea but also a good source of financing. The money can come from venture capital, but the people on the venture capital side are not always interested in the long-term well being of the company, or the success of the particular investors they’re speaking to. Dan Yarosh of AGI describes his experience with a Wall Street venture capitalism firm in the late 1980s.
Dan Yarosh, interviewed on May 23, 2023
Place: Rare Books Room, Carnegie Library, CSHL
Interviewer: Antoinette Sutto
At the time that I started and shortly after biotech was hot. You didn’t even need Phase 1 clinical data. You could go public, which is unimaginable now.
We were introduced to a venture capital firm. We negotiated a deal. It looked great. My brother-in-law, Jeff, who passed away, was still alive. This is very early, this is before 1988, maybe 1987. We go into their offices on Wall Street. It’s my father-in-law and my two brothers-in-law and I were partners in the biotech company.
We sit down and we’ve been told this is the meeting to culminate this great deal. My tongue is hanging out, I’m going to now go public at a biotech company. They changed the terms of the deal and it made them in control of the company.
My father-in-law says, “Boys, get up. We’re leaving.” I’m going, “Wait, wait, wait, wait, wait, wait, wait, wait. Maybe there’s something.” To his credit, he said, “Dan, get up, we’re walking out,” and we walked out. We went to lunch and he said they’ll call us. They never did.
It was the best thing that ever happened to me because they were sharks. They would’ve taken everything. There was both the lack of infrastructure and the Wild West in financing. There were tricks and securities types of deals that had been well honed in the go-go 70s that biotech people had no idea how many different ways you could get screwed in the stock market.