The Murray Hill, N.J.-based firm has branched out considerably since then, establishing itself as an independent venture fund in 2001, and investing in spinouts from British Telecom and Philips Electronics in addition to Lucent.
More recently, NVP has looked West. The firm recruited David Tennenhouse, former Intel Corp. research director and DARPA chief scientist, as an investment partner late last year. Tennenhouse opened NVP’s first Silicon Valley office shortly thereafter, in San Mateo, Calif., charged with scouting spin-outs from West Coast tech companies. Considering the number of regional R&D powerhouses, he tells PE Week Senior Editor Joanna Glasner, the biggest challenge has been narrowing down the scope of potential new deals.
Q: You joined NVP in November. What’ve you been doing since then?
Since joining, I have played a few different roles within the firm. One is developing new relationships or deepening relationships with some of the big tech companies out here. Our business model is to have long-standing relationships with a relatively small number of companies. At most of them, I know the CTO, or the director of research, or the business development folks, so I’m calling them up and letting them know what I do now.
Q: Have you made any investments yet?
In February, we invested in Alverix, a spinout from Avago, based in San Jose, Calif. Its specialty is handheld readers for primary care diagnostic tests. The readers are much more accurate than tests that you read visually today, which give you a lot of false negatives.
The project actually predated Avago’s spinout from Agilent. We partnered with Safeguard Scientifics on that investment.
Q: Virtually all your investments start out in labs of large companies. How do you build a startup culture?
We do a lot of team building and bring in a lot entrepreneurial blood. What you usually find is they start out feeling great. Then they realize the bank account is going down, so that sense of urgency starts setting in. You want them to get the sense of urgency, but not panic.
Q: Why don’t traditional VCs do more corporate spinout deals?
These are still pretty immature assets. Often the technology’s mature, but the business isn’t. And large companies often don’t assign IP in the way that VCs are used to. It helps that we have our own in-house lawyer, and most of us have been inside the large companies. We’re more commiserating with them.
Q: Your firm closed its last fund, for $275 million, in 2006. Any plans for a new one?
We’re thinking maybe late 2009.