5 questions with Elon Boms

Elon Boms founded Launch Capital in 2008 to invest in early stage startups on the East Coast. So far, it has made 17 investments and is aiming to maintain that investment pace through 2009. Boms wouldn’t disclose the name of the firm’s only limited partner, other than to say that the investor is a family office based in New England.

Launch has offices in Cambridge, Mass., San Francisco and New Haven, Conn.. The firm’s office locations are based on their proximity to such schools as MIT, Stanford University and Yale University, where Boms earned an MBA.

The firm’s fund is evergreen and has somewhere between $10 million and $50 million to invest, Boms says. Boms and his team don’t receive a management fee, but will receive a part of the carry.

Lots of firms have tried to target only early stage opportunities and met with limited success. PE Week Senior Writer Alexander Haislip recently caught up with Boms to find out what he planned to do differently.

Q: What have you done to avoid the pitfalls of doing so many early stage deals?A: We’re aligned closely with universities, such as Yale, which has helped us find deals and do diligence that keeps our costs low. It’s very tough to balance the ability to do many, many deals with a very low cost structure and not be innovative at doing it.

Q: Can you describe more your relationship with Yale?A: We’re in touch with the tech transfer people at least twice a week. I sit on the board of the entrepreneurial institute. We’re very closely aligned with the business school there and helping business school students work directly with us. They do a lot of market research for us and a lot of level-one analysis and make recommendations for us as to whether we should progress to further reference checks. [The firm pays $40 per hour for the research.]

Q: In addition to using students, what other techniques are you using to keep costs low?A: When we’re leading a deal, we have pretty set deal terms we utilize, so that eliminates the need to hire lawyers. We’re able to process through closing documents much quicker as a result, too.

Q: Having invested in so many companies, how have your balanced your board commitments?A: We don’t take board seats; it’s not one of our core priorities. Most of our companies don’t even have boards yet. The way our model works is we take a medium-active role in the companies we invest in. Once we hand-off the company to a Series A round investor, we step back.

Q: What are your expectations on achieving liquidity on so many early stage companies?A: When I look at the ridiculously long terms to liquidity, there are two ways we address that. We invest in capital-efficient companies that won’t require $20 million to $30 million from venture investors. We understand that dilution is always going to be a risk. We aim to play nice and ride along. We do have an additional investment vehicle that could do select follow on funds. Certainly when you set up a business like this, you have to align incentives and talk about how it’s a very long time horizon and wait for returns.