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Fixing Israel’s Life Sciences Industry

March 2, 2009 by Steven R. Gerbsman

Here is a good article from WSJ online by Jonathan Matsey.

The Israeli life science industry was in the spotlight recently, when Medtronic Inc. agreed to pay $325 million up-front for Netanya-based Ventor Technologies Ltd., which had raised $17 million in venture financing in part from Pitango Venture Capital. While the deal was great for Ventor’s investors, Rafi Hofstein, chairman of Hadasit Bio-Holdings Ltd., a publicly traded tech-transfer company for Jerusalem’s Hadassah University Hospital, said it highlights a problem with the country’s life science industry: the inability to develop home-grown companies to fruition. And despite the global economic downturn and the re-location of many of the country’s drug and device companies overseas, Hofstein said government policy – and a possible $240 million public-sponsored biotech fund – may ultimately reignite Israel’s life science industry.

Read the full article here

Posted in Board Of Intellectual Capital, boic, Gerbsman Partners, Investments, Venture Capital | Tagged , , , , , , , , , , , , , , , , , | 1 Comment »

Venture Capital and Startups Feel More Pain, Study Says

February 26, 2009 by Steven R. Gerbsman

“Startup valuations are falling and venture capitalists are driving harder bargains, according to a survey by California law firm Fenwick & West.

Like the rest of the economy, the world of venture capital and startups is starting to feel more pain from the deepening global financial crisis. That’s the main takeaway from a new survey detailing trends in venture capital investments during the fourth quarter of 2008 by the California law firm Fenwick & West.

The survey, which analyzed the terms of venture deals for 128 companies headquartered in the San Francisco Bay Area, found that valuations are falling for startups and that venture capitalists are driving harder bargains. The silver lining: The fallout so far is not nearly as bad as it was during the dot-com bust, when hundreds of companies went under and stratospheric valuations came crashing down to earth.

Down Rounds on the Rise

Sure, there were some startups last quarter that secured a higher value on their latest investment round, such as online vacation rental site HomeAway. But, of the 128 companies that received financing, 33% of them experienced so-called down rounds, or an investment that placed a lower valuation on the company than it received in the previous round of investment. More ominous, the percentage of down rounds rose every month at year’s end, hitting 45% in December. “Each month things got worse in the fourth quarter,” says Barry Kramer, the Fenwick & West partner who runs the survey. The highest percentage of down rounds occurred in the first quarter of 2003, when 73% of the companies surveyed by Fenwick & West suffered down rounds.”

Read the full article by Spencer E. Ante here
Other comments on this piece can be found here: World Tech News, The Livermore report, Silobreaker,

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Bad Money Still Drives Out Good

February 25, 2009 by Steven R. Gerbsman

Here is a good analysis of a former collegue of mine, Tim Oren. To read the full article, please click here.

“Gresham’s Law hasn’t been repealed, but it’s taking on new forms in Washington these days.

Having put ‘bad’ money – printed by fiat or ‘secured’ by loans against taxpayers yet unborn – into the banking system in the first round of bailouts, the Feds now presume to rewrite not only future but existing loans. The consequences were on exhibit in Washington last week as financial genius Barney Frank and other politicians “…managed to demand more loans for consumers while simultaneously giving lenders new cause to wonder if they’ll ever be repaid.” They and other congress critters want to make it legal for bankruptcy judges to forcibly abrogate the terms of existing mortgages.

As pointed out in this WSJ article, most of the lending side of the credit market does not come from banks: “Most investors who lend in these markets are not recipients of financial bailout money, so Congress can’t simply browbeat them into making another big bet on the American consumer. ” These lenders have ‘good’ money that is still subject to the reality check of the market, rather than political exigency. But a move to retroactively rewrite credit contracts by government fiat will affect them as well. The result?

First, to make the world of collateralized mortgage debt tremble once again. While the consequences of foreclosures fall on the junior tranches of packaged debt – now mostly written off – in many case the results of forcible, retroactive modification of a contract’s conditions would fall pro rata across all tranches, causing the value of those that are still standing to slide as well. Yet more fear to hang over new as well as existing mortgage backed securities.”

Posted in Board Of Intellectual Capital, Economy, Gerbsman Partners, Investments, Venture Capital | Tagged , , , , , , , , , , | Leave a Comment »

Successful termination of “Prohibitive Executory Real Estate Contract”

February 24, 2009 by Steven R. Gerbsman

Steven R. Gerbsman, Principal of Gerbsman Partners, announced today that Gerbsman Partners successfully terminated the executory real estate contract for a US based life science company.

The publically held company, executed a lease for 54,000 square feet of space in San Mateo, California. Due to market conditions and the need to raise additional capital, the company made a strategic decision to reduce its corporate space allocation. Faced with a potential contingent liability in excess of $ 15.5 million, the company retained Gerbsman Partners to assist them in the termination of the executory real estate contract.

About Gerbsman Partners

Gerbsman Partners focuses on maximizing enterprise value for stakeholders and shareholders in under-performing, under-capitalized and under-valued companies and their Intellectual Property. In the past 60 months, Gerbsman Partners has been involved in maximizing value for 51 Technology, Life Science and Medical Device companies and their Intellectual Property and has restructured/terminated over $770 million of real estate executory contracts and equipment lease/sub-debt obligations. Since inception, Gerbsman Partners has been involved in over $2.2 billion of financings, restructurings and M&A transactions.

Gerbsman Partners has offices and strategic alliances in Boston, New York, Washington, DC, San Francisco, Europe and Israel.

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Android vs. iPhone: Why Openness May Not Be Best

February 23, 2009 by Steven R. Gerbsman

Conventional Valley wisdom have been that free is good. In terms of Android, this is the case – free is good! But, once you start to compare it to iPhone, some essential questions come up.

I recently finished a iPhone project with a company out of Sweden, Resolution Interactive. My task was to reshape the business model from traditional PC- online to something fruitful. Coming into to the company early last spring, the finances was well below bad, the team was in dissaray, and the revenues where nill. When iPhone developer program then came available in mid april, we saw the chance and made a jump for it. Although pretty messy to begin with, Apple continued to publish supporting materials, reached out with a network of visionaries and helped us go through the ups and downs of discovering a new market, new business model and new way of marketing.

When we in mid October release the first game – Clusterball Arcade – we received som good reviews and quickly went for title nr. two – AquaMoto Racing. Succesful in my mission, I was able to create a new businessmodel and find a new market for a struggling game company – this with the help of Apple and iPhone.

So, the release of Android from Google, the OVI initiatives from Nokia etc. are all good, but I wonder if they really will be able to provide the multitude of support that Apple was able to provide to me. Also, the unified developer environment (Xcode), the one device, clean business model and pre-existing audience to market too makes it very hard to understand how anyone will be able to compete with Apple on this market segment.

Mark Sigal just posted a excellent article at GigaOm. His analysis below summed this up very clear to me:

“The reality is that openness is just an attribute -– it’s not an outcome, and customers buy outcomes. They want the entire solution and they want it to work predictability. Only a tiny minority actually cares about how or why it works. It’s little wonder, then, that the two device families that have won the hearts, minds and pocketbooks of consumers, developers and service providers alike (i.e., BlackBerry and iPhone) are the most deeply integrated from a hardware, software and service layer perspective.”

Posted in Board Of Intellectual Capital, Business models, Intellectual capital, Mobile, mobile 2.0, Technology, Wireless, Wireless 2.0 | Tagged , , , , , , , , , , , , , , , | 1 Comment »

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