Armed with fresh funding, Innova prepares to launch investments in promising biotechs

Memphis Business Journal
November 30, 2007
By Toby Sells

The Innova biotech investment vehicle got fueled up with $11.5 million from MemphisED last month and it now has a driver. He's beginning to decide what to take to the marketplace.

That driver is former Smith & Nephew, Inc., executive Ken Woody. He says Innova will invest in two companies in the next three months and hopes to invest in three to four companies a year in the next five years.

"My ambition is clear: find, fund and grow," Woody says.

He's gotten help on the finding part. Ideas from several companies have poured in since Innova was announced last month. He is pleased with the initial seed capital, but hopes to raise about $30 million when he opens the fund to new investors in the next few weeks.

Woody is seriously looking at three companies now and is making headway into investing Innova's first dollar. He'll do that with the help of an investment board of Memphis business professionals with diverse backgrounds. Woody says he's not yet ready to announce the names of board members.

Sam Chafetz, an attorney with Baker, Donelson, Bearman, Caldwell & Berkowitz PC, has worked with numerous start-ups in his 36 years of practice. He says they typically fail due to lack of capital.

"But to have a ton of money available and all of that expertise attached is a boon to the area where that money lies," Chafetz says. "With the experience (Innova) has, it looks like it will be spent wisely."

Innova will invest in bioscience or pharmaceutical companies, medical device companies and possibly medical equipment companies. Woody says it's important to diversify the investments should a market segment tank. Also, he wants companies that can get to market quickly.

"Some of the companies we are looking at now can quickly have a ... liquidity event, an (initial public offering), they can get bought up or they'll license their products to someone else," he says. "All of those things bring a significant amount of capital back to that company. So if I own 25%, 30%, 40% or 50%, then it comes back to (Innova) and my investors. It gives them a good rate of return and it allows me to keep that cycle going."

The rate of investment will depend on how developed they are. The firms trade ownership to Innova for its investment.

"When you look back at Memphis, we have a phenomenal history of entrepreneurship," Woody says. "But over the last few years a lot of that really has died and we're trying to turn that around."

Innova

Biotech seed start-up and accelerator group
President: Ken Woody
Address: 20 S. Dudley, Suite 802
Phone: (901) 674-7410
Web site: www.innovamemphis.com

tsells@bizjournals.com | 259-1724