Bryan Roberts: Health care venture capital's billion-dollar man

March 17, 2014: 2:21 PM ET

Venture capitalist Bryan Roberts now has invested in six $1 billion+ companies. And none of them are in consumer technology.

Bryan Roberts, the most successful healthcare VC

Bryan Roberts has a lot of reasons to smile, including last week's Castlight IPO

FORTUNE -- In the world of venture capital, health care-focused investors are often thought of as second-class citizens (if they're thought of at all). Their investments are more scientific than sexy, and often require heavy capital outlays with lower-multiple returns.

One enormous exception to this rule, however, is Venrock partner Bryan Roberts. Last week, a health care SaaS company Roberts co-founded and incubated -- Castlight Health (CSLT) -- saw its stock jump nearly 150% after going public, and today opened trading with a full-diluted market cap in excess of $3 billion. It is the sixth $1 billion+ company of Roberts' venture capital career, which is a record that would make most consumer or enterprise software VCs green with envy. The others are:

  • Illumina (ILMN), where Roberts led the Series A. Current market cap is over $21 billion
  • Ironwood Pharmaceuticals (IRWD), where Roberts led the Series A. Current market cap is $1.7 billion.
  • Ikaria Inc., where Roberts led the seed round. Late last year, private equity firm Madison Dearborn Partners agreed to buy Ikaria for $1.6 billion.
  • Sirna Therapeutics, where Roberts led a PIPE recap at a $6 million valuation. Later sold to Merck & Co. (MRK) for $1.1 billion.
  • Athenahealth (ATHN), where Roberts led the first institutional round at a $10 million valuation. Current market cap is around $6.5 billion.

Roberts also had a second company go public last week, when antibacterials developer Achaogen Inc. (AKAO) raised $72 million at a valuation north of $200 million (it's shares have risen 35% since the IPO).

So we decided to spend some time speaking with Roberts, to get his views on the current state of life sciences investing and to learn what he thinks may set him apart from the rest of the health care VC crowd. What follows is an edited transcript of our conversation:

FORTUNE: You work for a generalist venture capital firm, but many others seem to have recently de-emphasized life sciences investing, or gotten rid of it altogether. How do you currently view the health of health care VC?

ROBERTS: There are a lot of ebbs and flows in what venture firms do, like when everyone had to have a China or India effort in the 2006-2007 timeframe. I think that health care is now coming back, at least if you view health care broadly to include more capital-efficient and predictable parts of health care, like health care tech and services. For example, Sequoia has a bunch of people doing health care tech. Or how Benchmark is in One Medical Group. And there still are large generalist firms that remain committed to biotech, like Kleiner Perkins and NEA.

Are you still investing in capital-intensive and unpredictable?

We have, although for the past three or four years most of our therapeutics investments have been later-stage or micro-cap public companies. Like some medical device companies looking for another deep pocket. But when it comes to non-tech/non-services, we're still mostly favoring capital-efficient companies. Like Ariosa Diagnostics, which went from a standing start three years ago and now is doing north of 150,000 tests commercially for non-invasive prenatal diagnostics.

Are you worried about the future of new drug creation, given the relative lack of early-stage pharma investing?

I am not. My opinion is that there still is more capital available than there are great ideas. I'm sure there are a couple of babies being thrown out with the bathwater, but not too many.

How do you explain your success?

I think that it's probably my willingness to invest broadly across wide sub-segments of health care, and that I actively try not to follow any model set. I kind of believe that "here's the new model of how we're going to make money" is one step short of the apocalypse. Long before the work "pivot" became a generic cliché, a company like Athenahealth began as a straight service business before becoming an IT business. Ikaria we started as a traditional Series A, bought a vascular operating business and brought in a private equity group. Sirna was the first PIPE financing Venrock had done in a decade. Castlight we incubated in our offices. I operate with a very healthy dose of paranoia – always trying to do new things, because the old things have been done.

Can you name me an opportunity you really regret missing?

The one that comes to mind, most strongly because it's now public, is Agios Pharmaceuticals (AGIO). When I looked at it, I couldn't discern it from the other 8,400 early-stage oncology companies out there. But, as it turns out, their biology was really interesting and that let them bring in (CEO) David Schenkein, who is exquisitely good.

There have been a remarkable number of VC-backed life sciences IPOs over the past year. Is this something specific to life sciences, or just a consequence of the broader IPO window?

I think it's part of the broader IPO window, and is being driven by some of the returns that have been found in the biotech world with really successful drugs. When you see a company's stock jump from $3 to $100 in a day, people start to get interested. In general, so many biotech returns remain binary, though, so there will still be a substantial number of these companies that go public but still fail in the end. Science doesn't care a whole lot about the market.

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