A former CEO who built a cancer drugmaker for a decade and then joined Google's venture arm reveals 2 crucial elements he looks for when investing in startups

Lydia Ramsey,Emma Court

Jul 15, 2019, 19:22 IST

A former CEO who built a cancer drugmaker for a decade and then joined Google's venture arm reveals 2 crucial elements he looks for when investing in startups

David Schenkein is a general partner at GV, formerly known as Google Ventures.

David Schenkein led Agios Pharmaceuticals from its early days in 2009 through the beginning of 2019.
He joined Alphabet's venture arm GV as a general partner in February, where he's using his background running companies to back startups.
When companies pitch Schenkein, he said there are two parts of the company he pays close attention to: the team and the company culture.
Click here for more BI Prime stories.

David Schenkein had been with Agios Pharmaceuticals, since its early days, back in 2009. He departed from the CEO role this year, handing over the reins to Jackie Fouse on February 1, 2019.

Ten days later, Schenkein was at Google's New York office going through orientation to become a general partner at venture arm GV, formerly Google Ventures. GV oversees more than $4.5 billion invested in 300 companies.

Schenkein said his experience building a drugmaker, as well as teaching at Tufts Medical Center, has helped prepare him for seeing a slate of investment prospects coming through GV's doors. Schenkein built the drugmaker Agios from an early-stage company to one with two approved drugs for cancer, and previously worked at the biotech Genentech. He got his medical degree from the State University of New York Upstate Medical School and specialized in treating cancer.

One of the learning curves that Schenkein said he faced in his transition to investing was learning how to vet private companies. He said he's getting a lot of opportunities to learn from his network, because people were eager to get his perspective after he became a VC.

"Pretty soon out of the gate, within the first week, I'm starting to get inbound emails from a lot of people I know saying, 'Would you look at this company?' Schenkein said. "As I'm learning, I figured the best response to all of those inbounds is 'Yes, I'll look.'"

As he began evaluating companies, Schenkein said there are a two key aspects of a startup in particular that he focuses on.

Hiring the right people

For starters, Schenkein pays close attention to the teams the company has built. He said he'll come across companies saying they plan to do one thing, but haven't hired the right person to do that.

"I've seen some companies come in and pitch that they're going to do drug discovery and drug development, but they actually haven't hired anybody who's ever done drug discovery, drug development," Schenkein said. "For me that's a pretty immediate flag."

After evaluating the company and deciding GV won't be investing, Schenkein gives the company that feedback.

"If you're really serious about doing this, you need to hire X, Y, and Z," he said he tells the startups.

Building a strong culture early on

The second thing he looks for is whether the company is intentionally building a company culture right off the bat.

"When I'm listening to the pitch, I'm listening for, 'Do they care about that? Have they talked about? Do they talk about that?'" Schenkein said.

That way, Schenkein can figure out why the founders are building the company. Are they setting up this company just to get it to a certain size and then plan to head out? Or are they in it for the long haul?

"If they're not investing in the culture in the early days, then they're not looking to build the company or they're going to run into a lot of issues," Schenkein said.

Building a culture in the early days is key.

In particular, Schenkein said, the company should make sure that all the employees, even those hired in the very early days, understand both what the company is setting out to do and what culture will be required to get there along the way.

"Are we going to tolerate high performing jerks?" he asked. "Are we going to have a hierarchical system where the CEO sits in a big corner office or is everybody sort of going to be the same? "

Building a culture in the early months of a company might not seem like a priority amid all of the other pressures founders face. But setting a culture up early can be key when the business starts to grow and potentially face challenges a few years in.

"It may not show how important it is in the first year or two, but when things start getting complicated if you haven't built that foundation it's pretty easy for it to crumble," Schenkein said.