FRANKLIN LAKES, N.J.- Becton,Dickinson and Company announced on Friday the completion of its $275 million acquisition of Ann Arbor-based HandyLab, an exit that brought a record setting $2 million return to early investor, the University of Michigan Wolverine Venture Fund.
The Wolverine Venture Fund, part of the University of Michigan’s Samuel Zell & Robert H. Lurie Institute for Entrepreneurial Studies at the Ross School of Business. HandyLab was added to the Fund portfolio in 2000 when it
participated in the company’s Series A round. The sale is the third successful exit for the fund since 1988.
Between 2000 and 2005, WVF invested $350,000 over six rounds and, upon exit, earned a six-fold, cash-on-cash return. Approximately 100 Ross students participated in the fund’s investment activities over that time span. Overall, HandyLab raised a total of $47 million in seed and early-stage equity financing from a pool of investors, including Ann Arbor, Michigan-based EDF Ventures, who helped found the company and provided the seed capital, as well as Ardesta and Arboretum Ventures.
In May 2009, BD and HandyLab announced an exclusive agreement for BD to
develop and commercialize molecular assays on the HandyLab Jaguar(TM)
platform, the first fully integrated molecular diagnostic system to provide
hands-off operation, incorporating clinical sample preparation, nucleic
acid extraction, and microfluidic real-time polymerase chain reaction (PCR)
amplification and detection in a simple bench-top system. The
self-contained workstation is designed to accommodate both batch workflows
and on-demand testing for maximum lab efficiency and flexibility.
“HandyLab’s high-quality organization and industry-leading technology
complement BD’s capabilities and healthcare-associated infections strategy,
which requires the throughput, simplicity and flexibility that the HandyLab
platform provides,” said Philippe Jacon, President, BD Diagnostics –
Diagnostic Systems. “We plan to provide laboratories with a broad molecular
test menu on a very advanced automation platform.”
Tom Porter, director of the Ross School’s Frankel Commercial Fund and
former general partner at EDF Ventures, and Mike Partsch, who served his
Kauffman fellowship at EDF under Porter’s mentorship from 1998 to 2000,
were key players in the formation of HandyLab nine years ago. They
negotiated an exclusive licensing deal with the University, and partnered
with two U-M chemical-engineering doctoral students, Kalyan “Handy”
Handique and Sundaresh Brahmasandra, to co-found the company in June 2000.
Porter saw the start-up venture as a prime investment candidate for the WVF
and contacted Tim Petersen who was then the Zell Lurie Institute’s managing
director.
“In many ways, this was a ‘normal’ WVF investment,” says Petersen. “It
involved exciting new technology from the University, two friendly
venture-capital funds, EDF Ventures and Ardesta, and two University
doctoral students with the right amount of interest and commitment to the
company and to being entrepreneurs. It was a tremendous experience for
students, who had an opportunity to watch the company’s evolution, track
its progress and make investment decisions over time that yielded great
results.” Petersen is now managing director of Arboretum Ventures, which
became an investor in HandyLab in 2004.
Mary Campbell, a founding WVF advisory board member and founding member
and managing director of EDF Ventures, says that investing in HandyLab fit
hand-in-glove with the mission of the Wolverine Venture Fund. “It was an
opportunity to reap financial rewards that would continue to fund the WVF,”
she explains. “It also enabled students to deepen their knowledge and
advance their understanding of venture capital and entrepreneurship.”
Campbell has served on HandyLab’s board of directors since 2004.
The Zell Lurie Institute oversees WVF, which teaches first- and
second-year MBA candidates the fundamentals of the venture capital business
by allowing them to make actual investments in early-stage companies under
faculty and advisor supervision and to earn venture rates of return.
Emerging high-potential companies, such as HandyLab, receive investment
dollars from the WVF at critical times during their seed and early-stage
phases. In addition, students provide input by developing and revising
business plans, conducting market and product research and writing case
studies.
“Our students have an opportunity to work with company founders and
co-investors from established venture funds in making critical judgments
about whether to invest and re-invest,” said Thomas C. Kinnear, executive
director of the Zell Lurie Institute and Wolverine Venture Fund Director.
“The greatest benefit is that students get practical experience by using
real money to make real investments in real companies in real time.”
Adam Orlov, MBA ’01, served as student chair of the WVF during the fall
2000 term and prior to fall term began due diligence on HandyLab and
oversaw the student team assigned to vetting HandyLab. He says his
experience on the fund has proven valuable over the long term.
“We learned valuable skills, such as sourcing deals, conducting due
diligence, valuing opportunities and gauging what investors are looking
for,” Orlov said. “It was a prestigious experience to have within the
U-M business community and presented an educational opportunity to work
with full-time, professional venture-capital investors.” Orlov put his
investment know-how to work when he formed Chicago-based Hill Partners with
three Ross classmates in 2002. Today, he is a managing member of Anthem
Capital.
This is not the first “home run” for the $3.5 million WVF. Students
also directed WVF’s investment of $250,000 over four rounds in IntraLase,
an ophthalmic medical-device company, which became the first firm in the
fund’s portfolio to go public. In 2004, the WVF sold its shares in the
initial offering, returning over $1 million in proceeds and effectively
expanding the overall size of the fund to $3.5 million. Prior to that, WVF
achieved their first investment milestone when portfolio company
Versity.com was acquired in 1999.
“Combined, the IntraLase IPO and HandyLab exit have returned more than
all of the capital invested in the Fund,” Kinnear said. “Had WVF been
a ‘limited partnership’ fund as opposed to an ‘evergreen’ fund, and were
able to look at the return rate of vintage 1998 venture capital funds, we
would have returns comparable to well-run venture capital funds, which is
another significant differentiator for WVF compared to other student-led
venture funds.”
Over its 11-year history, WVF has invested in more than 18 companies
across a wide range of innovative industries, and currently manages an
active portfolio of thirteen companies.
For more information, visit the Institute at
http://www.zli.bus.umich.edu.
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