Game-changer: Jacobson's Tri-Star group aims for impact

By Milt Capps

Published November 9, 2009

Harry Jacobson, M.D., and his young venture-investment colleagues find themselves in a target-rich environment.

Altogether, they aim to fund young companies, improve healthcare, enable universities to earn more from faculty discoveries and rise above localism to recruit capital wherever it resides.

As reported earlier, Jacobson, age 62, has co-founded a state-supported TNInvestco company, Tri-Star Technology Fund LLC, in collaboration with Brian Laden, 36, and Christopher Rand, 32, both of whom are currently executives in the Vanderbilt University office of technology transfer and enterprise development. Jacobson is on sabbatical as Vanderbilt's vice chancellor emeritus for health affairs.

Rand (at right) told VNC Thursday, "The fund will target investments in health care, broadly defined to include: biotechnology,

pharmaceuticals, personalized medicine, medical devices, health care IT and health care services."

In an interview with VNC Friday, Jacobson said one reason there are so many investment opportunities in health and medicine is pretty obvious: Quite apart from the health-insurance debate raging in Congress, there is the stark reality that "people are still dying from cancer" and heart disease, and still suffering from such diseases as alzheimer's.

One implication: Making greater headway against these problems calls for rapid and profound innovations in medicine, healthcare services, infrastructure and other areas.

At the same time, Jacobson stressed, "underlying all this is the fundamental concept that there is a link between doing good and doing well."

There can be little debate that Jacobson, who is on sabbatical following his service as Vanderbilt University vice chancellor for health affairs, has done much good. In addition, his entrepreneurial track record shows Jacobson has also done well – and he may just be getting started.

Jacobson said Friday that, in addition to his TNInvestco play, he is also actively preparing to create a new private-equity firm that will invest in later-stage healthcare-services companies and will be headquartered in Nashville.

He said that although Tri-Star is just finding its legs and the PE company has not been chartered, demand for healthcare investment opportunities is so strong that he's finding that "the instant" qualified investors learn of the new investment vehicles, they want to talk about it.

► Read more about Jacobson's entrepreneurship, activity, Merck, Informatics Corp. and more here.

Jacobson and Laden acknowledged that – while diligent in ensuring no conflicts arise with Laden and Rand's temporarily continuing Vanderbilt duties – the Tri-Star cofounders are already "mining data" to identify prospective investments, as well as working to secure insurance-company participation in the TNInvestco program.

VNC interviews with the three co-founders suggest the new Tri-Star fund may play a rare, and possibly unique role in enabling North American research universities to connect with investors far beyond their respective campus regions, and reap greater rewards from bringing technology to market.

Jacobson explained that when it comes to commercializing technology, universities typically rely mainly on income from licensing of intellectual property, and sometimes obtain funding from Angel investors and smaller venture funds that happen to be located near their campuses. (The apparent limits of the traditional approach in Middle Tennessee were underscored by Rand in a Sept. 11 presentation, reported by VNC.)

Jacobson said the traditional approach leads to universities' interests in new tech-driven ventures becoming extremely diluted at later stages, as major private investors take equity in successive financing rounds.

The new Tri-Star fund could help change the tech-transfer model. Jacobson said there is enormous demand on the part of strategic and institutional investors for solid intellectual property. Meanwhile, he said, it is well documented that "there's trillions of dollars worth of research embedded in the work of universities."

Accessing those valuable assets, however, is greatly complicated by the equally enormous "variability" in universities' tech-transfer in terms of research emphases, the quality of tech-office staffing and other factors.

Jacobson and Laden told VNC that Tri-Star aims to develop and introduce a more standardized and effective model for commercializing intellectual property.

Using pharmaceuticals as an example among numerous potential target sectors, Laden explained that Tri-Star will work to

establish standards, models and "mechanisms" that "advance nondilutive capital" funding that, in turn, helps to "advance compounds or therapeutics as far as possible before having to raise more private capital" that dilutes owners' interests in companies or in "therapeutic ideas," per se.

Both Jacobson and Laden emphasized in conversation with VNC that their efforts will not be reliant upon their relationships with Vanderbilt. Instead, both men indicated every university in North America, and possibly beyond, is a possible partner for bringing intellectual property to market.

Said Jacobson, "our playground's going to be all the universities we can contact" and monitor effectively.

Laden (at left) said that because he, Rand and Jacobson have broad professional networks, identifying and tracking opportunities is easy.

"It's a phone call," Laden said, adding that his access to fellow tech-transfer officials is heightened further by the fact he's a member of the board of the Association of University Technology Managers. In that role, Laden is also in charge of planning for AUTM's annual meeting, next spring in New Orleans.

Meanwhile, Jacobson revealedl he has ruled-out some options for how he'll spend his own time. With the smile of a man whose mind has long been made up, Jacobson said that he will not under any circumstances assume a C-level operating role in any company.

It was also clear during his interview that Jacobson takes more than a casual interest in the pursuits of his three adult children, one of whom is an attorney with the U.S. Department of Justice; one of whom has co-launched Belle Meade's 360 Bistro; and, one of whom owns commercial real estate businesses in Middle Tennessee. ♦