Mark Levin and Kevin Starr - Third Rock Ventures

Mark Levin

Venture capital's odd men out keep on TRUKKing

Names: Mark Levin and Kevin Starr
Titles: Co-founders, Third Rock Ventures

For whatever reason, the co-founders of biotech bankroller Third Rock Ventures tend to get nearly as much attention for their sartorial sense as their investment prowess. And while it's true the oft-T-shirt-clad duo of Mark Levin and Kevin Starr read a bit more Cabo San Lucas than Cambridge, MA, what sets them apart in the tumultuous world of biotech venture capital is their continued ability to make winning bets, and the team's success is a credit to an intensity of focus that's anything but laid back.

Third Rock takes a deeply hands-on approach to startups, and thanks to the firm's pedigree, it was able to close a $516 million third fund in 2013, a year in which numerous biotech investors struggled to convince their limited partners to shell out for risky bets on drug development. As it stands, Third Rock's take on venture capital is something of an anomaly in the industry, but, considering the company's track record, that may not be the case for long, as Levin and Starr have honed a model that could change the face of biotech investing.

After retiring from the C-suite of the Levin-founded Millennium Pharmaceuticals, the pair noticed an alarming trend that threatened to derail the progress of the drug development industry: VCs were happy to invest in biotechs, but most deals focused on companies that already had assets in the clinic, creating a funding chasm that threatened to starve promising upstarts. And thus came Third Rock, through which Levin and Starr set out to invest and develop companies on their own terms.

Kevin Starr

For starters, Third Rock doesn't operate like a traditional VC. Instead of wading through pitches from eager startups looking for their next raise, Levin and Starr prefer to focus on the brainchildren of their tight-knit staff of about 40 top-tier scientists, isolating a promising idea and then taking care to build the right team around it.

But before they even get that far, each potential project must clear a tough rubric known internally as the Third Rock Ultra Killer Kriteria, or TRUKK. It must be within three years of clinical trials; its preclinical data must be replicable; and Third Rock needs to be as certain as possible that Big Pharma isn't about to swing in and compete. From there, either Levin or Starr generally serves as CEO of Third Rock's startups for the first year or so, and the firm doesn't hand over the reins to an outsider until it's sure it has instilled a sustainable culture.

That's a stark contrast from the "invest and take a seat on the board" tradition that pervades many VCs. And the method makes Third Rock seem like more of an incubator than an investor and its beneficiaries look like spin-outs rather than portfolio companies.

But what Levin and Starr lack in orthodoxy they've more than made up for with impressive exits. Since its foundation in 2007, Third Rock has pulled together $1.3 billion and invested in more than 30 companies, including IPO high-flyers Foundation Medicine ($FMI), Agios Pharmaceuticals ($AGIO) and bluebird bio ($BLUE); high-dollar buyout targets Alnara Pharmaceuticals and Lotus Tissue Repair; and cutting-edge biotechs Editas Medicine and Sage Therapeutics.

Now, Third Rock says its latest raise will help it launch as many as 16 new companies in the coming years. If the firm can keep up a high rate of success, its far-reaching approach to startup development may well proliferate among its VC contemporaries. Whether its dress code catches on, however, remains to be seen.

-- Damian Garde (email | Twitter)

For more:
Third Rock's path to success lined with patience, rigor and T-shirts
Colorful Third Rock crew defines new biotech startup style
Third Rock's Levin calls for teamwork in personalized medicine

Mark Levin and Kevin Starr - Third Rock Ventures