Social Impact Investors: How Joško Bobanović Of Sofinnova Partners Is Helping To Empower People and Projects That Affect the World
The most important thing for an early stage VC investor is the chemistry between us and the entrepreneur. Working with a VC is almost like getting married for a period of time With a predetermined divorce 5,6,7 years later down the road. That means that you have to be able to live through ups and downs, experience everything that happens with the company, kind of like a relationship, and then at the end of the exercise separate because that’s the nature of the business. It’s the strength of that relationship that needs to be able to surpass all the challenges that come along the way.
As a part of our series about “Social Impact Investors”, I had the pleasure of interviewing Joško Bobanović.
Joško Bobanović joined Sofinnova Partners in 2010 as a partner focused on its industrial biotech strategy. He works on early stage deals in Europe and North America with applications in chemicals, agriculture, food, and materials. Prior to joining Sofinnova Partners, he was part of the investment team at iNovia Capital in Montreal, Canada.
Thank you so much for doing this with us! Before we dive in, our readers would love to learn a bit more about you. Can you tell us a story about what brought you to this specific career path?
In January 2001, I was snowed in along the Eastern coast of Canada. Because there was so much snow, we couldn’t get out and had to work from home. At that time, I was working on trying to predict how weather systems would affect the movement of the ocean — in particular the sea level. It can, if it goes too high, affect the coasts by flooding. It turned out that the prediction I made the day before was accurate. But at the same time, it just told people that they were going to get flooded. So I couldn’t prevent anything by using the work that I’d done. And in some ways, that moment taught me that working as a scientist, you can only do so much until you move to the other side, and try to take action to help prevent certain things that can come as a result of climate change or other environmental factors.
Can you share a story with us about the most humorous mistake you made when you were first starting? What lesson or take-away did you learn from that?
Years ago, we financed a company that was, at that time, trying to make plastic displays. Today, if you knock at your computer or phone, the display is still made out of glass, not plastic. That shows you how forward-thinking that was at that point in time. We were completely blind to the fact that to actually do this, you need to build factories that cost billions of dollars — you need to understand the whole value chain that exists around that. You could not show up as a small startup, and in particular not in North America (where that industry did not exist). So it’s more of an illustration of naive thinking and how you can be excited by something that you feel could change the world, but in reality it’s totally off because there’s no way you pull that off.
Are you able to identify a “tipping point” in your career when you started to see success? Did you start doing anything different? Are there takeaways or lessons that others can learn from that?
I think that the way we learn our craft is by incremental improvement, and by facing new adversities day-by-day, and learning from our mistakes, from new situations, people, and new challenges. What’s fun about what we do is the fact that every single company and team that we’ve worked with is different. Their product or market may be different, and so we’re always trying to adapt. In doing that, you learn how to work with different kinds of people and how to work with different situations. But in my case, I don’t think there’s been a light bulb moment.
You have been blessed with great success in a career path that many have attempted, but eventually gave up on. Do you have any words of advice for others who may want to embark on this career path but are afraid of the prospect of failure?
My advice is relatively simple — try not to be afraid. This is the way I approach younger people that work on our teams. This is the way I try to work with entrepreneurs — to try to help them understand that certain things can work or not, but what is the worst thing that can happen if you go for it? And if you are trying to overanalyze that, then you create this internal fear of making the mistake. So, not being afraid is one of the key elements of success because it simply liberates you to do things that you think are right. Sometimes you’ll make mistakes.
You are a VC who is focused on investments that are making a positive social impact. Can you share with us a bit about the projects and companies you have focused on, and look to focus on in the future?
One is a Canadian company called Pyrowave. It is a pioneer in the electrification of chemical processes using microwaves. Pyrowave is also a leader in the plastics circular economy and chemical recycling to regenerate post-consumer and post-industrial plastics into new plastics, reclaiming these resources’ full value. We’ve developed a solution that allows you to take the plastic back into its original matter — molecule. So that means that tomorrow we don’t have to use petroleum to make new plastic — we can simply recycle back the same plastic and make the same material over and over.
On another topic, pesticides are something that are widely used in agriculture. It helps defend plants from different pests in the field. However, historically, that has been done using chemicals. These chemicals often kill different things, not only the ones that they were intended for. When they are sprayed on the fields, they polute the environment, get washed out, and end up in rivers and oceans, creating all sorts of environmental consequences.
What if we could use biotechnology to develop biological solutions that allow us to target a particular pest, destroy it when it’s there, but when it’s not these biological solutions simply degrade naturally and cause no harm to biodiversity or insects in that field? That compared to the historical solution is a huge revolution in terms of what can be done using biology to develop environmentally friendly solutions.
What you are doing is not very common. Was there an “Aha Moment” that made you decide that you were going to focus on social impact investing? Can you share a story with us?
I’m not a revolutionary guy, but more of an evolutionary guy. I think the key thing here is understanding how increasing greenhouse gas emissions, how increasing pollution, and increasing use of petroleum-based solutions cannot go infinitely, while at the same time growing the number of people on the planet and expanding our economy.
So realizing that relatively early and understanding that there are other ways to do things to help, if you want to cross that chasm, to start really investing into these new technologies that are changing the world as we speak.
Can you share a story with us about your most successful Angel or VC investment? Or an investment that you are most proud of? What was its lesson?
There’s a French company called DNA Script that came to us five years ago, with a revolutionary way of trying to imitate what nature does to produce DNA.
Until that time, for about 40 years, DNA had been produced chemically and was an established industrial process that couldn’t get much improved because it had some issues, including being highly toxic and difficult to use. These guys used the same way you or any other living organism produces DNA. They developed a way to produce DNA, putting it into what’s called a “DNA printer” that allows them to enable other people to produce DNA on site, in their own labs, and in their own industrial facilities. So that changed dramatically the paradigm of an old established industry, using innovative biology to develop these new solutions.
Can you share a story of an Angel or VC funding failure of yours? What was the lesson?
I was part of investing into a company that was again, very much ahead of its time. So what we were trying to do was using computational techniques — things that you hear about today, like AI and medical modeling to design new materials. The only problem is that this was 17 years ago. And so it was a little bit ahead of its time, in a sense that we understood what it could do, but the resources that we have today were not available, the interest from the market was not available, and the maturity of the whole science that came around was not there yet. So in many ways, the failure was being ahead of our time, which is sometimes an issue in a VC world.
The lesson here was not to be overly excited by the sexiness of the technology, but simply being more grounded in terms of whether this can actually have immediate market application.
Super. Here is the main question of this interview. What are your “5 things I need to see before making a VC investment” and why? Please share a story or example for each.
The most important thing for an early stage VC investor is the chemistry between us and the entrepreneur. Working with a VC is almost like getting married for a period of time With a predetermined divorce 5,6,7 years later down the road. That means that you have to be able to live through ups and downs, experience everything that happens with the company, kind of like a relationship, and then at the end of the exercise separate because that’s the nature of the business. It’s the strength of that relationship that needs to be able to surpass all the challenges that come along the way.
Number two, is to get the right people. It’s about the passion that the people have about the technologies that they may hold in their hands, because it’s that conviction that excites me, and that very same way they will excite others about their work tomorrow.
If their story is boring, then chances are they will not convince other people down the road. So we need to be able to pick up on their excitement, their enthusiasm, and their leadership if you want to have others follow them on that journey. Because there will be naysayers. There will be people that will not want you to succeed. And so their ability to convince us and others consequently, is a critical success factor.
We are what’s called “deep tech investors,” so we invest in technologies that are highly sophisticated, and are based on some unique scientific breakthrough. In this case, we often look for a strong intellectual property, we look for a patent or a patent application, something that’s going to create a meaningful barrier for somebody else to do the same thing. That barrier is legally innovative because the patent gives you protection in the court of law to say I’m the only one who can practice this logic. But in many ways, there are other things around that you have in your hands that are unique, compared to what somebody else has. We need to be in markets that are ready to be disrupted.
That means that the timeline of a VC investment is relatively short. It means we have to invest in a company, invent something, build the business, get out of the company in five to seven years, maximum maybe eight. That lends itself to certain industries, but not every single one.
I’ll give you an extreme example. You’re trying to make parts for rockets or airplanes. This is extremely interesting, right? Intellectually curious. But to be part of the rocket or an airplane, to make it a simple event, is something that doesn’t fit in what a VC can fund. Why? Because the timeline to develop something, to build it, to get designed into the next Airbus or Boeing plane is much longer than the time that we have on our hands. So understanding how a business fits into a particular market is critical for its success. And so that’s one of the elements that we look at very carefully.
If you could tell other young people one thing about why they should consider making a positive impact on our environment or society, what would you tell them?
Actually, I am extremely encouraged by the fact that young people already know this. When we hire young people they get excited by what we do because they understand how changing the way we produce food from one way to another makes a positive impact, changing the way we produce chemicals and replacing petroleum by biology is extremely impactful. Young people are actually our opportunity to drive that change because they will convince the companies that are going to be producing things for them tomorrow, that they should change their ways today, not in 10 years’ time. Equally, they’ll force their parents or their relatives that are older than them to take those measures. So they are our allies.
We are very blessed that a lot of amazing founders and social impact organizations read this column. Is there a person in the world with whom you’d like to have a private breakfast or lunch with, and why? He or she might just see this. 🙂
I am a basketball guy, so my choice would be to have lunch or breakfast with Coach K (Mike Krzyzewski). Unlike professional sports, college coaches need year after year to work with new teams and he has been able to stay on top for 30+ years. There are many entrepreneurship lessons to be learned there. The fun fact is that we met once in 1987 when he was coaching US national team at the World University Games in Zagreb.
How can our readers follow you online?
You can follow my twitter at @joskob !
Thank you so much for this. This was very inspirational, and we wish you only continued success!
Social Impact Investors: How Joško Bobanović of Sofinnova Partners Is Helping To Empower ….. was originally published in Authority Magazine on Medium, where people are continuing the conversation by highlighting and responding to this story.