La Jolla venture capitalist is voracious in his pursuit of early-stage science
Some venture capitalists have all the pizzazz of a tug boat captain, crisscrossing over the same old territory. They commandeer MBAs and PhDs to pore over business plans, network by Blackberry and seek the safer deal.
Avalon Ventures’ Kevin Kinsella, a globe-trotting La Jolla venture capitalist with a relentless curiosity, a guy known for making snap decisions from the gut, is more in the swashbuckler mode.
Captain Blood, with a spreadsheet.
Tales of Kinsella’s business exploits – he has created or been an early investor in over 50 biotechnology and high-technology companies – underscore a willingness to gamble on early-stage ideas and on scientists who may have no more than a business plan sketched on a cocktail napkin.
There’s the time he raided Emeryville-based Chiron Corp. of about 15 of its oncology specialists to help form Onyx Pharmaceuticals.
Or, Pied Piper-like, when Kinsella persuaded the entire monoclonal antibody section of the National Cancer Institute to defect and join him at another biotech, Seattle’s NeoRx.
And earlier this year, when Merck & Co. announced it would close its San Diego research unit and offer its workers transfers to other units, Kinsella swooped in and plucked about 20 of the pharmaceutical giant’s researchers to staff one of his latest biotechs, Amira Pharmaceuticals.
“Anytime you have a layoff at a big company it’s like blood in water to me,” Kinsella said with relish. “I figure out who is the cream of the crop and go after them.”
Tall, lean and, at age 59, still retaining the good looks inherited from his New York model mother and a gift of the gab from his late Broadway actor father, Kinsella cuts a compelling figure. His business dash once earned him the moniker “the P.T Barnum of biotech” from The New York Times.
But there is more to Kinsella than style, colleagues and business competitors agree. He has an exacting intelligence, a steely competitiveness, and a passion for big ideas. On the flip side, those who know him say Kinsella tends to lose interest when the grunt work begins, sometimes makes an indifferent team player and can hold a grudge when crossed or imposed upon.
“Guilty,” said Kinsella, after taking a minute to consider the list of virtues and foibles.
Kinsella’s business qualities have shaped, and been shaped by, Avalon Ventures, a family of venture capital funds managed by Kinsella and various partners over the years.
Unlike some VC firms, which fund companies after they have a product in the pipeline, Avalon Ventures has specialized in what is arguably the riskiest part of the business – the seed-stage creation of new companies.
If Kinsella has a preference, it is to invest in the “cocktail napkin” startup, when there is little more than an idea sketched out on a napkin over dinner. Kinsella even has a collection of those napkins at work.
“So many venture funds are process-oriented. If you don’t have a business plan and a PowerPoint you couldn’t even be seen by them,” Kinsella said. “We’d much rather get involved earlier so we are part of the creative process, so we can figure out what is the opportunity and who needs to be involved.”
Notable successes
That strategy, despite the occasional investment flop, has served Kinsella well. Avalon’s most successful venture capital fund to date, Avalon V, produced eight public companies, including San Diego’s Neurocrine Biosciences and Aurora Biosciences, which was later acquired by Vertex Pharmaceuticals.
The $18 million fund reaped investors a 55 percent compounded return over seven years.
On the other hand, Kinsella’s instincts aren’t infallible; Avalon IV, a $1.4 million fund, produced no notable investment home runs, and brought in returns of about 13 percent.
Kinsella is sanguine about the misses.
“Maybe you should laboriously study something so you make sure you’ve thought about every potential wart and blemish before you make an investment,” Kinsella said. “But if you had to basically filter everything through some multilayered sieve, at the end of the day you may end up with pablum as your product.”
Lawrence Bock, a former Avalon partner who is chairman of Nanosys, a nanotechnology company in Palo Alto, said Kinsella is equal parts “hutzpah and humility.”
Listen and learn
“He’ll call anybody, he’ll tackle anything, but he has the humility to know what he doesn’t know, and so he’ll listen and learn,” said Bock, who worked with Kinsella from 1985 to 1998 on various Avalon funds. “He can start studying semiconductors from scratch and then talk to the chief technical officer of Intel on an equal basis within a few months.”
Bock said he and Kinsella spent much of their time as venture capital investors figuring out who were the leaders in any given technology field.
“We’d go everywhere and talk to leaders in the field, and then ask them who they thought the 10 leaders in the field were, and then we’d talk to those leaders,” Bock said. “From there, Kevin would germinate the basis of a company.”
Jay Lichter, chief operating officer of Sytera, a San Diego biotech founded by Avalon Ventures last year, recalls how Kinsella persuaded him in 1993 to become the first employee of an Avalon-backed venture, Sequana Therapeutics.
At the time, Kinsella was trying to get up to speed on an emerging field called genomics, and tapped the former Yale researcher to act as a kind of genomics aide-de-camp.
“He said we don’t have money, ideas or an advisory board, but we’d like to build a company in La Jolla,” said Lichter, with a laugh. “I was unmarried, working in a lab, so it sounded good to me.”
Sequana, one of the first gene research “toolbox” companies, merged in 1998 with Arris Pharmaceuticals in a $166 million deal, and then changed its name to Axys Pharmaceuticals. Axys was later acquired by Celera Genomics.
“Kevin has incredible intuition about what emerging technologies are important,” Bock said. “But his greatest strength is that he’s an incredible judge of people. He can identify someone who is truly bankable – or, as Kevin says, he knows how to bet on a two-legged animal.”
Kinsella’s taste for adventure and risk, as well as gut decision-making, are themes that run through his life.
After stints at the Massachusetts Institute of Technology, where he earned a bachelor’s in management and electrical engineering, and Johns Hopkins University, where he got a master’s in international economics, Kinsella embarked on an eight-year vagabond adventure that paid poorly but provided valuable experience.
In 1970, after reading the book “Nicholas and Alexandra,” Kinsella took the Trans-Siberan Railroad across Russia, black-market rubles stowed in a secret pocket in his underwear.
He taught algebra in a high school in Beirut, worked for an oil company in Paris, ran a fellowship program in Mexico for Tufts University, and was a consultant in Peru under a contract with the Agency for International Development.
Kinsella returned to the United States in 1975 and, at 30, landed a job at MIT as fundraiser in a nationwide campaign to raise $100 million.
It was the experience of trying to woo donations out of wealthy MIT alumni, many of them entrepreneurs or venture capitalists whose companies had created Silicon Valley, that introduced Kinsella to the venture capital world.
“Venture capital was technically interesting and, if you were successful, could make a lot of money, and I thought, gee, what could be better than that?” Kinsella said. “But the VC firms wouldn’t have me. It was like, ‘You were doing what in Peru?’ ”
Determined to succeed But Kinsella was determined to succeed.
In 1978, with $250 in his pocket, he moved to La Jolla and landed a job at Solar Turbines, putting together international bartering and trade agreements. In 1982, he started Landmark Graphics Corp.
The following year, Kinsella hooked up with a friend from MIT, John Freeman, who had made a fortune in real estate. Freeman and his business partners were impressed with Kinsella’s entrepreneurial energy and offered to bankroll future company creations. The first Avalon Ventures fund was born.
Today, Kinsella is on his seventh Avalon fund. With $75 million from limited partners, it is the largest to date. The fund has already committed $15 million to three biotechs and two wireless startup companies.
Kinsella balances his professional life with a personal one that is as rich and varied. He collects fine wine and fine art, and travels regularly overseas with his wife, Tamara.
Kinsella recently made a high-risk, personal investment in the musical “Jersey Boys,” which opens on Broadway next month. The play, which broke box office records during its premiere at the La Jolla Playhouse, relates the story of the pop music group The Four Seasons.
Kinsella said his investment is in part an homage to his late actor-father, Walter Kinsella. But it is primarily motivated by a “gut-instinct” that the musical will be a hit, he said.
“Everything is a calculated risk,” Kinsella said.
Penni Crabtree: (619) 293-1237; penni.crabtree@uniontrib.com