Roger Kitterman, managing partner of Partners Healthcare’s Innovation Fund and founder of Mass Medical Angels, proves it possible to generate annual financial returns in the shape of internal rates of return of more than 30% per year while working on commercialising early-stage ideas that come out of treating patients.
Partners Healthcare’s core hospitals are the Brigham and Women’s Hospital and the Massachusetts General Hospital, while faculty are appointed at Harvard Medical School.
Christopher Coburn, vice-president of innovation at Partners Healthcare, said: “Roger was recruited to be a founding partner at the Partners Innovation Fund in 2007 when it was established to further capitalise on Partners Healthcare’s now more than $1.5bn of annual research.
“Partners is the largest academic research enterprise in the US. Roger became managing partner in 2010. He has guided a team that includes three additional principals through a portfolio with 24 companies, each built around technologies developed by Partners’ Harvard-appointed faculty at its core hospitals – the Massachusetts General Hospital, rated number one in the US by US News and World Report, and the Brigham and Women’s Hospital, rated number six in the US.
“The fund’s three acquisitions, with several portfolio companies poised for monetisation, have yielded an internal rate of return of more than 30% and a commitment to Fund II, which will raise assets under management to $100m.
“He is greatly respected by co-investors, executives and his team for his steady leadership in all settings – including tense deal issues – his keen analytical mind and his strong organisational insights.”
Kitterman said: “Being on the inside of one the world’s top medical centres offers the opportunity to work with brilliant people and help patients by bringing products to market through our successful investments.”
Three of these investments, including CoStim Pharmaceuticals, have already been acquired “for a total consideration of over $1bn”, helping the fund generate a total estimated internal rate of return, a measure of annual performance, of more than 30%.
Other deals of his, such as Daktari Diagnostics that closed its $15.5m series D round early last year, have raised substantial amounts of venture funding.
Given such financial performance, as well as the strategic value for Partners’ hospitals, has encouraged it to raise a second fund and also raise a new “impact investing, privately financed adjunct fund,” Kitterman added.
He believes these goals – and the industry itself – would benefit if more people were “confidentially sharing performance and structural information”.
“The understanding of our success inside our very large organisation, and that of many others, is often directly influenced by accurate benchmarks that are typically very hard to come by.”
Healthcare and research commercialisation, however, can sometimes take a long time for the value to be realised, unless the startup is in a hot area, such as CoStim.
Kitterman said: “Working inside a large academic medical centre is very complex, especially while building the portfolio and waiting for the first monetisation.”
As at November, he had been on the board of Provasculon, Visionscope and Adheron Therapeutics for more than five years each.
However, his earlier experience for nearly four years as director of new ventures for the Boston University Technology Fund in the late 1990s – after his MBA from Columbia University and degree from Harvard University – meant he was well aware of the challenges he would be facing with the Innovation Fund.
The fundraising and portfolio support might mean he has less time than he would like in “supporting three beautiful daughters in their growing soccer careers”, but after 20 years of investing, first in Bulgaria then also including Lee Munder Venture Partners and MI3, he seems to be able to succeed at the work-life equation.