Leaning in to non-linear paths — how SR One is navigating the downturn

CEO Simeon George on the VC’s strategy three years after spinning out from GSK

With about $1.5 billion in assets under management, and having closed its second fund this year at $600 million, SR One is sailing free from the mothership GSK that it left in 2020. And though the firm has fewer constraints now than it did as a corporate VC, the discipline it learned there in the 2008 crisis has been a core part of the strategy for managing through this bear market.

CEO and Managing Partner Simeon George, who led the spinout of SR One from GSK plc (LSE:GSK; NYSE:GSK), discussed the VC’s approach to raising funds and starting companies, as well its areas of focus, on The BioCentury Show. 

It’s rare if not unheard of for a corporate venture arm to spin out to an independent traditional venture firm, a move that SR One completed in 2020 at the height of the bull market. Its first fund was $500 million. The freedom has given it greater flexibility and a broader base of investors, said George.

“We’ve brought on some really significant investors, whether it’s pension funds, endowments, fund to funds, sovereign wealth funds, large family offices, in addition to the continued support of GSK.” The pharma put in 44% of the first fund and less than 10% of the second. 

It’s also brought in leadership talent to help portfolio companies build out their finance function and needs across the journey to public markets, and to manage their relationships with pharmas. “We’re really leaning into that in a way that frankly wasn’t possible at GSK,” said George.

That allows the firm to couple a strategy of aligning investor syndicates and derisking the path from A to B, with building from the get-go sufficient reserves for the unexpected. “No story is linear,” he added.

George joined GSK in 2007, and was rapidly immersed in the global financial crisis (GFC); many in biotech credit corporate VCs with having stepped in to fund companies at that time, when traditional venture dried up. The lessons he learned then have held fast. 

“Those first few years post GFC, the way that we thought about investing, the focus on the fundamentals, [and] capital efficiency. Those are the same ideas that we have leaned on even during the bull periods. And now we’re certainly back to that narrative.”

On the scientific front, George thinks there needs to be “expectation setting” in the personalized medicine approach. “You need to have a clear rationale for why this molecule is going to stand up against whatever else is in development or commercialized.” The trend to large total addressable markets (TAMs) is clearly a factor to consider, but there’s still room for a venture model for a start-up to begin with a narrow focus on defined specific genetic or biological characteristics that are precise, and segment the population. “That’s a pretty reasonable way for companies to be building value in the near to midterm.”