SPECIAL REPORT

HUNTING HIDDEN GEMS

Bernard Coupai turns untapped research into successful businesses

BENOIT AUBIN April 11 2005
SPECIAL REPORT

HUNTING HIDDEN GEMS

Bernard Coupai turns untapped research into successful businesses

BENOIT AUBIN April 11 2005

HUNTING HIDDEN GEMS

Bernard Coupai turns untapped research into successful businesses

SPECIAL REPORT

R&D

BENOIT AUBIN

SOME PEOPLE make a living roaming the countryside looking for antiques to resell. Others hang around suburban arenas looking for the next Mario Lemieux. Bernard Coupal scouts the research labs of universities and technical colleges, looking for the glimmer in someone’s eye that he could help turn into a billion-dollar baby, the next BioChem Pharma, the next Big Innovation.

Coupai is into technological transfer. In other words, helping turn the abstract research findings of, say, McGill biologists studying the aging process in worms into a business venture that could—one day far down the road, if all goes well—offer a technique for accelerating the aging process of a cancerous tumour, help save lives and, in the process, make a bundle of cash for its inventors and early backers, the first among those being, of course, Coupal’s own outfit, T2C2.

Hello R2D2. T2C2 stands for Technology, Transfer, Commercialization,

Opportunities often go to waste because the scientists don’t know about business, they’re too busy, they lack the capital

Capital. Coupal’s niche is the riskiest, with the longest odds, of any in the risk-capital business: spotting investment opportunities that are not even trying to be spotted by investors. “There is good science being pursued in Quebec, and that means many business opportunities that could be wasted otherwise,” says Coupai, a 71-year-old chemical engineer. “These opportunities often go

to waste because the scientists don’t know about business, hate the paperwork, are too busy with their projects, don’t have the capital, or for whatever other reason.”

Filing for a patent on a potential design for an implantable pump to assist the heart, for example, takes a long time, involves tons of paperwork, and is just the start of a development process that will require millions of dollars. Heart surgeons with a long waiting list of ailing patients have better things to do. “But if you look for financing,” Coupai says, “investors want to see a patent, a company with a serious board of directors, a credible business plan, the works.” That’s Coupal’s job—helping pure science turn itself into a business prospect. Since 1997, T2C2 has set up three investment funds—two in bio-tech, and one in information technology—worth a sum total of $167.5 million.

Transforming a scientist’s hunch into a market-ready product with a chance of making money takes deep pockets and much, much patience. “Rule of thumb is it takes 15 years between the company’s inception and taking it to market with a viable product,” Coupai says. “The closer to market you are, the higher the costs of testing.” In other words, a project’s need for fresh money grows steadily as the project evolves, without ever generating a temporary return on investment.

Another rule of thumb: nine out of 10 brilliant start-up ideas will never make their money back. The earlier you invest in a project, the lower your

initial cost. But the longer you stay with it, the higher your cost. And, of course, the later you come in, the higher the entry cost.

Coupai cites the heart pump venture he has under way. “You have two renowned heart surgeons who have ideas about making an artificial heart. Of course, they do! They live their lives replacing hearts, unclogging arteries or whatnot. They have the knowledge.” T2C2 set up a company with an address, a board, a CEO, a business plan and a bank account. It involved an engineer, designed a machine, based on the surgeons’ idea, that can be implanted inside the left ventricle to pump blood, and secured a patent. “Now we have reached as far as testing it on calves, and it looks promising,” says Coupai. If this thing reaches market one day, “the demand for it would be in the billions of dollars. Annually. Recurrent.”

How does he manage the risk? By sharing it. “Every time a project needs new financing, we syndicate it on a share-holding basis. And the money comes with a set of objectives, and a timetable attached to it.” Coupai is still waiting for the 30 or so bio-tech ventures developing under his umbrella to one day provide a return to institutional investors who have injected millions into T2C2’s limited partnership.

In the ’80s, BioChem Pharma was a faltering start-up in Montreal. In 2001, by then a huge international biopharmaceutical company, it was sold for $5.9 billion. “So, yes, it happens,” Coupai says. “It’s just that it doesn’t happen every time.” 171