March 21, 2008
Sigma-Aldrich Chooses Prolog for Its First Venture Capital Investment
By Rachel Melcer, St. Louis Post-Dispatch
Mar. 21--Sigma-Aldrich Corp., in search of cutting-edge business opportunities, is making a strategic investment in Clayton-based Prolog Ventures, a life-science venture capital fund.
If it succeeds, the relationship could help fine-chemical maker Sigma-Aldrich continue its growth in the biotech industry. The St. Louis-based company, which last year topped $2 billion in sales, is exchanging an undisclosed amount of cash for a seat at the table when Prolog reviews and discusses early-stage business plans.
"It gives us a view into the future," said David Smoller, president of Sigma-Aldrich's research biotech division that last year had nearly $300 million in sales, or 15 percent of the company's total. His division's long-term goal is for annual growth of more than 10 percent.
The deal with Prolog could help him to achieve that by providing a glimpse at "horizon three" technologies -- ideas that might not reach the market for five or 10 years, but represent new avenues for Sigma-Aldrich to pursue, Smoller said.
"You can't just think of today, or you're not here tomorrow," he said.
Sigma-Aldrich's investment will feed into Prolog's third fund, for which it is seeking contributions, Smoller said.
Prolog declined to comment, citing legal restrictions on promoting a fund in the media while seeking contributions. According to published reports, it is hoping to raise $120 million.
Local business leaders said the relationship is a good sign for the region's biotech economy.
"It's important that we have significant venture capital managed locally in St. Louis, and having our major corporations participate in that is a very healthy thing," said Donn Rubin, executive director of the Coalition for Plant and Life Sciences, a local industry-building initiative.
And it's not a one-way street, as Sigma-Aldrich also stands to gain from the expertise and networks of Prolog Ventures.
"They are coming together in a synergistic way to help strengthen each other, and that's a sign of a healthy concentration of assets" in this area, Rubin said.
Sigma-Aldrich's investment also is a vote of confidence in Prolog, said Bob Calcaterra, president of the Nidus Center for Scientific Enterprise business incubator in Creve Coeur and a board member of several local and statewide industry groups.
"It's the Good Housekeeping seal of approval that someone feels that, strategically, (Prolog) is unique," he said.
Indeed, Sigma-Aldrich has been approached by other venture capital funds -- and chose to make its first such investment with Prolog, Smoller said. He likes the ability to work with a local group and support this community.
But, most importantly, Sigma-Aldrich was impressed with Prolog's network of contacts and focus on making deals in particular market niches, he said.
Prolog is eyeing deals in health care; wellness products such as nutritionally enhanced foods and aesthetic goods; "green" technology, including plant science and biomaterials; and innovations that provide a platform for novel approaches to research, including new methods for drug discovery.
Prolog has "a network of entrepreneurs and thought leaders that's vast, and we will take advantage of that," Smoller said. "And they're thought leaders, in and of themselves."
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