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Q and A with Sean Sebastian, Birchmere Ventures

With more than $115 million under management, Birchmere Ventures has a successful track record of investing in and building early-stage technology and life sciences companies in the Pittsburgh and mid-Atlantic regions. Birchmere focuses its investments on early stage, pre-revenue start-ups in industries where they have direct operational or investing experience including: Advanced Technologies, Software, Communications, System Components, Drug Discovery and Improvement Platforms, Biopharmaceuticals, Medical Devices and Diagnostics. They often lead syndicated deals with other institutional investors. One such deal, with Pittsburgh start-up Neolinear, resulted in an acquisition by Cadence Design Systems, Inc., a $1.1 billion San Jose-based technology company, earlier this year. Both companies are members of the Pittsburgh Digital Greenhouse. The deal kept Neolinear’s key jobs in Pittsburgh and brought validation and new capital investment to the region.

Pittsburgh Ventures interviewed Birchmere Founding Partner Sean Sebastian who has over 16 years of experience in technology commercialization, management consulting, systems integration, and financial services. Well known for his involvement in the region’s technology community, Sebastian serves on the Pittsburgh Technology Council’s executive committee and is past president of the Pittsburgh Venture Capital Association. He is a frequent guest lecturer on entrepreneurship and venture capital at Carnegie Mellon University.

What can you share on the Neolinear deal in terms of price and details of how the acquisition came about? What will the deal mean to Neolinear and the investors?
The terms of the acquisition are confidential but this deal provided a healthy return for all of the investors and employees. We were there from the outset when the company was little more than two CMU professors with an idea and demonstration software. It was one of our first investments in this space so we didn’t have the deep domain expertise that we do today, but we knew that they would be serving a segment of the market that was untapped elsewhere—software for designing analog and mixed-signal semiconductors.

What were some of the unique aspects of the deal?
The deal was structured to enable the venture investors to realize their gains immediately, while enabling Cadence to retain and motivate its new employees. Securing and transferring rights to Neolinear’s intellectual property, some of which was publicly funded, also presented special challenges. CMU, as licensor of the technology, was a critical player in making this deal happen.

Birchmere often works with other VC partners in deals—How do you create and manage the right dynamic for these partnerships to work?
It’s one of our critical success factors. We have co-invested with dozens of other funds across the country and we have developed close working relationships that enable us to tap specialized areas of expertise. When we form a new board with these other partners, we already know how it’s going to work. There may be times when we have constructive disagreements, but there’s a lot of talent around the table working together to make the company a success.


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“Deal flow is about the same as it was in 2003, with a steady supply of high quality opportunities. We have invested at a fairly consistent pace, even through the bubble bursting, picking our spots carefully.”
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