When Chris Rizik made a $4 million investment nearly a decade ago into a nascent venture capital fund, he hoped for "moonshot" companies to emerge.
What he did not know at the time is that investment would help scale up a company that would go on to make a vaccine that's likely to help bring an end to the coronavirus pandemic that has killed nearly 275,000 Americans and 1.5 million worldwide in less than a year.
Rizik is the CEO and fund manager of Ann Arbor-based Renaissance Venture Capital, a "fund-of-funds" that primarily invests in other funds rather than directly into companies. In early 2012, Rizik said he was hopeful the investment into Cambridge, Mass.-based venture fund Flagship Pioneering would lead to major discoveries and changes. That appears to be on the verge of happening.
In 2010, Flagship Pioneering launched Moderna Inc., a biotechnology company that is now one of three companies expected to deliver a vaccine that could bring about the end of the COVID-19 pandemic by sometime next year.
That's good news for Rizik and his investors, not to mention the broader society benefits after nearly a year drained by a pandemic.
"It's good news that the vaccine works, and obviously it's nice to have a stake in the company," Rizik said. "It's kind of changing the world in a good way and doing well in the process."
The venture capitalist declined to disclose the payout his fund may be looking at upon an exit, other than to say, "it's really good."
Based in Cambridge, Mass., Moderna (NASDAQ: MRNA) has seen its stock price rise by more than 600 percent over the past year from $21.27 to $157.26 as of Thursday. The company now has a market capitalization of about $60 billion.
As of Sept. 29, Flagship Pioneering stood as Moderna's second-largest shareholder — behind Fidelity Investments Inc. — holding 7.8 percent of the company worth about $2.18 billion, according to Yahoo Finance.
Flagship Pioneering declined to comment for this report. Moderna did not respond to multiple requests seeking comment.
Rizik's fund has made several follow-on investments into Flagship Holdings since 2012, and he acknowledged that at the time he was unaware of Moderna. But the work Flagship was doing with its labs at the time would likely lead to such companies, he said.
"(Flagship) certainly had a history of investing in health care startups," Rizik said.
"But they were creating something — they called them Flagship labs — with the idea of looking at white spaces in the world of pharmaceuticals and biotech, and identifying great moonshot ideas, and starting up companies in their offices to test their theses. And you're sort of creating a process of going from startup ideas all the way to company formation, with gates along the way, as milestones were met."
Such practices are common now, he said, but were rarer a decade ago.
David Brophy, a finance professor at the University of Michigan's Stephen M. Ross School of Business and a longtime observer of the state's venture capital market, was hardly surprised when told that a company like Moderna had grown out of the Ann Arbor venture community.
"In one sense, I'm not surprised that any of these deals that our venture capitalists engage in turns out to be a home run," said Brophy, adding that he's always disappointed when a company such as Moderna winds up based in an area like Boston, one of the nation's primary hubs for VC dollars. "I would love it if we had the home run in our ballpark."
Moderna's COVID-19 vaccine, developed with support from the U.S. National Institutes of Health, is reported to be 94 percent effective in preventing the spread of the coronavirus, and the company has filed with the U.S. government for emergency use authorization, meaning that the first doses could be available yet this month.
Henry Ford Hospital in Detroit was the only site in Michigan to do trials on the Moderna vaccine.
The Moderna vaccine and its ability to be stored at fairly mild temperatures for days is seen as more logistically friendly for distribution than that which was developed by rival pharmaceutical company Pfizer Inc. That vaccine, which was in part developed in Portage near Kalamazoo, requires storage at a temperature as low as -70 degrees Celsius.
The need for ultra-cold storage for the Pfizer vaccine could lead to business opportunities for companies such as Novi-based Lineage Logistics, as Crain's has previously reported.
As the epicenter of the state's venture capital sector, as well as a hub for biotechnology and life sciences, Ann Arbor is no stranger to big, impactful ideas growing into profitable companies.
Entrepreneurs and scientists in Ann Arbor have created life-changing drugs including Lipitor, the record-selling pill taken each day by millions of Americans to control cholesterol.
Similar to Moderna, many of those discoveries and the bets on them play out over a decade or more. As such, Rizik said patience is the name of the game.
"It's not a world where you get quick results," Rizik said of the realities of venture capital investing. "The process of investing — particularly in this case, growing a company that started in the office of a venture capital fund — it just takes a while to get to the end point."
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