Investing In Disruptive Innovations With Jenna Aronson Of Two Bear Capital

Some of the most exciting investment opportunities right now can be found in the realm of science and technology. Jenna Aronson, Partner at Two Bear Capital, joins Scott Kelly to discuss how they invest in technical founders at the forefront of today’s cutting-edge and disruptive innovations. She explains how technology, particularly AI, is driving capital efficiency and accelerating the discovery of new biotech frontiers. If you are curious about the gold to be found in the intersection of health and technology, this episode is a must-listen.

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Investing In Disruptive Innovations With Jenna Aronson Of Two Bear Capital

I’m excited to have Jenna Aronson from Two Bear Capital on the show. It was interesting to have someone from Montana on the show of all places.

You’re getting all the states in.

Exactly. We’re going to do the 50 states in 50 days, but she is on the leading edge of technology and extending the quality and the length of life. She comes to this as a neuroscientist, which again, my state college brain was almost exploding while I was talking to her because she knows this stuff so well. She knows about genetics and aging because that’s where she got training from Harvard to Mass General. She understands this sector inherently explicitly. It was exciting to listen to what she’s doing with the leading-edge technology focus on life sciences and we got some pretty interesting things to learn from her.

This whole area of the brain has been fascinating me for a long time. When I used to write my Inc. column, which is how you and I met. They would say, “Can you write anything about the brain? If you write about the brain, people will click it.” It fascinates everyone, but I feel like I don’t know anything either. It’s such a broad area but super aging is in the news now. This idea of how we’re going to age and how we’re going to overcome all these diseases, age gracefully and age with high quality of life. She’s on to something here. I look forward to everyone hearing this and having comments back. I’d love to see your comments on social about this.

About Two Bear Capital's Partner & Principal, Jenna Aronson

Jenna is a Principal at Two Bear Capital where she sources, diligences, and leads investments in innovative life sciences therapeutics companies. She serves as board observer for Montara Therapeutics and Abilita Therapeutics.

Prior to joining TBC, she was a researcher in the Genetics & Aging research unit of the MassGeneral Institute for Neurodegenerative Disease at Massachusetts General Hospital/Harvard Medical School, working under Dr. Rudy Tanzi developing 3D human neural stem cell models of Alzheimer’s disease.

She completed her PhD in the Brain & Cognitive Sciences Department at MIT, advised by Dr. Ed Boyden in The McGovern Institute for Brain Research, developing biotechnology platforms for enhanced resolution into clinical samples including brain tissue and liquid biopsies with applications in cancer and neurodegeneration.

Her doctoral training was supported by fellowships from the Singleton Foundation and Center for Neurobiological Engineering as well as a Koch Frontiers Award and she served on the teaching team at MIT Sloan School of Management. In her free time, Jenna continues to support MIT entrepreneurs as a Sandbox Innovation Fund Mentor.

Follow Jenna Aronson on Social: Linkedin

I’m excited to have Jenna Aronson from Two Bear Capital. Welcome to the show, Jenna.

Thank you so much, Scott. It’s great to be here.

Looking Back To Jenna Aronson’s Career Journey

Jenna, before we get into Two Bear, share a little background on yourself prior.

I trained as a neuroscientist. I spent over a decade in academia. I did my PhD at MIT in Dr. Ed Boyden’s lab in the McGovern Institute for Brain Research within the Brain and Cognitive Sciences Department. I was working on developing platform technology to get nanoscale resolution insight into different types of clinical samples, brain tissue slices and liquid biopsies so we could understand more about neurodegenerative disease processes and also get better insight into glioblastoma and other types of brain cancers.

I also spent a number of years in research at Mass General in Dr. Rudy Tanzi’s lab, where we were building 3D human neural stem cell models of Alzheimer’s disease. There are a lot of challenges with the mouse models. We were making more complex models with actual human cells so that we could study over months at a time and understand what were the contributing factors and what drugs might be helpful for the enormous number of patients who are searching for hope.

All About Two Bear Capital

That’s a pretty impressive background. It doesn’t look like you come to defend from traditional channels. Share a little bit about Two Bear but first of all, why the name Two Bear? I’m curious about that.

I became interested in the biotech innovation ecosystem because I loved the intellectual exploration and there’s enormous unmet need in the freedom of academia. However, I wanted to get closer to patient impact and to get into the biotech industry as a way of getting closer to bringing real care to patients. In my time at MIT, I took a lot of coursework over at Sloan at the business school. I went on a journey of education and exposure to folks in the ecosystem to understand where I might slot in and make a difference.

As I learned about opportunities, the role of investors in the biotech ecosystem, especially at the early stage, it’s critical. In order to bring these innovations that so many folks are working on in the lab out into new companies that can progress forward and push therapy, new therapies for it. There needs to be investors and those investors need to have deep scientific insight. In order to understand the innovations that are being worked on, these approaches are early and risky. It’s important to have technically savvy folks with deep sector expertise.

That’s where I could make a difference in helping drive investment decisions. I got connected with Two Bear Capital during my time in my PhD and became very excited because they had a differentiated approach. There are a lot of folks who are a little concerned about capital efficiency, and so because of that they choose to go after developing a single program or single asset. While that can work, at Two Bear, we take a different approach.

What we get excited by is a platform approach. What a platform means is you don’t have a binary wrist profile. You can work on a couple of different programs all of which have the potential to move the needle for human health. That creates not just a diversified risk profile, but also additional optionality. Some of those programs, a small biotech can carry forward and run the clinical trials themselves. Some of them might be a good fit for partnering.

When you think about the range of different indications out there, the time and costs of running for example, an Alzheimer’s study is enormous. That’s something where you want to partner up with farmers. If that’s the only thing you’re working on, then you might sell the company without being fully bought. It’s good to have a couple of things cooking. That’s the Two Bear Capital approach.

Working With Deeply Technical Founders

That’s awesome. You obviously get in early. In terms of the types of companies and the types of founders, maybe share a little bit of flavor on the entrepreneurs you’re backing.

In the early-stage company development, the founders are so important. There are so many factors that need to come together to have the right mix of potential to succeed because it’s hard and the failure rate is high. We like our deeply technical founders who understand the space that they’re working in and can make good strategic decisions and we work with them.

Our approach is to be helpful and hands-on. We’ve led or co-led all of our investments. We support our company through board seats. We’ve got operating partners who can be helpful. The CEOs we work with have got our phone numbers. I’m always happy to get late night texts and calls. The first call, something good or something bad. You just need to chat. We’re here. We like to find founders who not just have that deep type of expertise, but also have the ability to think critically about the business side of it as well. It’s hard to come in with all of those strengths.

What we like to see is somebody who has a combination of leadership potential who can help drive a team, motivate a team and interact with all sorts of different personalities but also has their ears open and knows that they might not know everything and wants to have input from different perspectives so that good conversations and decisions can ensue.

It’s nice to find that balance of somebody who’s a tremendous leader but also has a little bit of that meadow awareness and wants to be better every day. Somebody who’s a sponge who’s just trying to always improve and recognizes that biotech is a team sport. We need to all learn and have the best odds of success.

How Technology Impacts Capital Efficiency

You mentioned a little bit ago about capital efficiency. Maybe you could share how technology is impacting the capital efficiency offices. There’s been a lot of talk about AI. We did a previous episode interview where they were doing research in space. Maybe talk about how technology is playing into your investment thesis and how that’s making capital more efficient.

It’s a question of the moment and every time I get this question, I wonder. When is it going to be that AI is so commoditized we don’t even ask the question? For example, let’s pop up a level. Do we ask people, is electricity part of, , your Innovation? No, we don’t. If it was the early 20th century, we would because it’s like, the electricity is going to transform transportation or productivity or making shoes or whatever it might be. In the same way, all joking aside, AI offers tremendous benefits for improved efficiency and streamlining processes. We firmly embrace it.

We think it should be a part of basically every company but we’re not investing in AI first companies. It’s more that this is part of the approach. This enables the approach. Even internally, we have all sorts of AI tools that we use to boost our own productivity. There’s a lot of different examples of how AI is being used amongst our portfolio. There are some folks who are using AI algorithms and combinations with the most cutting-edge biomedical data sets in order to pick indications or pick targets, then they’re getting the output of those in silico experiments into the first experiments into cells to see if that checks out.

There are other companies who are using AI algorithms in order to optimize the molecules that might become a drug. They might take a look at the drug they’re starting with and say, “I wish that we could tweak a couple of these factors so that it can get to the brain and cross the blood-brain barrier with a little more efficiency or get metabolized a little bit faster than we’d like. Let’s see if we can prove stability.”

Traditionally with medicinal chemists, they follow well-trodden pathways and follow the precedence. With AI, you can explore a lot of different avenues and get out into some novel space efficiently. On the productivity side, we see some of our portfolio companies who are using it in order to prepare high-quality materials that will set them out for success with pharma partners. The bars don’t apply for the data sets that these companies need to deliver. Especially for first-time founders who haven’t navigated a partnership with a pharma company.

The level of detail and rigor that needs to go into how they prepare and format their materials can be eye-opening for them. Helping them understand what they need to get to in order to be able to communicate the potential of their program and why they should be attractive for partnerships. That can come from having sophisticated and organized materials and then internal communication and everything else that you might add.

Success Stories At Two Bear Capital

I appreciate that. Let’s talk about some of your portfolio companies. Maybe share some of the companies that you would gain a success story about. Also talk about some of the things that you’re excited about in your portfolio, new discoveries and things of that nature.

Our first investment out of venture fund two is a company I’m excited about. I first met the founder at a conference in New York. He was coming off of an acquisition of his former company by Avi. That was a pick one activator for Parkinson’s Disease. We were chatting neuroscientists to neuroscientists and here’s where the deep technical expertise and background comes in. We’re speaking the same language and he said, “Let me tell you about this new stealth thing that I’m working on.”

It happened to be in a space that I had already been tracking and following, which is in the area of getting drugs into the brain. There are a lot of different ways that people are working on getting drugs into the brain. You might have heard of brain shuttles, which help get a little bit more drug into the brain but you still have some drugs circulating out in the rest of the body. Something that I’ve been thinking about and this founder was working on is how do we address the problem that there are targets that exist on cells in the brain and we want to hit those. Those targets exist in cells in the rest of the body as well.

If there’s any drug that is still circulating in the body outside of the brain, you’re going to hit those targets outside of the brain and you’re going to get toxicity. You’re going to get side effects. There are a lot of programs that have stopped. Not because the drug didn’t work, but because you’ve got these toxicity issues from the drug and the rest of the body. These folks had come up with a clever approach, which is a chemistry-based platform that allows a universal peripheral blocker. This blocker stays outside of the brain, cannot cross the blood-brain barrier and preferentially interacts in the rest of the body.

The drug is to get into the brain where it can go and get activated by its partner and do its job. The cool thing about it is that you’re not just limited to one disease. You can use this approach for epilepsy to neurodegeneration even neuro oncology. There’s just so many opportunities. Also, the risk profile is better. You can go and use drugs. There are FDA-approved drugs that some doctors refuse to give even though they might stop children from having seizures. The side effects are so intense and so prevalent that some clinicians will refuse to use them.

If we can go back and leverage the work that has previously been done, put it on this platform and make a big difference. We co-led that investment and with a few other great investors. They’re just been efficient and moving forward. They are moving into their IND enabling studies now with their lead program. They’re looking to be heading into the clinic in early 2026. It’s efficient progress.

You asked about the founder as well. This comes back to the founder. He’s done it before. He’s navigated partnerships and acquisitions. He’s a tremendous leader. A lot of the folks at his previous company came with him so they were able to keep it running. He’s very savvy and capital efficient. Everything that comes across his desk gets negotiated and stuff to be on the other side. He does a good job. That company is Montara Therapeutics and they’re based out in the San Francisco Bay area. We’re very excited about them.

Two Bear Capital’s New Frontier Interests

I was watching a drug commercial and it always stunned me. They talk fast about all the things that could go wrong and all the side effects. It’s intriguing that the drug delivery system can make these drugs more effective and less negative. That’s fascinating. What are some of the new frontiers that you’re looking at now? What are some of the things that are on your radar?

At Two Bear Capital, we like platform approaches, the therapeutics. The areas that we tend to focus on the most heavily as a team are oncology, CNS and I&I. In the CNS space, I told you about this delivery and getting drugs into the brain. It’s an essential problem and Montara fits in there nicely, but there’s still a lot of white space. We’ve been looking very closely at a number of different approaches to get drugs into the brain through different shuttles and new mechanisms.

Another area that’s very interesting is the neuropsych space. There have been improvements in clinical trial design and strategy in order to reduce some of the challenges that are unique to that space like the placebo effect, inclusion bias for patients and participants in clinical studies. They are systems where the folks who aren’t on site at the clinical trial center are not the ones empowered to make the decisions. You have unbiased third parties that are looking through. The reason why is because if you look at the numbers and some of these studies, you’ll see that a lot of folks just barely make it over the threshold and there’s like a white space a little bit below.

You realize that the folks at these clinical trials centers are incentivized to enroll. They’ve got pressure to get patients and they’ve got pressure to push forward. It’s important to run the best study again. Having external readers who don’t have that pressure on them can help you make less bias decisions on who gets included then you get better trial outcomes. In the same way, with clinical trial design, they’re clever and new approaches where you hear there’s a placebo group and a drug group. Now, they run those groups and then they randomize.

What you can see is that there are certain folks who are higher placebo responders and you can use biostatistics in order to reduce the impact that those placebo responders are having on your study outcomes. Additionally, we’re getting better biomarker data for neuropsych indication. It’s been very challenging in the past. In the past, we’ve got these messy drugs. We don’t know exactly how they work but they seem to. Now, we’re trying to be a lot more thoughtful and strategic and say, “We want the drug to be bought exactly where we want it and nowhere else.”

There’s a pet positron emission tomography that’s being used as a way to see target engagement of a drug with the target that we want it to be acting on. We can use advanced Imaging techniques to see if that’s happening in early-stage clinical trials. Also, quantitative EEG and Meg. There’s all these other strategies to see, are we doing something that seems like it’s maybe helpful and also not harmful in those early studies? That’s traditionally not been something that’s available to us. It’s an interesting space. We’re looking at it and there are lots of opportunities there.

Two Bear Capital’s Investor Profile

It’s encouraging to have an investor that knows her space so well. I would imagine if I was on the due diligence call with a biotech, I would not be able to answer all the questions as you put in front of me. I appreciate your expertise. Let’s talk about potential investors. Let’s talk about the makeup of investors in Two Bear Capital and investment partners. What’s that makeup look like? Who are these people?

Popping up a level, I’ve been talking a lot about the biotech investment thesis that we have at Two Bear Capital, but I want to make it clear. We’re both a tech and a life sciences investment firm. We practice on the tech side. On the tech side, we’re also deeply technical. The areas that we are interested in and have expertise in is cybersecurity, information security, networking and DevOps. I’ve been building out a new thesis in quantum software.

Back to your question, if you look around the investment team, all of our backgrounds reflect those areas. We’ve got folks who can ask deep questions and have their pulse on the latest in those spaces so that we make good investment decisions and are excellent stewards to the best of our abilities for our LPs capital. Also, so that we can be helpful to our founders and our operator because they’ve got so much going on.

The need of driving their companies for it is so much that if we can be an extra pair of eyes and ears and set them up with warm intros, potential customers, potential partners and investors, then that’s how we can be beneficial. That’s part of our thesis, is to invest in companies where we can be supportive beyond simply the financial capital that we’re putting in there. We want to make sure that we can do more than that because if not, why are we differentiated?

Two Bear Capital’s LP’s Background

The LPs in Two Bear Capital, who are they? Not by name but maybe my profession and background.

We’ve got a great group of LPs at Two Bear Capital. It’s a mix of high-net worth individuals, family offices and institutional money. The way that I would describe our investors is that very intelligent sophisticated successful individuals and families know a lot and would love to be exposed to some areas that aren’t necessarily exactly within their core area of expertise. Perhaps, not get into specifics but we’ve got family offices who have substantial holdings in the real estate sector or maybe transportation or maybe other types of family businesses that are enormously successful.

I want a little bit of exposure to some alternatives and within that strategy, VCPE comes in. They are interested in Two Bear Capital because they know that we’re going to run a deep diligence process and be very helpful with our companies. We’ve got a 20/80 rule, where 20% of it is picking the right company and 80% isn’t helping with good decision-making afterwards. Our founding partner Mike Goguen was a very successful partner at Sequoia for a couple of decades, multiple trips to the Midas list and too many successful exits to enumerate here.

Having done on over a hundred boards, he’s a tremendous mentor and leader. We’ve been building up the firm and learning from his background and sticking to these tenets that we agree are so important, which is a technically deep investor team who invest in deep founders. As we grow and as the teams grow, if those founders aren’t the right people to be in the CEO role, we still keep them closed.

We find the right people to support and make sure that we’ve got the technical expertise paired with the right experience in the business space in order to help these companies reach their full potential. Don’t invest in companies unless we see an exit that could be meaningful to our LPs. There are a lot of different opportunities out there and we can’t tell everybody, but we’re looking for not iterative solutions but big transformative answers that could just be tremendously impactful on the world.

Why Choose Two Bear Capital Today

For potential new LPs in Two Bear Capital, why your fund? Why now?

Potential LPs should be excited about what Two Bear Capital is building here in fund two. I should add, we’re actively fundraising now. What we’re doing is very carefully selecting companies where we see the right mix of the technical innovation that’s impactful, a team that can drive it forward and economics that can bring nice returns to our LPs. We think about everything from a platform approach, which means that there’s not going to be a binary risk flip, which says, “We were wrong. This is not going to have a good outcome.”

We’ve got optionality to teach about how to push forward with solutions and because of that, we’re mitigating risk and being wise and prudent and also disciplined stewards of our LPs capital. Our approach is different. A lot of investors now are scared about the macroeconomic climate. They’re pushing towards these binary investment bets. While those might take a little less money to get to an outcome, that’s all they’ve got. It’s one shot on goal.

You look back at history and what’s worked. It’s not the single shot on goal that’s going to work every time. That’s great if you want a portfolio that’s going to have the traditional statistics of one big winner or maybe like two or three bass heads and a bunch that are going to goose eggs. Our process there is that we want to help most of our companies succeed. We see potential for most of them to succeed and we see that there’s going to be ways that we can help continue to support them even if they hit a little bit of a bump in the road or the roadblock. We’re going to be the part to help them there. We’re also going to be the wanted partners.

We build such trusted relationships with us, they want to take our input and they want us to be partners in that journey. We’re empowered to do that. We can help find solutions. Something that separated Mike from some of his colleagues and throughout his career is that other folks were ready to hang up the boots when things got a little tricky. That was what lean in and roll up his sleeves. There are so many examples of when he was able to pull out a big win when other people were like, “Let’s move on to the next one.”

That patience and that dedication figuring out what the path forward is even when he hit the roadblocks. That’s something that we bring to Two Bear Capital. The why now, that’s because we’re always on the pulse of what’s changing and what’s new. We know what the latest innovations are in the space that we’re working with, we’re dialed in and we’re on the pulse of it all.

How Biotech Transforms Life Sciences

Any final thoughts you want to share to our readers?

Another thing that separates Two Bear Capital is we have both tech and life sciences expertise on the team and we’re co-mingled into one fund. Which means that we know we all lean in because the thesis is biotech and tech are coming together. Tech is enabling biotech in ways that have never previously been possible. They’re accelerating the discovery and the efficiency that we get there. Rather than siloing our practices into different categories. We see enormous value in keeping those together.

The folks are asking deep technical questions, as well as very intelligent individuals who might not be subject matter experts in big picture questions. We’re thinking about it from all different perspectives. We’ve also been very thoughtful about our team construction in addition to the deep academic expertise. We’ve also got folks who come from Wall Street who bring public market expertise. Even as we’re early in these seed and serious egg companies, we’ve got the big picture perspective on a few steps down the line and we’re thinking strategically.

Episode Wrap-Up And Closing Words

Where can readers learn more about you, Two Bear Capital and connect with you?

You can find me on LinkedIn and also, we’re at TwoBearCapital.com. There’s a form on the website that you can use if you want to fill it out. I encourage anybody who’s reading this who’s excited about what we’re working on to reach out to me. My email is my name Jenna@TwoBearCapital.com. I’d certainly love to hear from you because we like to partner with intelligent LPs who are excited to work with a serious and technical team with business savvy because we can be a diligence engine. We can help you make good investment decisions. We’re always looking to build that network of Two Bear Capital LPs and change the world together.

For everyone reading, make sure you follow Jenna on LinkedIn and reach out to her at TwoBearCapital.com. Make sure you like, comment, and share this show. Jenna, thanks for being on the show.

Thank you so much.

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It’s interesting to learn more about how to get older, more graciously and more successfully. She has this great platform approach. Two Bear Capital has a lot of focus on life sciences but they’re also in cybersecurity and information security and quantum software. She’s in the bleeding edge of several different technologies that are going to be transformed up to our society and the way we live and quite frankly, how long we live. It was very interesting.

She’s right to be on the edge of all that technology because these science breakthroughs aren’t going to happen without the technology breakthroughs as well. The two things have to go hand in hand. This is an area that Tom, my partner and husband and I watch very carefully. He had two family members with Alzheimer’s. It’s a very big area, this idea of your brain and aging. You are neuroscience and aging just like what starts to decline.

These memory issues and degeneration that starts to come with aging is surprising at how quickly it happens when you hit over 50 and how many people are surrounding you and oncology and cancer issues. All of those things are creeping up at a much faster pace and you just obviously notice it more as you hit a certain age. You’re more aware of it, but I am glad to see that combination with the technology because that’s starting to bring that awareness earlier.

The great thing she does is she brings in these deeply technical founders who know their space and they bring along their technical support. They’re training in the background. It’s a real hands-on approach to support these companies and we have this bit of a conversation. You got these very good technical founders who understand the craft of the technology but need help running a business and growing a business.

It’s not only the folks and her team at Two Bear have this background in the sciences but they have background running a company. At the end of the day, these types of companies take a long time to develop and definitely need the support of people that understand the technology but understand how to practically turn this technology into a profitable company.

Also, are in it for the long haul. Not the short flashy gain because that’s not going to happen in this sector, but the returns. Look at our aging population. Look at how big those returns could be. That’s fascinating. I’m sure you’ve got some more sectors. I love that you’re getting into these deeply technical ones too. We had medical science in space and all of these things. These are all fascinating.

If you haven’t caught up with some of the interesting sectors that we’ve been covering here on Emerging Managers, you have to go to EmergingManagersPodcast.com. Go check out all the episodes, the blogs for those episodes, connect up with the companies and the amazing investment founders we’ve been talking to on the Emerging Manager Podcast. We will be back. We will have more and more sectors being covered and more investors being covered.

Many more to come.

Important Links

• Jenna Aronson on LinkedIn
• Two Bear Capital
• Montara Therapeutics
• VCPE
• Mike Goguen on LinkedIn
• Jenna@TwoBearCapital.com
• Emerging Managers Podcast