John Brooks – The Thinker –

For someone who has been a venture capitalist for just five years, John Brooks has quickly earned a reputation as one of the most creative thinkers in the business.

Brooks, 51, a founding general partner of Prism Venture Partners, has spent the past few years proving that established medical devices can increase stagnant market penetration by simply becoming more consumer friendly. He has taken the disposable contact lens paradigm and extended it to two new markets.

His first effort was Songbird Hearing Inc., which he launched in 1997 with Prism partner Duane Mason. The Cranbury, N.J.-based company made the world’s first disposable hearing aid, tapping into the estimated 28 million hearing-impaired Americans who endure their disability without any technological assistance. Unlike traditional hearing aids, the Songbird solution eliminates custom fittings and battery replacements. And its 30-day lifecycle permits users to regularly benefit from technological advances without making additional long-term financial commitments.

“A lot of the people who we’ve sold them to had not used hearing aids in the past,” says Ron Tye, a hearing instrument specialist with Woonsocket, R.I.-based Community Hearing Aid Center. He notes that while the device has a few downsides, it has served especially well as a loaner for people whose traditional hearing aid is being repaired.

In late 2000, Brooks and Mason reapplied their disposable theory to the diabetes market by forming Beverley, Mass.-based Insulet Corp. Type II diabetes sufferers are forced to either inject themselves with insulin or use an automated pump. While the latter seems preferable, most potential beneficiaries chose to use syringes because the pump requires them to have an infusion set taped to their torso, which is then inextricably tethered to a control device slipped onto their belts.

Insulet’s disposable pump allows a greater range of motion and flexibility because it has no tether.

The issue of “coming up” with paradigm-shifting ideas may make Brooks appear to be more of an incubator revivalist than a traditional early-stage investor, but he rejects the notion. Instead, he says that he and Mason have restricted themselves to developing just one company per year, with the likely 2002 candidate focused on vision.

Brooks spends the rest of his workdays engaged in the conventional activities of Prism Venture Partners, which he co-founded alongside Mason, Laurie Thomson and Robert Fleming in 1996. He sits on the board of seven companies, and is praised by his CEOs for his industry knowledge and operational expertise.

Those qualities have been honed throughout a career that has included CFO stints at several venture-backed companies, as well as significant time with Arthur Andersen, Strato Medical and Pfizer/Valleylab. With Pfizer, Brooks was charged with helping determine the future of the company’s medical device division in the wake of enhanced profit margins for mega-pharmaceuticals like Viagra. He recommended that Pfizer sell off the lower-margin businesses, and then he turned his attention full-time to Prism.

Over the years Brooks has gained so strong a grasp of the operations side of the business that he has even helped write business plans for his portfolio companies. “He really understands what we go through on a day-to-day basis,” says Bob Rabiner, chief executive of Prism portfolio company OmniSonics Medical Technologies Inc. “He provides us with the type of assistance that isn’t necessarily there from someone who is more technology driven.”

Nancy Briefs, chief executive of Percadia Inc., says that Brooks not only has a deep understanding of her company’s coronary stent device, but he also brings extensive industry contacts. “I speak on a lot of panels, and I was really interested in being on one hosted by Deutsche Banc Alex. Brown,” she says. “I told John, he picked up the phone and got me in the panel in just a couple of minutes.”

While Brooks has earned a solid reputation, he has yet to take a portfolio company public the yardstick with which VCs measure performance.

Still, he has enthusiastic support from fellow VCs during expansion rounds of Prism’s Series A stable. Songbird, for example, received a $1 million pre-money valuation in its first round in 1997. Three years later, it accepted a $95 million pre-money term sheet from Investor Growth Capital on its Series D offering. Another of Brooks’ portfolio companies, Locus Discovery Inc., went from a $12 million pre-money valuation on its Prism-led Series A round in 1999 to a $162 million pre-money third round valuation last summer.

Meanwhile, OmniSonics and Percadia more than quadrupled their pre-money valuations between Series A and Series B offerings.

If the monster increases in valuations are any indicator, Brooks will have a number of IPOs and company sales under his belt in no time. Based on what he’s done in his first five years, one can only imagine the success he’ll have in the next five.

John Brooks

Co-Founder & General Partner with Prism Venture Partners

Investment focus: Medical devices, drug discovery

Biggest hits: No exits or flops. Ran Strato Medical, which was successfully sold to Valley Labs. Ran Valley Labs, which was sold to Pfizer. Organized sale of Valley Labs from Pfizer to Tyco.

Years in VC: 6

Board seats: Axya Medical, Boston Medical Technologies, Cortek, OmniSonics Medical Technologies, Percardia, Spotlight Health, Quorex

Did You Know: His favorite musician is Yo Yo Ma