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Ropes & Gray attorneys provide timely analysis on legal developments, court decisions and changes in legislation and regulations.
Brad Flint: Hi, I’m Brad Flint, a partner in the venture and emerging company practice group at Ropes & Gray. I’m based in our Boston office. I want to welcome everyone to the latest episode of the R&G Tech Studio podcast. In this edition, we have my good friend and colleague, Raj Banerjee, with us. Raj is a partner in both our venture capital (VC) and emerging companies practice, as well as our IP transactions group. He is also based in Ropes & Gray’s Boston office. Welcome, Raj.
Raj Banerjee: Thanks for having me on the podcast, Brad. Brad, it’s interesting—we both travel a lot but our offices in our Ropes Boston office are around the corner from each other, so when we’re both in town, we bump into each other a fair bit.
Brad Flint: That’s right. Great to have you again, Raj, and certainly, plenty of in-person collaboration around here these days at Ropes. With that, Raj, tell us a little bit about your practice. Who are your clients and what do you do for them?
Raj Banerjee: I am a life sciences lawyer, which means I do both venture capital and emerging companies work primarily in the life sciences or related businesses, and I do life sciences licensing. I’m excited to talk about some of the trends we’re seeing around AI in the life sciences space, because the lines between what we traditionally consider “tech” and traditionally consider “biotech” are increasingly getting blurred. It’s one of the most fascinating things to observe in my practice.
Brad Flint: Where are those clients based, Raj? I know, for example, you travel a fair bit to California in addition to being based here in Boston. Do you have clients in both of those locations and elsewhere?
Raj Banerjee: I do. There’s a fair bit of flying involved there, but I spend most of my time in Boston. I fly quite a bit out to the Bay Area to meet our clients there, both investors and emerging companies. And sometimes, you’ll find me in New York or London as well, because we’re a global firm and we’ve got clients all over the globe.
Brad Flint: Great. Then, getting back to the substantive topic that you mentioned at the outset, I know we’ve had several conversations over the past year around the impact of generative AI in our area of focus. Could you walk us through a few big themes around AI that you have observed over that past year or so?
Raj Banerjee: I’d be glad to. Now, with AI, there are so many threads that you could pick on, and obviously, a lot has been said and written about AI and its impact in every industry. Let me focus on two themes, and I’ll unpack them a little bit. The first big theme is just that funding for AI companies is dominating and reshaping the venture investing world. If you look at numbers from Crunchbase, the first three quarters of 2024 have seen over $55 billion of investment in venture-backed private AI companies. Now, so far in 2024, that’s about one in three dollars going to U.S. venture-backed startups. Those are just numbers, but there are three interesting qualitative features of this AI investment boom.
The first is, AI—this shouldn’t come as a surprise—is a capital-intensive industry. There’s a lot of computing power required, and that requires a lot of capital. And so, these eye-watering numbers that we’re seeing are being driven by massive funding rounds in a few large players. Look at xAI’s $6 billion raise from the summer and Safe Superintelligence’s more recent $1 billion funding round—that’s what’s driving the numbers here. But those are just the emerging companies that are getting the funding. It’s interesting to look at who’s behind these investments.
Alongside traditional VCs, this AI boom is actually attracting investments from the biggest companies in tech: Microsoft, Alphabet, Amazon and NVIDIA. Microsoft and NVIDIA, including NVIDIA’s venture arm, which is called NVentures, are actually two of the biggest investors in this space. It’s interesting to observe traditional VCs sharing space with these large strategic investors. I’m curious to see how they work together to shape the future of AI.
Then, the third interesting feature just within the same theme is that now we’re seeing the biggest venture-backed AI companies themselves becoming venture investors in the space and making their own investments in second-generation AI companies. OpenAI has a large and well-publicized venture fund, and it’s not the only one. We’re paying attention to how these first-generation, big AI companies are driving the next stage of this boom.
So, that’s one theme: AI is just reshaping the venture investing world.
The second big theme is these numbers that I shared almost underestimate how AI has caught hold of corporate America. I mentioned a couple of minutes ago that, so far in 2024, about one in three dollars going to startup investments in the U.S. has gone to AI-related companies. Now, that doesn’t mean that the remaining two-thirds of funding has gone to startups that have no use for AI or are somehow immune to its impact.
I mentioned at the start that I’m a life sciences lawyer. A lot of my work is in the life sciences industry—that’s where most of my practice focuses. In life sciences, there’s a serious focus on exploring ways to use AI to, for example, make drug discovery, drug development and manufacturing better, faster and cheaper, and there’s a tremendous opportunity here. Just to frame it: drug discovery and drug development today is a really laborious process, and it has several failure points and it’s very capital intensive. The R&D costs associated with the large pharma company bringing a drug to market in the U.S. could be over $2 billion. It’s still early days, and people in the industry will caution that there’s no silver bullet here, but if AI-based tools can be used to considerably improve how we pick targets in the body to drug, how we design drugs to interact with these targets, how we manufacture these drugs, how we determine which patients are best suited to which drugs, it can bring down the cost of drug development and really change the face of medicine. So, it’s not hard to see why there’s so much VC excitement in this space.
Brad Flint: That’s all really fascinating, Raj. How are you, in particular, helping clients navigate these exciting developments in this space?
Raj Banerjee: As you know, Brad, we’ve got several emerging company clients in this space. In life sciences alone, Genesis Therapeutics comes to mind as an example. We also work with investors making important bets on AI-related companies.
At Ropes, we’re playing a role in at least two important ways. On the investor side, we’re helping our clients navigate just “what is market” in a world where the recent AI boom has completely upended and reshaped the VC investing market.
But then, we also go deeper than that—this is where it really helps that our VC and emerging companies group is so closely integrated with our IP transactions, life sciences and other regulatory groups. Our IP, data privacy and regulatory teams are providing, I’d say, market-leading advice to both investors and startups around navigating the risks of pursuing certain business models. You can imagine in an industry that requires you to consume, collect and analyze a ton of data, that there is a need for very specialized regulatory advice. Personally, I work closely with our emerging company clients in structuring licensing deals that help them build and commercialize these technology platforms. As a life sciences lawyer, I also work with our large pharma partners on doing deals across from AI companies.
On a separate note, we’re also using AI-enabled tools at Ropes ourselves to improve how we advise clients and do deals. There’s actually a great episode of this podcast where our technology strategy leader, Ed Black, who’s based in the Boston office with us, goes into how we’re integrating AI into our client service efforts.
Brad Flint: That’s great, Raj. Thank you for walking us through that. Then, to lighten it up and go in a bit of a different direction toward the end of our conversation, I would love to talk a little bit about your life outside of work with a couple of quick questions. So, starting with the first: What was the last book that you read?
Raj Banerjee: The last book I read has nothing to do with AI and nothing to do with life sciences. It’s called Revolusi, and it’s a history of the Indonesian independence movement. I’m still looking for a connection between that and my practice, but it’s an absolutely fascinating book.
Brad Flint: That’s interesting. Not one that I’ve read, I can’t say, but it sounds interesting. How do you spend your weekends when you’re not working?
Raj Banerjee: If the weather’s good, and when I’m in Boston—that’s not always a given—the ideal weekend would involve just heading down to our local neighborhood coffee shop, sitting down with a book, whether it’s about Indonesian history or something else, and grabbing a cup of coffee. We’ve got a lot of dogs in our neighborhood (I live in Cambridge, Massachusetts), and I get to check in on the neighborhood dogs at the local coffee shop.
Brad Flint: That sounds great. I certainly find myself doing the same. It’s currently fall here in New England as we’re recording this, and a great time for that activity, I think. Raj, it’s been great having you on the podcast. I also want to thank our audience and our listeners for following us. As with all of our other R&G Tech Studio podcasts, this edition will be available on the Ropes & Gray Tech Studio webpage and everywhere else that podcasts are made available. Thanks again, everyone, so much for listening.