Guest post by Constantine Theodoropulos, President of Base Pair Group
They say that the numbers never lie. But in the case of early stage biotech investments raised in Q2 2015, the numbers are, at minimum, deceiving.
The healthy USD 1.4 billion raised in that time period as series A financings is distorted by large investments in a few companies, such as Denali Therapeutics which raised USD 217 million. According to an elite roundtable of VC and pharma corporate investors that met this morning at BioPharm America™ 2015 in Boston, the old norm of A-B-C phased investment is over. Participants in the discussion included Abingworth LLP, Baxalta Ventures, Boehringer Ingelheim, Broadview Ventures, CBT Advisors, The Harrington Project for Discovery & Development, Johnson & Johnson Innovation, Landmark Angels, MedImmune Ventures, Mitsui & Co Ltd., Nowak Ventures, and MassBio. Today, Series A look more like mezzanine rounds to support more developed ideas and assets, leaving entrepreneurs grasping for true seed capital. This shift also has significant economic implications for biotech-heavy regions like Boston that count on the next crop of Biogens and Genzymes to sustain growth.
With traditional VC shying away from risky seed investing, where can startups go for capital? Pharma is stepping into the breach to seed pilot studies on projects aligned with their areas of strategic interest, which is indeed good news. But still, success there requires the science to be novel and perfectly matched with their strategic roadmaps, or the assets need to be developed enough to plug into clinical pipelines within a reasonable timeframe.
In short, despite the ample pool of capital sloshing about, much of that money remains out of reach to a majority of small, emerging companies.