Pharma Funds for Biotech Equity Wane
This article was originally published in Start Up
One important source of equity funding for biotech companies--investments by pharmaceutical firms--is drying up.
You may also be interested in...
As biotech deal prices skyrocket, pharma's trying to get in on the ground floor, hoping for a bargain. But innovation-for-less is tough to engineer, and not everyone agrees on how it can be nurtured--and who is best placed to do the nurturing. Novartis now has two competing groups pursuing lower-cost venture-based paths to innovation. Neither, apparently, wants much to do with the other.
Every venture capitalist is anxious to use the latest IPO window to get his companies liquid. But some firms are more successful than others. At the top of the list there were few surprises--JP Morgan Partners and Alta Partners, with six biotech IPOs each, and MPM Capital with five. But the next group down contained some newer names.
What makes a health care VC stand out in the minds of entrepreneurs? According to a first-of-its-kind survey by Windhover, PricewaterhouseCoopers, Wilson Sonsini, and Applied Information Networks, the answer is value-added services. Entrepreneurs prize VCs who assist them, pre-financing, with constructive feedback and sharing of due diligence results. VCs do pretty well here. But they do less well on the more important post-financing criteria: helping their portfolio companies secure additional financing and recruit customers, partners, and employees.