Alan Frazier of Frazier Healthcare has quite a few opinions about the state of venture funding in today’s financial climate. He has new ways of thinking on how biotechs can be funded and how VCs can recoup their investment.
I applaud Alan Frazier’s assertion that he decided back in 2005 that biotechs need to be tailored to be acquired by big Pharma. I heard a very similar story from Brenda Gavin at Quaker BioVentures about the same time. Brenda was of the opinion that venture firms had to give up expecting their portfolio companies to exit after 5 years. She said Quaker had set their expectations for an exit after about 9 years – just about the time needed to go from lead identification to proof of concept in the clinic.
I also applaud Fred’s comment about big Pharma wanting to buy companies with one project. We have seen quite a few venture backed firms build up staffs of 50 to 150 and then get caught in a funding crisis when new investments were needed. By the time these larger biotechs had gone through $100M or more, new investors were unwilling to add in more capital in what would become a down round. The consequence is many of them have gone out of business. It seems like capital efficient biotechs are getting more popular these days.
Comments
Post has no comments.