Even with the public biotech was just at an all time high, VCs in the US also have difficulties convincing LPs (Limited Partners) to make investment in their funds. At a recent panel discussion led by Venture Valuation at the RESI (redefining early stage investment) conference in Boston, VCs offered an insight into their perspective of the industry.
Alternative investors such as family offices and corporate investors have become more and more important to fill the financing gap. It was a general understanding among the panelists that investment has to come from alternative sources including family offices and corporate VCs. Early stage investors in particular seem to have difficulties to syndicate deals, but need co-investors that can mitigate the risk and have the capabilities to co-finance across several rounds of financing.
Health IT and platform companies were the hot topics discussed by the VCs on the panel. West Coast VCs seem to be very eager when it comes to Health IT companies, combining the strength of Silicon Valley with the life sciences industry.
Investors tend to look for lower risk but also lower return opportunities. It was mentioned that the VCs have reduced their expected returns somewhat. They also expect the risk to be reduced when looking at broader platform technology companies, companies with service components or medical devices.
The balance between Biotech – Pharma – VCs seems to shift and include family offices and corporate VCs, driving biotech companies to look for alternative sources of funding. If you are interested in Biotechgate’s new Investor database, please contact us here.