Is Biotech risky business? I think we can all agree due to the research and development and the unknown areas as far as predicting a winner can be close to a roll of the dice at times. The bar has risen a bit today to secure VC funds no doubt and then we still hear about the failed trials. The good news part of this though is that Pharma also has an interest, so there's a potential second alternative, but again, it's back to research and development and the hope of a success.
One thing for sure, we wouldn't have many of the breakthroughs today in medicine if it was not for the backing of the venture capitalists who have enjoyed success at various levels. BD
Significant changes occurring in the global economy, in general, and venture investing, in particular, have finally caught up with venture capital (VC) support for biotech companies. Despite an abundance of funding as well as scientific and technological progress, the environment for investing in the life science industry seems to have changed dramatically.
For example, the first quarter of 2007 enjoyed record highs in venture investments in biotechnology, medical device, and healthcare firms. In fact, average investments in these areas maintained nearly the same levels through the end of the first quarter of 2008.
One factor behind these changes is that biotechnology investments, like most venture capital investments, are inherently risky. In today’s uncertain economic climate, many investors are opting to sit out and wait for more certainty in the market before they invest.
The money is still there but it is going to be harder for biotechnology companies to obtain. This is particularly true given the increased competition for investment with medical device and equipment companies as well as new competition from biofuels and alternative energy companies for investment dollars.