Background:

After the 2008 and 2011 economic downturns, the funding landscape in the life sciences began to shift dramatically. A majority of traditional venture capital firms in the life sciences moved away from high risk, early stage investments and opted for less risky, more developed investments or creating companies in-house using their internal networks. As a result, there has been a drop off in first-round funding placed into life sciences companies from 23% in 2006 down to 12.8% in 2012.

Despite a handful of firms that continue to build companies from scratch, strategic changes from traditional VC firms have created a large funding gap that will be a challenge for new bioentrepreneurs to overcome. Fortunately, there are a number of alternative funds filling in the void that traditional VC firms have created. Big pharma and biotech companies are creating their own corporate venture funds and incubators to directly invest in earlier stage development as a viable alternative to traditional in-house R&D. A new wave of foundations, nonprofits, and venture philanthropists are partnering with commercial biotech companies to fill the need of early-stage investments. Furthermore, with the advent of the JOBS Act and emergence of credible platforms, angel networks have expanded to include crowdfunding as a meaningful way to obtain early stage funds in biotech.

Undoubtedly, these strategic shifts by traditional and corporate VC firms, along with increased alternative funding in early stage ventures with an eye towards commercialization, are set to have a significant impact on bioentrepreneurship. With an increasing number of investors at each stage, it is likely that a single venture may be funded by several sources along the path from inception to exit. Having a plethora of options is certainly exciting but investors will have to work together in a cohesive, structured manner in order for individual entrepreneurs, and the biotech industry as a whole, to fully realize the benefits of having such a wide array of funding opportunities. For each new venture, the new challenge is to find ways to efficiently and effectively utilize these many different funding platforms, each with its own strategy and philosophy. How will these new funding sources cooperate and interface with more traditional sources to fund the latest advances in the life sciences sector?

The Biotech Connection’s launch event in Boston examines the shifting funding landscape in the biotech industry from the perspective of leading experts. It brings together industry leaders from traditional venture capital firms to alternative sources, such as corporate venture funds and new crowdsourcing platforms. Join us as we discuss the challenges and opportunities facing the funding landscape for bioentrepreneurs and how we can determine its future. Registration is free.