Expanding Venture & Funding Options for New Biotech Companies

Author : Agronomics Limited | Published On : 13 Jan 2022

The funding model of Biotech companies today resembles the model followed by technology more than a decade ago. A large share of early-stage funding in the Biotech sector comes from the venture capital model. In this model, the Venture Capital firm invests a large amount of money upfront in the Biotech firm and takes a controlling ownership stake.

Just like starting a tech company was an expensive affair, the cost of starting a Biotech company is high. Interest in the Biotech industry peaked after 2013 and has been going on at a steady pace since then. Biotech has become attractive to a wide group of investors and potential buyers. Initial public offerings and Bio-pharma acquisitions are typically the two primary ways for biotech venture capital firms to receive returns on their investments.

For biotech venture capital firms, investment opportunities lie in startups with goals such as moving new drugs into and through the human testing phase. Companies with technology platforms and the potential to give rise to multiple drugs are considered safer bets. Biotechs with a single drug program do not have any cushioning if the program runs into complications.

The Coronavirus pandemic may have slowed down processes like human trials but it has also opened up new investment opportunities in the biotech sector. Companies that are in the early stages of their research are good investment opportunities as by the time their testing reaches the phase of human trials, the pandemic upheavals may have settled.

Biotech venture capital firms will be attracted to companies that will demonstrate that their technology and the science backing it are sound. They will need to convince the VC that their work will be validated in the preclinical proof-of-concept studies and in the clinical trials that will follow later.

Deep technology biotech companies will prove to be the high return investment opportunities in the years ahead.

About the Author:

Agronomics(LSE: ANIC), the AIM-listed investment company, remains the only UK based vehicle that provides the public with an opportunity to engage in a sector which is likely to become the future of our food. August saw Agronomics participate in BlueNalu’s latest fundraising round following the announcement of their First-of-its-Kind Commercialisation Strategy. When Jim Mellon and Anthony Chow return from attending the Good Food Conference, I am sure the September buzz for this hot sector will continue.