Access to Capital – The Answers are in the Crowd?
This is a guest post from Susan K Finston, President of Finston Consulting. Do you have a response to Susan’s post? Respond in the comments section below.
There is a saying that if you have a tough problem, you can find the solution if you ask enough people – the answer is in the room. For access early capital for biotech, it may take a whole crowd.
But first, here are a few of the latest data points on access to capital – from the developed and developing world. Just how bad is the funding environment for early stage biotech companies in the UK trying to develop new therapies, cures and novel combination medical devices?
For start ups located outside the Golden Triangle of London, Oxford and Cambridge, the Financial Times’ adjective of choice is “awful.” Earlier this week, the FT reported on research on funding of biotechs in the England’s northwest region, concluding:
“Despite universities in the northwest producing similar levels of research and patents they find it hard to attract investors … attracting only 5 per cent of the early stage funding for life science companies in the UK.”
Apparently, a rose by any other name would not smell so sweet to the City of London.
Given that the City – an early mover in venture finance dating back to Elizabethan times – can’t find Manchester on a map, it should not be surprising that funding for innovative biotech remains weak across the BRICS.
A new meta-analysis of investment patterns in emerging markets published in the March 2013 issue of Nature Biotechnology confirms that governments are no more effective at providing access to early capital than venture funds in emerging markets including China, India, Brazil, Russia and South Africa.
And in an austerity budget environment, more companies also are chasing each public grant dollar in developed countries. So outside of VC comfort zones like London, Boston, and San Francisco, what is a Bio-entrepreneur to do? Are the answers in the crowd?
Crowd-funding promises to do for access to capital what Facebook, G+, YouTube and Twitter have done for freedom of expression. Though associated more with indie-music and movies than commercial R&D, it has already scored a few early successes for biotech.
Websites like Kickstarter may provide important new ways to democratize and expand access to capital, giving early-stage companies an opportunity to reach supporters around the globe, and turning anyone with an internet connection and a laptop, tablet or smartphone into a venture philanthropist.
We know that in the 21st century no nationality has a monopoly on good ideas. If Crowd-funding works, location does not have to be destiny for emerging biotech companies looking for early financial backing.
What do you think – are the answers in the Crowd?
About the author:
President of Finston Consulting LLC since 2005, Susan works with innovative biotechnology and other clients ranging from start-up to Fortune-100, providing support for legal, transactional, policy and “doing business” issues. Susan has extensive background and special expertise relating to intellectual property and knowledge-economy issues in advanced developing countries including India and South Asia, Latin America and the Middle East North Africa (MENA) region. She also works with governments, s and NGOs on capacity building and related educational programs through BayhDole25. Together with biotechnology pioneer Ananda Chakrabarty, she also is co-founder of Amrita Therapeutics Ltd., an emerging biopharmaceutical company based in India with cancer peptide drugs entering in vivo research. Previous experience includes 11 years in the U.S Foreign Service with overseas tours in London, Tel Aviv, and Manila and at the Department of State in Washington DC. For more information on latest presentations and publications please visit finstonconsulting.com.
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