Most new drug companies start small, with few staff members and little money. So in exchange for equity in their company, biotechs can raise much-needed cash from venture funds looking to invest in a technology early in order to earn a big pay-off down the road. Experienced individuals from the venture capital firms usually play a key role making decision and guiding the new company through the development process. 

Venture capital funds will, at various stages, provide fresh infusions of cash if a biotech's program shows promise and continues to move through the clinic without hitting any major speed bumps. Ideally, the drugmaker will exit when the it's in a position to demand a premium price. Promising Phase II or, better yet, Phase III data could tempt a larger company to make a pricy buyout offer. Alternately, some developers attempt to raise money by filing an IPO. This is a gamble at best. While some high-flying developers like Pacific Biosciences have had success on the open market in recent months, investors still lack an appetite for small developers with no drugs in the market and the risk of an FDA delay or rejection looming in the future.

In 2010 biotech venture capital investing began to recover from its 2009 low, growing three percent in the number of dollars raised and eight percent in the number of deals which were struck. That represents a significant bounce-back from 2009, which saw biotech investing plummet 19 percent during the worst of the economic crisis. The industry dropped to second place overall behind software, with $3.7 billion going into 460 deals.

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Biotech Venture Capital

Latest Headlines

Latest Headlines

Mersana grabs a $35M round, posts ex-Millennium chief Protopapas at helm

For more than a year now, NEA general partner David Mott has helmed Mersana Therapeutics, a Cambridge, MA-based biotech that has been working on next-gen antibody-drug conjugates. But this morning he's handing the reins over to longtime biotech vet Anna Protopapas (while remaining chairman) after organizing a $35 million B round that will be announced later this morning.

Woodford readies a $300M wager on struggling U.K. biotech sector

LONDON-- High-profile British fund manager Neil Woodford rolled out plans to raise about $300 million for an investment trust that will bet heavily on the U.K.'s struggling biotech sector.

G1 banks $33M to cut in on a blockbuster oncology race

North Carolina's G1 Therapeutics hauled in $33 million to advance a headline-grabbing approach to cancer treatment, helping the biotech hit the gas in a space otherwise dominated by Big Pharma.

Biotech guru Gregory Verdine lands $18M round for new WaVe drug developer

A U.S./Japanese hybrid biotech chaired and co-founded by Gregory Verdine, the high-profile Harvard investigator now laboring as CEO of Warp Drive Bio, has gathered together $18 million in a transpacific venture round and set its sights on developing a "revolutionary" new class of nucleic acid drugs based on a potentially breakthrough approach to drug design.

Gene therapy pioneer ReGenX fuels R&D, hiring spree with $30M VC round

Cashing in on the current enthusiasm in venture circles for gene therapy upstarts, ReGenX has snagged a $30 million round that will finance a round of new hires as it sets sail for the clinic with lead programs for rare diseases of the central nervous system.

Euro VC Fountain unveils a $101M biotech fund

Fountain Healthcare Partners put together an €85 million ($101 million) new purse, money the Irish investor plans to pour into biotech startups.

Third Rock-backed GBT grabs a $48M round, plots upcoming IPO

The Third Rock-launched Global Blood Therapeutics has rounded up $48 million to push into the clinic with an experimental therapy for sickle cell disease and set the stage for an IPO later this year--once they have proof-of-concept data for their drug in hand.

A record year for biotech inspires some great expectations for 2015

Yesterday's news that Moderna raised $450 million on the back of its preclinical R&D work--on top of the $500 million it already banked--stood out as the biggest new venture round recorded for an early-stage biotech like this. But it's still just a piece of the money that's been flowing into biotech over the past year--and a likely harbinger of more good things to come in 2015.

Naurex bags an $80M round for PhIII study of an NMDA drug for depression

Whatever data Naurex collected from its recently completed Phase IIb study of an NMDA receptor drug for depression, it must have deeply impressed its investment syndicate. Today the company unveiled the news that it has rounded up an $80 million round designed to put the drug through a late-stage pivotal trial.

Price of UniQure gene therapy tops €1.1M, fund backs RET inhibitors, Promethera bags €25M

Welcome to the latest edition of our weekly EuroBiotech Report.