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.


Biotech Venture Capital

Latest Headlines

Latest Headlines

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.

Report: Woodford is diving full on into biotech with new $314M fund

High-profile U.K. investor Neil Woodford made headlines last week when he invested $25 million into Northwest Biotherapeutics, and that's a sign of much more to come, according to reports, as the ex-Invesco manager is planning to unveil a new fund devoted solely to emerging biotechs.

Fledgling Ziarco grabs a $33M transatlantic round for PhII atopic dermatitis drug

Two years after Michael Yeadon and a close-knit group of Pfizer investigators managed to grab some of the pharma giant's anti-inflammatory assets on the way out the door at Sandwich, they've drummed up a $33 million B round for their biotech from some U.S. and European investors. And now they're set to launch a midstage clinical program to help determine the value of what they took with them when launching Ziarco.

What's the #1 biotech hub for VCs? (It's still not Boston)

Biotech investing is sizzling right now, and despite all the attention that the Boston hub gets, the Bay Area is still number one.

Thinking 'big,' Arch Venture gathers $400M-plus to back a new wave of biotechs

Arch Venture Partners has joined a lineup of top venture groups which has been making hay while the market sun shines on biotech IPOs. The VC has marshaled more than $400 million for its new investment fund--its eighth--that will now be available to back a new wave of cutting-edge life science companies, often starting from scratch.

Dermira pockets $51M to bankroll skin treatments

Well-funded biotech Dermira has landed a $51 million C round to support its late-stage dermatology pipeline, rallying some high-profile investors as it dials up R&D spending and builds out its management team.