Nature Biotechnology | Trade Secrets

Assessing VC funding in biotech

Ever since Prospect Ventures handed back $150M of committed money to its limited partners, there has been plenty written on the lack of venture capital funding for the life sciences.

However, a deeper dive provides a better picture. Bruce Booth has done the diving, and he wrote a blog post about it.

His findings are similar to what we found when digging up research for a news analysis, scheduled for publication in the December issue of Nature Biotechnology. That piece looks at new funding models for today’s startups, and I’ll get it removed from behind our firewall and post a link on the blog next week, after embargo lifts. Until then, you can read Bruce Booth’s piece here.

Brady Huggett


  1. Report this comment

    Reinhard Hiller said:

    Hi Bruce,

    many thanks for making this available.

    If I understand correctly, the paper argues that things are actually quite rosy in the VC financing arena for biotech start-ups. What has seemingly changed is the VC firms’ approach to shaping deals, most notably linked to an appreciation of longer development times in riskier early-stage projects.

    Also, throughout the paper an impression is created that many projects are being sent away and only the best projects are being considered for investment. When interpreting what has been said in the article, I’d say that this is mainly due to the fact that VC firms are spending more bucks on individual projects, leading to a decrease in the number of projects that are being funded.

    I think that’s actually a good thing; i.e., the fact that VC firms are investing more money into longer-term projects.

    Anyway, this raises a few questions:

    1. Have the VC firms portrayed in the paper changed their approach to selecting projects? I suppose, investing more money into individual projects will requires a more thorough due diligence process. Not so?

    2. What happens to the projects that fall by the wayside? The paper creates the impression that AA+ projects (as opposed to ‘AAA’ projects that are picked for funding) are not being funded while these are possibly equally worthwhile for making an investment. Is there any idea of who is picking up these projects, if at all?


    Reinhard Hiller