{"id":8,"date":"2011-03-11T11:30:31","date_gmt":"2011-03-11T11:30:31","guid":{"rendered":"https:\/\/blogs.nature.com\/tradesecrets\/2011\/03\/11\/startups_in_china"},"modified":"2012-01-26T21:46:57","modified_gmt":"2012-01-26T21:46:57","slug":"startups-in-china","status":"publish","type":"post","link":"https:\/\/blogs.nature.com\/tradesecrets\/2011\/03\/11\/startups-in-china","title":{"rendered":"Looking for China money for your biotech venture?"},"content":{"rendered":"<p>&lt;!&#8212;[if gte mso 9]&gt;<xml><\/p>\n<p><w:WordDocument><\/p>\n<p><w:View>Normal<\/w:View><\/p>\n<p><w:Zoom>0<\/w:Zoom><\/p>\n<p><w:PunctuationKerning\/><\/p>\n<p><w:ValidateAgainstSchemas\/><\/p>\n<p><w:SaveIfXMLInvalid>false<\/w:SaveIfXMLInvalid><\/p>\n<p><w:IgnoreMixedContent>false<\/w:IgnoreMixedContent><\/p>\n<p><w:AlwaysShowPlaceholderText>false<\/w:AlwaysShowPlaceholderText><\/p>\n<p><w:Compatibility><\/p>\n<p><w:BreakWrappedTables\/><\/p>\n<p><w:SnapToGridInCell\/><\/p>\n<p><w:WrapTextWithPunct\/><\/p>\n<p><w:UseAsianBreakRules\/><\/p>\n<p><w:DontGrowAutofit\/><\/p>\n<p><\/w:Compatibility><\/p>\n<p><w:BrowserLevel>MicrosoftInternetExplorer4<\/w:BrowserLevel><\/p>\n<p><\/w:WordDocument><\/p>\n<p><\/xml>&lt;![endif]&#8212;&gt;&lt;!&#8212;[if gte mso 9]&gt;<xml><\/p>\n<p><w:LatentStyles DefLockedState=\"false\" LatentStyleCount=\"156\"><\/p>\n<p><\/w:LatentStyles><\/p>\n<p><\/xml>&lt;![endif]&#8212;&gt;&lt;!&#8212;[if !mso]&gt;<object \n\n classid=\"clsid:38481807-CA0E-42D2-BF39-B33AF135CC4D\" id=\"ieooui\"><\/object><\/p>\n<style><\/p>\n<p>st1\\:*{behavior:url(#ieooui) }<\/p>\n<\/style>\n<p>&lt;![endif]&#8212;&gt;&lt;!&#8212;[if gte mso 10]&gt;<\/p>\n<style><\/p>\n<p>\/* Style Definitions *\/<\/p>\n<p>table.MsoNormalTable<\/p>\n<p>{mso-style-name:&#8220;Table Normal&#8221;;<\/p>\n<p>mso-tstyle-rowband-size:0;<\/p>\n<p>mso-tstyle-colband-size:0;<\/p>\n<p>mso-style-noshow:yes;<\/p>\n<p>mso-style-parent:&quot;&quot;;<\/p>\n<p>mso-padding-alt:0in 5.4pt 0in 5.4pt;<\/p>\n<p>mso-para-margin:0in;<\/p>\n<p>mso-para-margin-bottom:.0001pt;<\/p>\n<p>mso-pagination:widow-orphan;<\/p>\n<p>font-size:10.0pt;<\/p>\n<p>font-family:&#8220;Times New Roman&#8221;;<\/p>\n<p>mso-ansi-language:#0400;<\/p>\n<p>mso-fareast-language:#0400;<\/p>\n<p>mso-bidi-language:#0400;}<\/p>\n<\/style>\n<p>&lt;![endif]&#8212;&gt;<\/p>\n<p class=\"MsoNormal\">While vacationing in the US during the Chinese New Year<\/p>\n<p>early February, I attended a Bay Area event organized for VCs (venture<\/p>\n<p>capitalists) and medical device entrepreneurs. I was a bit surprised by the<\/p>\n<p>sentiment voiced by the panelists and the audience that &#8220;there is plenty of<\/p>\n<p>venture money available in China&#8221;<\/p>\n<p>and &#8220;given the tough funding environment in the US,<\/p>\n<p>companies should look to China<\/p>\n<p>for alternative sources of venture money&#8221;. &#8220;Aren&#8217;t the roads there paved with<\/p>\n<p>gold?&#8221; a Chief Medical Officer for a Bay Area biotech startup jokingly asked<\/p>\n<p>me. As an active healthcare VC in China in the past few years, I know<\/p>\n<p>this view is far from accurate.<\/p>\n<p class=\"MsoNormal\">It is not hard to understand why investors and entrepreneurs<\/p>\n<p>might view China<\/p>\n<p>as a bountiful source of financing. At the end of 2010, China held over<\/p>\n<p>$2.8 trillion of forex reserves. The Chinese government has played white knight<\/p>\n<p>in an effort to help stabilize the Euro zone economy, by buying<\/p>\n<p>euro-denominated Portuguese and Spanish debt. These facts have been widely<\/p>\n<p>reported in the US press,<\/p>\n<p>and I&#8217;m sure that US biotech entrepreneurs have also heard about the<\/p>\n<p>hyper-active PE (private equity) and VC industries in China.<\/p>\n<p class=\"MsoNormal\">There is no comprehensive list of all the PE and VC funds with<\/p>\n<p>a focus on China<\/p>\n<p>who are actively investing. However, there are probably over a thousand of<\/p>\n<p>these funds, and it is quite possible that more than half of them probably<\/p>\n<p>raised fresh money over just the past two years. Statistics from ChinaVenture<\/p>\n<p>suggest that such funds raised more than $12.3 billion in 2009, and over $30<\/p>\n<p>billion in 2010 alone.<\/p>\n<p class=\"MsoNormal\">Moreover, the Chinese government&#8217;s 11<sup>th<\/sup> and 12<sup>th<\/sup><\/p>\n<p>five-year development plan spanning from 2006-2015 places a high priority on<\/p>\n<p>biotech. As a result, dedicated central government funds have been allotted to<\/p>\n<p>incentivize new drug development, and dozens of biotech parks have sprouted<\/p>\n<p>around major cities to support biotech companies.<\/p>\n<p class=\"MsoNormal\">So is China<\/p>\n<p>a good place for your biotech startup to look for money? Think again!<\/p>\n<p class=\"MsoNormal\">Over the past two years, I have come across a fair number of<\/p>\n<p>entrepreneurs from North America and Europe,<\/p>\n<p>with deals ranging from pre-clinical or phase I\/II therapeutics to<\/p>\n<p>prototype-stage medical devices. Many of these entrepreneurs had included some<\/p>\n<p>sort of China-related story in their business plan. But most of them have<\/p>\n<p>ultimately not been able to implement the Chinese dimension of their plan, even<\/p>\n<p>after half a dozen trips to China<\/p>\n<p>and many meetings with local investors and bio-parks. As a consequence, they<\/p>\n<p>have left the country empty-handed &#8212; though after a series of eye-opening<\/p>\n<p>experiences, and probably a sense of repletion after several elaborate banquets.<\/p>\n<p class=\"MsoNormal\">So the people I met at the Bay Area event are not so very<\/p>\n<p>different from many bio-entrepreneurs who came to China with high hopes but major<\/p>\n<p>misconceptions. Many of them appear to believe that: 1) there is plenty of VC<\/p>\n<p>money available around China<\/p>\n<p>for biotech startups; and 2) startups can get free funding from the government<\/p>\n<p>and local bio-parks.<\/p>\n<p class=\"MsoNormal\">Unfortunately, I can tell you that if you are a starving<\/p>\n<p>early stage biotech startup, chances are slim for you to get funded in China.<\/p>\n<p>In next blog post, I&#8217;ll be explaining why. <\/p>\n<p class=\"MsoNormal\"><span style=\"\"><\/span><i style=\"\">(Karen Liu is a healthcare investor at a leading China based PE<\/p>\n<p>and VC fund. The views and opinions expressed here are entirely personal and may<\/p>\n<p>not represent those of her firm.) <\/i><\/p>\n<p><span style=\"font-size: 10.5pt; font-family: Calibri;\"><\/p>\n<p><\/span>&lt;!&#8212;[if gte mso 9]&gt;<xml><\/p>\n<p><w:WordDocument><\/p>\n<p><w:View>Normal<\/w:View><\/p>\n<p><w:Zoom>0<\/w:Zoom><\/p>\n<p><w:PunctuationKerning\/><\/p>\n<p><w:ValidateAgainstSchemas\/><\/p>\n<p><w:SaveIfXMLInvalid>false<\/w:SaveIfXMLInvalid><\/p>\n<p><w:IgnoreMixedContent>false<\/w:IgnoreMixedContent><\/p>\n<p><w:AlwaysShowPlaceholderText>false<\/w:AlwaysShowPlaceholderText><\/p>\n<p><w:Compatibility><\/p>\n<p><w:BreakWrappedTables\/><\/p>\n<p><w:SnapToGridInCell\/><\/p>\n<p><w:WrapTextWithPunct\/><\/p>\n<p><w:UseAsianBreakRules\/><\/p>\n<p><w:DontGrowAutofit\/><\/p>\n<p><\/w:Compatibility><\/p>\n<p><w:BrowserLevel>MicrosoftInternetExplorer4<\/w:BrowserLevel><\/p>\n<p><\/w:WordDocument><\/p>\n<p><\/xml>&lt;![endif]&#8212;&gt;&lt;!&#8212;[if gte mso 9]&gt;<xml><\/p>\n<p><w:LatentStyles DefLockedState=\"false\" LatentStyleCount=\"156\"><\/p>\n<p><\/w:LatentStyles><\/p>\n<p><\/xml>&lt;![endif]&#8212;&gt;&lt;!&#8212;[if !mso]&gt;<object \n\n classid=\"clsid:38481807-CA0E-42D2-BF39-B33AF135CC4D\" id=\"ieooui\"><\/object><\/p>\n<style><\/p>\n<p>st1\\:*{behavior:url(#ieooui) }<\/p>\n<\/style>\n<p>&lt;![endif]&#8212;&gt;&lt;!&#8212;[if gte mso 10]&gt;<\/p>\n<style><\/p>\n<p>\/* Style Definitions *\/<\/p>\n<p>table.MsoNormalTable<\/p>\n<p>{mso-style-name:&#8220;Table Normal&#8221;;<\/p>\n<p>mso-tstyle-rowband-size:0;<\/p>\n<p>mso-tstyle-colband-size:0;<\/p>\n<p>mso-style-noshow:yes;<\/p>\n<p>mso-style-parent:&quot;&quot;;<\/p>\n<p>mso-padding-alt:0in 5.4pt 0in 5.4pt;<\/p>\n<p>mso-para-margin:0in;<\/p>\n<p>mso-para-margin-bottom:.0001pt;<\/p>\n<p>mso-pagination:widow-orphan;<\/p>\n<p>font-size:10.0pt;<\/p>\n<p>font-family:&#8220;Times New Roman&#8221;;<\/p>\n<p>mso-ansi-language:#0400;<\/p>\n<p>mso-fareast-language:#0400;<\/p>\n<p>mso-bidi-language:#0400;}<\/p>\n<\/style>\n<p>&lt;![endif]&#8212;&gt;<\/p>\n<p><a href=\"https:\/\/www.linkedin.com\/in\/vckarenliu\">Karen Liu<br \/><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p><!\u2014[if gte mso 9]>&nbsp; <a href=\"https:\/\/blogs.nature.com\/tradesecrets\/2011\/03\/11\/startups-in-china#wpn-more-8\" class=\"more-link\"> &hellip; Read more<\/a> <a href=\"https:\/\/blogs.nature.com\/tradesecrets\/2011\/03\/11\/startups-in-china\">Continue reading <span class=\"meta-nav\">&rarr;<\/span><\/a><\/p>\n","protected":false},"author":643,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[47,9],"tags":[],"class_list":["post-8","post","type-post","status-publish","format-standard","hentry","category-featured","category-finance"],"_links":{"self":[{"href":"https:\/\/blogs.nature.com\/tradesecrets\/wp-json\/wp\/v2\/posts\/8","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.nature.com\/tradesecrets\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.nature.com\/tradesecrets\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.nature.com\/tradesecrets\/wp-json\/wp\/v2\/users\/643"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.nature.com\/tradesecrets\/wp-json\/wp\/v2\/comments?post=8"}],"version-history":[{"count":0,"href":"https:\/\/blogs.nature.com\/tradesecrets\/wp-json\/wp\/v2\/posts\/8\/revisions"}],"wp:attachment":[{"href":"https:\/\/blogs.nature.com\/tradesecrets\/wp-json\/wp\/v2\/media?parent=8"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.nature.com\/tradesecrets\/wp-json\/wp\/v2\/categories?post=8"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.nature.com\/tradesecrets\/wp-json\/wp\/v2\/tags?post=8"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}