Shifting Landscape in Biotech VC

CAMBRIDGE, Mass. - The biotech industry is on the rise, driven by rapid breakthroughs in fields such as gene therapy, personalized medicine, and immunotherapy. However, despite this scientific explosion, venture capital investments have remained largely unchanged since 2007 and numerous studies and articles have focused on a perceived funding shortage. In order to gain a first-hand account of the current status of the biotech investment environment, Biotech Connection Boston brought together funding experts for its inaugural event, “The Shifting Landscape of Biotech Ventures.”

Our panelists represented a broad cross-section of agencies, including venture capital firms, family offices, crowdfunding, pharmaceutical venture funds, and disease foundations. When our panelists were canvassed about the current funding landscape, the consensus was that the funding shortage is a myth and that there is still money available. Instead, the key challenge for entrepreneurs is that competition is increasing. Rajeev Shah, Managing Partner at RA Capital, noted that venture capital investment philosophy now focuses on more efficient use of capital and products that clearly differentiate themselves from the existing market. This idea of disruptive technologies was echoed by Christopher De Souza, Director at Broadview Ventures, who said that there is a strong need for innovative ideas that are revolutionary, not evolutionary. Imran Nasrullah, Director of Innovation Sourcing at Boehringer-Ingelheim, added that pharmaceutical companies are looking for breakthrough products, not just “me-too” drugs.

Panelists (left to right): Adam Griff, Christopher DeSouza, Rajeev Shah, Imran Nasrullah, Deborah Brooks.

Panelists (left to right): Adam Griff, Christopher DeSouza, Rajeev Shah, Imran Nasrullah, Deborah Brooks.

During the evening, the panelists stressed the need to explore all possible funding options and not just traditional VC firms. Speaking with them after the event, they said that each type of funding agency can fill specific roles during a company’s development. Adam Griff, COO at MedStartr, highlighted a new role for crowdfunding in very early stages to help start-ups build their business case. He also stated that because of the JOBS Act, crowd equity stakes can be a powerful resource in clinical trial stages. Deborah Brooks, Co-Founder and Executive Vice Chairman of the Michael J. Fox Foundation, spoke about the increased involvement of patient advocates and disease foundations in driving drug development. She recounted how the Michael J. Fox Foundation broke away from only funding academic proposals and established a new business model by funding commercial groups. This agnostic approach was strategically designed to fund the right organization and the right people, independent of origin. Griff similarly emphasized the huge crowdfunding potential of patients and families, saying,

“Think of crowdfunding with a capital ‘C’ and a lowercase ‘f’. The crowd isn’t just patients, it’s the person to your left, the person to your right, and everyone around the globe.”

Funding groups also add critical value to companies not only through capital, but through business expertise and networks. Nasrullah emphasized how Boehringer-Ingelheim collaborates and works together with the people they invest in to steer science toward product development. De Souza and Shah both talked about how their respective companies offer strategic advice, consulting, and market awareness. Brooks and Griff focused on how their organizations build key connections between patients, payers, and scientists.

This theme of networking was repeated throughout the evening. As Brooks said, the network built by the Michael J. Fox Foundation fills a critical need in Parkinson’s research by opening the lines of communication between all parties in that space and aligning needs and interests. She commented during the networking session that the foundation has also established partnerships with other funding agencies, including RA Capital and Boehringer-Ingelheim to jointly fund projects. When asked by the audience what approach entrepreneurs should take to find funding in this new environment, De Souza responded, “Look everywhere. If you haven’t hit 200 people, you haven’t even started yet.” Nasrullah also focused on networking, saying, “Relationships matter. This whole business is based on the relationships that you have in this ecosystem."

Of course, the big question from all entrepreneurs is, “How do I compete for funding?” All of the panelists agreed that effective communication was absolutely critical in attracting investors. Emphasizing the importance of making a personal connection, De Souza said, “The best way to connect with us is not to sell, but to inform and network. People invest in people.” Griff followed by saying, “You have to concisely and accurately talk about business strategy…and be ready to hit the pavement [when you get funding].” Shah concluded the event by advising,

“Know what it is you’re trying to achieve…What is the unmet need, and can you fill it? You need to stand out and find your story.”

Biotech Connection Boston would like to thank all of our panelists: Rajeev Shah, Deborah Brooks, Imran Nasrullah, Adam Griff, and Christopher De Souza for sharing their valuable time and insight. We would also like to thank our event co-sponsors: RA Capital, Tufts Biomedical Business Club, Harvard’s PATHS, and MIT’s EBICS group. Lastly, thank you to all the attendees for a stimulating discussion during and after the event! Keep those conversations going and stay updated on news and future events by following us on Twitter @BioConBoston and on Facebook at The Biotech Connection.