Amidst a shaky early investment landscape and tough economic climate, it is “important [for pharmaceutical companies] to get dialogues going before there is anything on the table,” said Ingrid Kelly Spillman, a partner at Xista Science Ventures.
A July 2023 report from HSBC Innovation Banking found that 50% of venture financing healthcare deals in H1 consisted of add-on or insider financing rounds. Furthermore, H1 deals were valued at 40% less than was seen in the previous year. The organisation predicted that by the end of the year, early investment in biotech startups (first financing) would fall by 40% compared to previous years.
Spillmann said the issue lies in a risk-averse venture capital space. Stefaan Allemeersch, the executive director of Centre for Drug Design & Discovery, added that venture capitalists are currently looking for companies with more “meat on their bones”, causing the novel biology and academia space to suffer.
Spillmann and Allemeersch were speaking at the BIO-Europe 2023 conference, where she alongside other panelists shared insights into translational funding.
The University of Oxford describes translational funds as funding to “bridge the gap” between early-stage university research and its commercialisation”.
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Amidst the tough investment climate, the experts advised startups to raise their profile for potential partnerships sooner rather than later. Bert Klebi, the managing director at Khanu Management GmbH acknowledged that many venture capitalists would refuse a company saying, “We’ll speak to you at a later stage.” However, he said that early introductions to these businesses would allow familiarity that could foster collaboration or funding later down the line. Spillmann affirmed this saying it is “important to get dialogues going before there is anything on the table.”
The experts at the conference panel said partnerships with pharma companies could span from eight to twenty years. Spillmann explained the importance of this funding saying,“ [pharma] spinoffs need money and they need expertise along with that money.”
Another panelist, Jaromir Zahrádka, highlighted the important role that translation fund investors hold in the industry. Zahrádka is the CEO of i&I Biotech Fund I, which he describes as an entity that gives companies seed financing and expertise to help them gain investment in their first financing rounds. He added this could involve “de-risking” company assets by using his company’s partners or running extra clinical trials to ensure scientific surety. Martin Raditsch, the managing director at CARMA Fund Management GmbH, added that his business often incubates a project, runs it as a spinout, and then continues to collaborate with the spinout for years to come.