Economic instability witnessed recently has only created problems for the venture capital market. However, experts state that challenges and threats which confront today’s venture capital have not emerged all of a sudden. Venture capitalist community has been facing the need to restructure seriously given present capital constriction. Failure to invest promptly in the field of biotechnology is likely to have long-lasting repercussions upon healthcare innovations.
Experts also are of the opinion that technologies get developed at universities, hospitals or academic institutions. The funded Biotechnology companies license such advanced technology from that particular institution and move towards venture capital community to raise capital to pay for technology and initiate company operations. On successful launch of the company, additional venture capital funds are raised to enhance and promote products.
Investments to profits
The biotechnology company is likely to go through 3-4 venture capital fundraising efforts prior to introducing its products within the clinical point. In this case, the entrepreneur is to try taking the company public, via Initial Public Offering (IPO) or carry out collaboration with any bigger pharmacy company which offers capital or prefers the outright sale.
If the product is still in the idea stage, then there can be involvement of venture capitalists. They can even enter after formation of the company and there is found the need for additional investments prior to the launching of the products in the market. Besides identifying capital sources to fund the development, there is plenty that the company management can derive from the venture capitalists. It can be known on successful strategies, mistakes to avoid, contacts, etc. to facilitate further maturation of the company.
When identifying new promising projects, it is necessary to come up with superior technologies or products and deal with people, with whom there is enjoyed the prior experience. It can also be word of mouth, scientific meetings and checking out scientific papers.
Necessary changes to implement
There are many new funded Biotechnology companies that are eager to know how to change the investment outlook with regards to biotechnological innovation. Experts opine that the lead to foster industry developments can be taken by the concerned governmental agencies. Start-ups can be provided with tax assistance, reduction of some costly burdens that are otherwise associated with the formation of the public company, including better facilitation of procedure to approve products by the concerned government department.
Besides external assistance, the industry through communication, consolidation and collaboration has managed to effectively become more organized. Previously, there had been noticed more information sharing via activities like publishing. But with the introduction of biotechnology companies, the shift has been noticed towards not sharing crucial information and creation of own company. This has only witnessed the emergence of thousands of companies in this field.
But emphasis laid with biotechnology industry’s culture upon independence over cooperation only might have hampered progress towards consolidation. To survive, companies now are required to consolidate and collaborate. But with shrinking capital and increasing ruthless nature of venture capitalists, combined with bankruptcies will only lead to fewer companies in the industry that are much stronger and better capitalized.