Over the past decade,
small startup seedlings have grown to become disruptive companies in a range of
industries. Venture capitalists work hard to stay ahead of the trends and can
only hope to catch the wave before it reaches its peak. For the past few years,
though, there’s one sector that’s received a worthy spike in attention,
reception, and investment: biotech.
A report published by
the Biotechnology Innovation Organization called “Emerging
Therapeutic Company Investment and Deal Trends” highlighted ten years of biotechnology
funding. The report focused on funding in five key areas in the biotech
industry, including venture capital and IPOs.
BIO’s Executive Vice
President, Cartier Esham, stated: “Investment and licensing are the lifeblood
of today’s emerging biotechnology companies searching for cures and treatments
for patients suffering from devastating and life-threatening diseases.”
The report aims to
deepen the understanding of investor behavior, and revealed several key
findings. For instance, it confirmed that 2015 was the best year on record for
venture capital in the United States, and that funding of various disease
companies helped fuel those sky-high numbers.
Those trends remain
consistent as biotech continues to win the hearts of venture capitalists. And
when a particular industry experiences a boom, the businesses that complement
those industries also experience a spike in investor interest. For example, as
the amount of active military personnel rises, so too would the need for active duty apparel
for suppliers like TruSpec.com. The domino effect of related industries and
underliers help boost economy in other areas, too.
A large range of various
disease setting, from gene therapy to cancer metabolism, have excited investors
around the world. These medical ventures present a promising new land for
venture capitalists, and have paved the way for others to jump on the
bandwagon. That potential shows in reports like BIO’s and Silicon Valley Bank’s
“A Year of Dazzling Returns.”
The Bank’s report found
that biotech startups had seen 85 major exits over the last six years, and the
value has risen steadily. In 2014, the average total deal value for
venture-backed biotech companies was $507 million, up from $366 million. One of
its key forecasts predicted that venture investments would continue to post strong
returns and fundraising would remain stable or increase.
There are many biotech
startups and products in all stages of growth that are viable candidates for
pieces of the pie. As these reports show, the hype around biotech isn’t all
smoke and mirrors: there’s so much more to go around. Among those companies are
Essen Bioscience, whose IncuCyte Live-Cell Imaging & Analysis System aims
to derive deeper, physiologically relevant information about your cells. The
system works round-the-clock to acquire and analyze images and provide an
easy-to-achieve information-rich analysis. The system also allows for multiple
users and is compatible with a wide range of culture vessels and applications.
Other products are
blazing a trail, too. Gingko Bioworks, a company that engineers organisms to
address fundamental issues of today, was the first biotech startup to participate in Y Combinator’s highly
regarded incubator program. Sam Altman, program director at Y Combinator, told
Techcrunch that what’s happening in biotech is similar to what was happening
with hardware startups several years ago.
Back then, popular
consensus felt it was too risky to invest in hardware versus traditional
software, but then hardware starting to make a bold appearance. This is exactly
what’s happening to biotech now. Y Combinator’s decision to take on a biotech
startup in 2012 was a bold statement of where the company felt biotech could
influence the future of technology and investments.
Another biotech startup, Cambrian Genetics, designed the first hardware system for laser
printing DNA. The company addresses a gaping need: researchers annually order
or clone around $1 billion of DNA. The growing market demanded high
quality sequence, and Cambrian sought to establish itself as the reliable
go-to. In 2014, the company raised $10 million in Series A from VC firm Draper
Associates and Adam Pisoni.
Major investments like
these prove where the money is going, and forecasts and industry analysis
reports show why. This is a space that continues to be shaped by pioneers and
new technology, and in a space that deals with health, there is always room for
improvement. As venture capitalist firms search for the next big addition to
their portfolios, they should be inclined to keep a lookout for promising