Navigating the biotech logjam through financial backing of innovative concepts, rather than focus on data acquisition
In the rapidly evolving world of biotechnology, a radical shift in approach is needed to overcome early-stage funding bottlenecks. The focus should be on empowering biotech's builders as much as its discoverers, as the early risk in biotech should be financial, not scientific.
Failure is not a measure of ambition, but rather a sign of bad design. The goal should be to target an 80% success rate, and failure should be seen as a stepping stone towards success. Universities must evolve, fostering entrepreneurship and celebrating the creation of products that save lives on par with published papers.
Traditional venture capital often chases the same academic spinouts, leading to competitive, inflated valuations. To break this cycle, we need to diversify the funding landscape. Tying early innovation primarily to academic grants creates a single, vulnerable pathway. By unlocking public funding mechanisms that provide affordable, non-dilutive capital and technical support, we can stimulate a surge of new solutions.
Asia-Pacific countries have pioneered models where government funds offer early-stage capital, grants, and infrastructure to biotech ventures. For instance, South Korea’s US$23 billion strategic advanced industry fund, Korea Drug Development Fund (KDDF), and Japan’s Bioventure Support Program are examples of such initiatives. Similarly, the Biotechnology Industry Research Assistance Council (BIRAC) in India supports early-stage startups with funds and low-interest loans.
Moreover, fostering biotech communities focused on critical global challenges can enhance early-stage research. Efforts like Homeworld Collective's in climate biotech build knowledge networks and direct support systems tailored to sector-specific needs. Scaling solution sets that leverage impact finance innovations can also redirect capital flows towards biotech innovations that advance sustainability and food security.
Investors must dare to do "zero-data" deals, structuring investments around experimental milestones. Backing inventions with battle-hardened components and rigorous engineering design can be less risky than a discovery with a decade of academic research behind it if that research hasn't systematically de-risked the product pathway.
Philanthropy can adopt a venture mindset, seeding engineering-led approaches to unmet needs. Embracing the zero-data approach allows investors to get in earlier, at lower valuations, and shape the direction of novel, innovative, and commercially viable ventures.
Kerstin Papenfuss, the Director of Pharma at Deep Science Ventures (DSV), is a seasoned leader in therapeutic innovation with a decade of experience translating cutting-edge science into investable and impactful ventures.
As we reimagine funding, we need to blend public and private funds with innovative financing approaches and community-building to create a more resilient pipeline that can more rapidly address urgent global health and environmental problems.
- To tackle early-stage funding issues in the biotech sector, it's crucial to target an 80% success rate, viewing failures as stepping stones towards success.
- Universities should evolve to foster entrepreneurship and celebrate the creation of life-saving products as much as academic papers.
- Asia-Pacific countries are pioneering models where government funds provide early-stage capital, grants, and infrastructure to biotech ventures, such as South Korea's KDDF and India's BIRAC.
- Philanthropy can adopt a venture mindset, investing in engineering-led approaches to unmet needs using the zero-data approach, which structures investments around experimental milestones.
