Angels Share In Biotech Rewards, But Rarely In Drug Discovery
This article was originally published in The Pink Sheet Daily
New data shows an uptick in start-up investment by individuals in young biotech and health care companies, as the contracting venture capital industry shies away from early-stage investing. But angels still avoid companies with high costs, particularly those associated with clinical and regulatory paths.
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In our second annual Life Science Venture Survey, VCs paid their respects to the importance of corporate investors right now. For their part, corporate investors, many from long-established programs, said they are bullish about making more bets in early-stage companies.
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Many VCs have lost interest in early-stage investing, but angels - individuals who invest their own money alone or in groups - are stepping up to fill the gap. Angels are an especially good fit for for biotech start-ups that don't want to cede control of their companies to VCs too early, if at all. In addition to bringing valuable cash, angels put less pressure on start-ups to achieve an exit within a given time frame than traditional venture investors, and are more willing to accept buyers that may not be the highest bidders but will nevertheless be good stewards for their assets. For their part, companies looking to angels must understand the goals of their potential backers, since these financiers are often motivated by philanthropy and personal interest in a disease.