By Rebecca Stauffer
Two entrepreneurs and two venture capitalists working in the life sciences industry say there is still funding to be had – but companies must be focused on their science to win it.
The panel took place during the BioBuzz Awards Celebration & Symposium in May.
Companies are getting funding despite the difficult market of the past year, the panelists said.
George Davis, Fund Manager, Wexford SciTech Venture Fund, was optimistic about 2023.
“I don’t look at it any different today than in 2022 and 2021. I’ve lived through a lot of recessions,” he said. “We’ll find a way through it. Capital is crazy and it finds winners. Let’s build winners.”
Bill Enright, CEO, Vaccitech, a company with a clinical stage T-cell-based immunotherapy, was also optimistic. “I think 2023 is going to still be good,” he said. “Companies continue to get funded.”
Deborah Hemingway, Ph.D., Managing Partner, Ecphora Capital, a venture capital firm focusing on emerging life science technologies, sees companies with strong portfolios receiving capital in the current environment.
“We are seeing difficulties, but the best companies are seeing funding,” she said. Later when asked about the recent pullback in life science funding from investors, she expanded her comments, but stayed positive. “We are feeling the liquidity crunch. It’s definitely in investor favorability.”
Hemingway began her career as a research scientist. After finishing a Ph.D. in biophysics, she launched a startup before moving into venture funding.
Mustafa Al-Adhami, CEO, Astek Diagnostics, drew from his experience leading a company during challenging times.
“When things got hard, we turned to investors,” he said. His openness to reach out to investors was one of the factors in meeting milestones for the product his company is developing, a medical device for identifying urinary tract infections within an hour. (In early June, Astek Diagnostics closed on a $2 million round of funding. The Wexford SciTech Venture Fund led the round.)
When it comes to scale, Davis has seen continued funding of early-stage firms while funding of Series B companies has become more conservative.
“The real impact is at that downstream level,” he said. “You have to get to clinical.”
Enright encouraged executives to build a cushion that the company can rely on in difficult markets. “The key to funding is to fund when you don’t need it,” he said.
How a company responds to challenges is also important.
“One of the things is looking at your milestones,” Enright said. “From an operational view, take a hard look at budgets. You never know when the market is going to turn.”
Al-Adhami agreed.
“I think the most important thing is capital efficiency,” he said. When Astek Diagnostics faced challenges early on, his team focused on the science behind their product, particularly, ensuring the solid data behind it.
Al-Adhani also addressed disruptive technologies from the perspective of a founder.
“It really helped me as a founder to automate as much as possible,” he explained. For example, AI can be used to create pitch emails to send to potential investors.
From an investor perspective, Hemingway said that AI can “amplify processes” while Enright agreed that AI also offers potential to the industry, noting it has been used in antigen design.
“There are a lot of aspects where AI can streamline development,” he said.
“If you ignore AI and machine learning, you do so at your own risk,” cautioned Davis. “It’s here and we need to embrace it.”
A discussion followed about protecting intellectual property (IP) in the face of disruptive technologies. While the concept of open source has been a hallmark of software development, Al-Adhami does not see “open source” product development as fair due to the hard work his team puts into his company’s product.
“Our main asset is our patent portfolio,” he said.