Monday, June 1, 2009

Passion Capital at BIO

by Margaret Anderson, COO, FasterCures
Is venture philanthropy the new venture capital? The FasterCures-organized session at BIO focused on this question and highlighted the similarities and differences in the two. The panel featured a terrific lineup of:
First up, the topic of “how bad is it out there with respect to funding?” Mark Simon has been involved in raising capital for life science companies for years and sees venture philanthropy as a great option for companies , especially when you see the statistics of how few biotechs currently have enough cash for long-term stability. According to BIO, 99 companies are operating with less than six months' worth of cash, which accounts for 25 percent of all public U.S. biotech companies. The vast majority of America's biotechnology companies are small, research and development focused companies with fewer than 100 employees. Simon was concerned that we stand to lose valuable scientific opportunities in biotech as funding continues to be elusive.

As for how the venture philanthropy groups view their mission, it turns out failure is an option. “There will be failures, this funding from organizations like ours is not a panacea,” said Bob Beall of the CF Foundation. Eric Olson of Vertex spoke of the pass-off from CFF where they take the funding baton after CFF funds discovery. The synergy with Vertex and the other companies CFF partners with wasn’t always so easily found. Turns out Bob had to pass through the phase where there were a lot of calls unanswered from biotech in his early days at CFF. Expectations must be realistic on both sides for these relationships to work, reflected Beall.

Katie Hood of the Fox Foundation talked about how one size doesn’t fit all. They are driven by different imperatives in terms of their disease state as well as their pipeline , which has resulted in different types of relationships with companies; what they have in common with foundations like CFF is that they are trying to remove risk for companies potentially interested in investing in their disease. Katie also discussed PD Online, which they are launching to provide a collaborative space for discussion and problem-solving in PD research.
Even though philanthropic research funding accounts for only two percent of total health research funding, it's a small but substantial source for novel, high-risk research that might not be able to compete successfully for public funds. It fills gaps in funding research that is high risk but also with potential of high return.

So, is venture philanthropy the new venture capital? Not exactly, but it is an exciting new kind of collaboration that can bring benefits -- funding, but also intelligence, relationships, and access to patients -- to companies and to foundations.

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