Life sciences lifeline

16 February 2007

Unveiling Europe's largest ever VC fund dedicated to life sciences, Dr Stephen Bunting of Abingworth Ventures revealed that the fund had been oversubscribed - in fact, investors were falling over each other to get involved. But even he conceded that recent biotech funding has been scarce. So what exactly is the problem?

The ₤300m Abingworth Bioventures V (ABV V) will invest in life sciences technologies, therapeutics and medical devices at all stages from seed to quoted companies. Expecting around 20 deals in both Europe and the US, the fund plans to be handing out from ₤7.5m to ₤20m. It is life sciences specialist Abingworth's eighth such fund and follows hot on the heels of its involvement in Europe's largest life sciences investment of the last 12 months - 50m euros in series B funding for Paris-based Novexel.

But reporting the deal last week, the Guardian took the opportunity to air the grievances of biotech ventures which hadn't been so lucky as Novexel - including one that was 'forced' to list on Aim after exhausting other funding options, and another that hightailed it to Japan after 'leaving no stone unturned' in searching for funding in both the UK and US. The Telegraph's analysis of biotech's funding situation, Investment in Science is a Hard Cell, highlighted the two main problems for stem cell research as 'the escalation in patenting around the world, raising concerns about freedom to operate' and 'great uncertainty regarding the product and its delivery'. Its point was that biotech is often more of a service than a product - and as we've highlighted frequently in our analysis of this space, investors sometimes feel uncomfortable dealing with such intangibles.

Whenever biotech's problems are analysed, it tends to be claimed that the best ideas always raise funding one way or another. But it's the 'one way or another' that's the tough part for entrepreneurs.

Part of the attraction of a fund like ABV V is it's not just a casual investor in life sciences. With seven previous life sciences funds behind it, a heavyweight scientific background and offices in London, Cambridge, Silicon Valley and Boston, it's one of a new breed of global investors which understand what it takes to make a success of biotech. That may finally start to make things easier for entrepreneurs.

By David Longworth