Early Stage Funding for Biotechnology Ventures-Jan 2003

Sarath Naru•The Biotechnology Venture Fund•Ventureast Tenet Fund•APIDC – Venture Capital Fund

Post Lunch Wake-up Calisthenics

If you are offered equity funding of Rs 1 crore from a reputed Venture capitalist, and your Institution gave a sabbatical, would you venture out?

If you were offered a crore by the same VC but have to leave the Institution, would you venture out ?

If you were offered a crore by your dot com czar neighbour, but have to leave the Institution, would you venture out ?

Talk flow

1. Venture Capital Investment in biotech low in Indian, but globally upbeat!

2. Lack of funds or lack of opportunities?

3. Are qualified entrepreneurs coming forward

4. Case Studies – Ventureast Tenet Fund.

1. Venture Capital Investment Low in Indian Biotech

1. Venture Capital Investment low in Indian biotech –

Globally biotech investment activity has been upbeat

Big opportunity:

US VC trends signals huge potential:More VC investment in biotech in 2000-2003 than previous 10 years

US Public markets confirm biotech potential:50% of biotech companies that went for IPO in NASDAQ since 2000 were funded by VC’s.

Huge potential for new drugs:All therapeutics in the world only address 500 proteins versus the many thousands of protein targets unaddressed.

Huge Potential for IT activity related to biotech research: The use of computers for data mining, and target / drug design and validation

University Spin-offs more than Pvt. sector (Germany)- late 1990’s 240 spin-offs by university professors

395 spin-offs by students 152 spin-offs from Research

Institutes 458 spin-offs from Companies

Genetic innovation patents in Universities / Govt. R&D institutes lead private sector

1998 1999 percentage

Pvt Sect

64 103 43%

Govt. 74 71 29%

Univs 47 67 28%

Total 185 241 100%

1. Venture Capital Investment low in Indian biotech –

Most global ventures from Academia / Researchers

1. Venture Capital Investment low in Indian biotech –

CII Estimates

Business Standard: 31st Jan, 2003

1. Venture Capital Investment low in Indian biotech –

Indian VC funds scenario for biotechnology

No Indian biotech focused funds Few fund managers with operating experience

that’s needed to hand-hold for early stage companies

Most fund managers with operating experience and the required overseas support, focusing not on start-ups but on mature companies and large investment sizes while most investment opportunities are in start-ups

2. Lack of funds or lack of opportunities?

2. Lack of funds or lack of opportunities?

Investment low because….

VC’s do not want to invest in Biotech?

OR Qualified entrepreneurs not coming

forward to start ventures?

2. Lack of funds or lack of opportunities?

Comparing the Silicon Valleys

Start-up Activity

Human Talent

Venture Capital

Global Links

Universities / R&D Institutions

Taxes & Regulations

Composite

Britain 3 4 4 2 4 4 3.45

Finland 3 4 3 3 5 3 3.45

Israel 5 4 5 5 4 1 4.25

India 4 3 2 4 2 2 3.05

Singapore 2 3 4 5 3 5 3.20

Taiwan 4 4 4 5 5 5 4.35

Source: D. Rosenberg, The Cloning of Silicon Valley

3. Why are qualified Entrepreneurs not coming forward

3. Why qualified Entrepreneurs are not coming forward

Issues with Researchers / Academia

Pure research versus Research focused on commercialisation

Institutional barricades to commercial enterprise

Lack of awareness of commercial opportunity Fear of Investor ignorance and of investors Fear of partnering with others with business

skills

3. Why qualified Entrepreneurs are not coming forward Case Study – Ventureast Tenet Fund

Fund Objective: To support technologies that can be commercialised from IIT M, or support businesses that can gain from IT faculty support

Involvement of the Tenet group of IIT Madras, and investment from the Chairman of Analog Devices

Fund managed by the team members of APIDC Venture Capital Limited

3. Why qualified Entrepreneurs are not coming forward Case Study – Ventureast Tenet Fund

Pure research versus commercialisation: Faculty driven by vision for India of telecom connectivity for the masses

Institutional barricades to commercial enterpriseSabbaticals and work through Institution approved consultancy contracts, while incubating Alumni.

Lack of awareness of commercial opportunity:Close interaction with industry and VC’s

Fear of Investors ignorance & of investors:Work with select VC’s.

Fear of partnering with others with business skills:Work with Alumni and hands-on VC’s, who moderate the partners roles

If you dare to dream then the funding is there!

Contact India’s first:

“The Biotechnology Venture Fund”sarathnaru@apidcvc.com

Thank You