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Biotechnology is viewed as an industry that combines scientific innovation, entrepreneurial management and experienced investment to drive innovation, primarily in biomedicine. This paper examines the third of these assumed preconditions. We find that the majority of investors in biotechnology companies over the last decade by number or by value have not been experienced, and that the majority of investors in biotechnology companies have invested in less than three such companies in the decade, suggesting that they have very limited experience of biotechnology. 13% of investment syndicates contain no investors who have made more than three biotechnology investments. Investor inexperience is disproportionately high in Seed and Series A rounds, but has little correlation with amount invested. Investor inexperience is found in all categories of investors and all territories, although US investors tend to have greater experience than those outside North America. The banking crisis of 2008-11 has not materially changed this. We suggest that the conventional image of biotechnology investment as the careful selection and nurturing of young companies by experienced investors is incomplete. This has implications for candidate investor selection by entrepreneurs, and for government support of biotechnology by supporting investors or investment mechanisms.

I report on five years’ testing of what makes a happy team, using students in a Bioscience Entrepreneurship Masters programme at Cambridge University as a test-bed. I looked at measures of personality (using the IPIP test for the Big Five personality characteristics) and a measure of work style derived from the time of submission of work that I term Deadline Brinkmanship. I find that teams selected to have a similar working style are generally happier working together than those selected by other criteria. Entrepreneurial activity is uncorrelated with psychological characteristics in this study, but is slightly correlated with working style and the willingness to accept a “good enough” result now rather than an ideal result in the future. I conclude that it is important for a nascent entrepreneurial team to work together on an important, deadline-driven task before committing to a new venture.Â

Investment in start-up biotech. companies outside the USA has essentially disappeared. VC investment in biotechnology and healthcare as a whole has nearly returned to pre-2008 levels, but almost all is in later stage opportunities. But companies continue to be founded, and continue to flourish. We examine the VC investment patterns for the past 7 years, and show that a start-up today can expect little VC support. We show from companies’ financial records that companies are adopting financial models based on angel investment, grants and revenue, and moving away from business models that need substantial investment. There is a time lag, but government and research council policy is beginning to recognize and align with the new investment realities. We believe this trend will accelerate as internet-mediated angel investing, such as crowd-funding schemes seen in other sectors, become a developing force in the next decade.

The European biotechnology industry receives less funding, and less funding per company, than the North American industry, especially at the sensitive early stages of company development, and the European industry is substantially smaller in terms of employment, products and capitalisation than the US industry. The cause and effect of this relationship are explored in this paper. It is shown that if the European industry is immature it is because its growth has been slower, most probably because of low investment levels, and that the relatively lower value of biotech companies at initial public offering (IPO) is a result of the lower amount of investment they receive, not a reason for. This suggests that poor investment levels are a primary cause of the small size of European biotech companies and the European industry as a whole, not an effect of it. Investor mistrust and investment mechanisms are plausible reasons for this under-investment.

This paper examines the effect of founder team removal on the success of a set of 77 UK venture-backed biotechnology companies. Five measurements of success of these (predominantly private) companies are used: achieving liquidity for its shareholders, attracting further investment and further investors, company size, and how many products it managed to take into clinical trials. For all measures, early removal of the founding New Venture Team is correlated with poorer performance than retaining the founding team's skills. The best time to remove the founding team for this set of companies is after IPO. This suggests that venture capital investors' tendency to routinely remove founders and change CEOs on investment is damaging to their own interests as well as those of the founders concerned, and that alternative, more cooperative ways should be sought to retain founders and early executives in meaningful, effective roles in their companies to continue to harness the value that they are observed to add.

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