PharmaSphere: Emerging Biotech Investment Report - Strategic Trends in Private Equity and Venture Capital Funding

Monday 17 March 2014, Amsterdam

The importance of capital, particularly for emerging biotechnology firms, cannot be overemphasized. For these companies, many of which are spun out of university laboratories and their technology transfer offices, being able to attract sufficient capital in a highly competitive and fast-paced investment climate is crucial to their survival and success. Indeed, private equity (PE) and venture capital (VC) firms play an important role in driving entrepreneurship in the economy. These firms ensure a healthy economy by providing an avenue for the evolution of innovative ideas (which might otherwise have been extinguished due to a lack of funds), into products and services. In many cases, these products and services are then expected to contribute significantly to the nation’s Gross Domestic Product (GDP).

However, before this can be achieved, it is the responsibility of investors to raise capital and strategically invest in companies with innovative ideas capable of solving unmet needs, as well as identifying enterprises with an attractive future outlook in terms of return on investment.


The Global Investment Market Continues its Recovery from the 2008 Financial Crisis

Capital commitments to PE funds totaled $272.6 billion in 2007, with VC funds accounting for 11% ($29.4 billion). However, the financial market crisis of 2008 resulted in a 24.3% decline in the value of capital commitments to PE funds ($206.5 billion) for the year. Despite this, the noteworthy portion of the impact of the financial crisis was felt after 2008. In 2009, capital commitments to PE funds totaled only $66.1 billion – 75.8% less than in 2007. However, the market has been more receptive to PE commitments since then, with $126.3 billion and $93.7 billion raised in 2012 and 2013, respectively.