Investment strategies of corporate venture capital in life science industry revealed in new report
One of the most important sources of capital supply for small and medium-sized life science enterprises is the large pharmaceutical companies’ own venture capital operations, so-called corporate venture capital companies. Farhang Modaresi and Parhat Hebibul, master students in Karolinska Institutet’s bioentrepreneurship program, were commissioned by Stockholm Business Region to map the last ten years’ investments globally and interview key individuals to investigate the decision-making process.
The conclusion of their research is clear. “Small companies in need of venture capital must analyze large pharmaceutical companies’ portfolios, become familiar with their focus and preferences and meet investors before they submit a proposal. Networking is probably more important than many people think,” says Farhang Modaresi from Karolinska Institutet.
The data are based on the 300 most recent investments of the 19 biggest private equity investment companies over the past decade. Additional in-depth interviews were conducted with seven investors. The purpose of the report is to identify general success factors, thus supporting the Stockholm region’s life science companies in pursuit of venture capital. None of the investments were made in Sweden during that period, despite the fact that the sector accounts for approximately 20 percent of Sweden’s net exports.
“Given the major research campaigns, it is surprising that none of the pharmaceutical companies’ venture capital investments were in Sweden and Stockholm. In many cases, our companies pursue world-leading, cutting-edge research and investors are extremely curious. However, the report clearly shows that experienced leadership with a broad international network is essential,” says Ylva Hultman Erlandsson, Business Development Manager Life Science at Stockholm Business Region Development.
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