Considering start-up financing strategies | From Japan to Belgium: A Biotech Field Report Series

"What is the difference between 'price' and 'value'?" Academic Director Philip began the lesson with this question. "Price" can be thought of as the amount you pay out of your wallet, and "value" is what you get for it.

Other topics introduced were opportunity costs (benefits that could have been gained by making different choices) and sunk costs (costs that have already been incurred and should not affect future decisions). It was mentioned that it is important to assess the situation calmly and objectively, especially when a large amount of investment (money, effort, etc.) has been made, so that future decisions are not misjudged by being stuck in the unchangeable past.

Fundraising requires a particularly high level of expertise, and it is important not only to understand the brief but also to seek expert advice.

Even experienced venture capitalists find it difficult to have a deep understanding of the "value" of technology with a high level of scientific knowledge, so the acquisition of grants becomes a factor in their investment decisions (this can happen with independent VCs, as corporate VC (CVC) investments are often based on the views of internal experts within a pharmaceutical company).

There is a general desire to maintain a high level of ownership by start-ups to ensure stable management control and to maintain bargaining power. On the other hand, investors not only want to invest in a start-up and gain equity, but they also want to hedge their risk to some extent. However, in biotech and medtech, where development is highly uncertain, reducing the shareholding ratio is not necessarily a disadvantage. The skill lies in developing a strategy that considers what is the best way to deliver medicines and other products to patients, how much development needs to be accelerated, and what investors and VCs expect from the company. Sometimes the best option is to hand over management to others like serial entrepreneurs or graduates of the SBS AMBT programme, if the ultimate goal is to save as many people as possible, as quickly as possible.

Compared to larger companies, start-ups lack internal resources and experience, adequate production lines, and distribution channels. This means that M&A by pharmaceutical companies could accelerate development and lead to earlier delivery of drugs to many patients. Indeed, it has been reported that biotechs backed by large pharmaceutical companies have a higher probability of success in clinical trials.”