Latest News & Insights – More

“Before we take a stake in a company, we evaluate whether its value proposition appears to be clinically successful — how will their product make a difference, and does the science work?” Gunton said. “We also consider the management team and their clinical and capital experience: Will the team be able to raise the capital necessary to sustain the company during the years before it starts to generate revenue? It’s always somewhat of a gamble, because there are no guarantees, but we also consider proxies, including the company’s clinical trial successes and failures.”

During his three decades in the VC space, “The fundamentals remain – like a good management team that can assemble a lending syndicate – but some investing aspects are changing,” observed Gunton. “From 2000 to 2010, VC providers typically had eight- to 12-year exit strategies. But from 2013 to 2020 that dropped to a three- to five-year period. Now, though, gestations are taking longer, thanks primarily to reduced valuations and more cash constraints, and shifting drug reimbursement.”

Artificial intelligence is also impacting the VC space. “As an investor, it can be difficult to disentangle drug discovery and clinical trial documentations,” Gunton explained. “So, we can use AI to help dig down into the records, and even read images to uncover patterns. Currently, Tech Council Ventures is using AI to find and assess investment opportunities; and we anticipate increasing our use of AI in the future. We’re also investing in companies that leverage AI, like Xevant. This can open up a new chapter for investors.”

Strong fundamentals

Despite some challenges, the momentum has also not slowed appreciably at New Jersey-based investment firms like Syridex Bio, according to Managing Partner Squire Servance.