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VC providers keep funds flowing in NJ
It’s been a tough year for life sciences startups. According to a report issued by Evaluate Ltd., which provides commercial intelligence and predictive analytics for the pharmaceutical industry and their advisors, “While Big Pharma valuations ‘regained their mojo’ toward the end of last year, the outlook remains bleak for smaller scale drug developers.” And an Ernst & Young report released in May warned about a possible pullback in overall venture capital funding, noting that, “While VC investment in Q1 2023 improved by 37% over Q4 2022 – rising to $44.1 billion compared to $32.3 billion for Q4 2022 – recent bank failures and a weaker economic environment have dampened the overall outlook for the remainder of 2023.”
Still, some New Jersey-based venture capital funds are optimistic about opportunities in the early-stage segment.
With some $130 million of assets under management, the fund invests in seed and Series A financings across biotech and other industries throughout the Mid-Atlantic region. Holdings include a minority stake in Epibone, a Jersey City-based company that aims to use bone marrow stem cells to help individuals regenerate their cartilage and other skeletal cells, and a seed-stage position in Regenosine, a Princeton-based enterprise that’s developing and commercializing injectable musculoskeletal regenerative therapies for osteoarthritis.
“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.
“It is a difficult environment to raise money, given the volatility and the tendency of sources to temporarily hold their capital,” observed Servance. He launched the impact-driven, life sciences-focused venture creation and private equity firm – which invests in therapies that address the needs of underserved communities – in November 2022. “But we’re continuing to talk to institutions and raise capital. Plus, we’re getting deal flow from our strong standing industry relationships.”
Gain insights from Mark Kolb, Partner at Tech Council Ventures, who joined Alan Wink, Managing Director of Capital Markets for EisnerAmper to discuss tech startup funding in 2023. In this video, leaders will learn about new capital funding options, how much money funds are raising, and key milestones that can yield important dividends.
Or watch the video segment here.
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NVCA Appoints Threshold’s Emily Melton as New Board Chair
WASHINGTON, DC — Today, the National Venture Capital Association (NVCA) announced that Emily Melton, Managing Partner at Threshold Ventures, will serve as the 2022-2023 Chair of the NVCA Board of Directors.
“This is a critical moment for the United States as we continue building back after two pandemic years,” said NVCA President and CEO Bobby Franklin. “I am very excited to have Emily lead the board during this important time. She knows what it takes for entrepreneurs and investors to build great companies, and she has a true gift in communicating these priorities with policymakers.”
“As Board Chair, I will push for laws, regulations, and policies that support investors and entrepreneurs tackling our most pressing societal challenges,” said Melton. “From immigration reform to the climate crisis, the U.S. must remain the most attractive place in the world to build new companies. This will undoubtedly create more American jobs along with services and products that will benefit all of society.”
Melton is preceded by Michael Brown, General Partner at Battery Ventures. Brown successfully led NVCA and its members during the pandemic and set up the VC community to help lead the recovery.
“Michael’s strong leadership and creative thinking guided us through a new administration and shifting legislative agendas,” said Franklin. “His commitment to the values that define NVCA helped advance pro-startup policies that diversified and expanded the greater venture capital ecosystem at a time when we witnessed unprecedented investments in tomorrow’s economy.”
NVCA also announced the appointment of seven new directors to its board who will serve four-year terms from 2022-2026:
- Gavin Christensen, Managing Partner, Kickstart Fund
- Beezer Clarkson, Partner, Sapphire Ventures
- Kirsten Green, Partner, Forerunner Ventures
- Nnamdi Okike, Co-Founder and Managing Partner, 645 Ventures
- Deena Shakir, Partner, Lux Capital
- Steve Socolof, Managing Partner, Tech Council Ventures
- Adam Valkin, Managing Director, General Catalyst
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The National Venture Capital Association (NVCA) empowers the next generation of American companies that will fuel the economy of tomorrow. As the voice of the U.S. venture capital and startup community, NVCA advocates for public policy that supports the American entrepreneurial ecosystem. Serving the venture community as the preeminent trade association, NVCA arms the venture community for success, serving as the leading resource for venture capital data, practical education, peer-led initiatives, and networking. For more information about the NVCA, please visit www.nvca.org.
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