Call it venture capital with a heart. Venture philanthropy offers fresh sources of funding for biotechnology research.
“Nonprofit organizations bring access to patients, trial centers, specialists and far deeper understanding of the disease — and patient need — contacts with the Food and Drug Administration and sometimes a political voice,” says Tricia Brooks, managing director of alliance development at BIO. But because nonprofit investors are outside traditional funding paths, biotech companies may not be aware of them.
While there is obvious potential for disease-focused nonprofit groups to partner with biomedical researchers, partnerships could extend to biotech development as well. BIO has been including these organizations in its Business Forums, so that member companies can meet with these groups. It also is working with FasterCures, a group focused on speeding treatments to market, to find other ways to foster philanthropic VC agreements.
Margaret Anderson, executive director for FasterCures, points out that philanthropic investment plays a critical role in finding medical solutions. “For some diseases, nonprofit funding models are virtually the only source of capital for innovative, risk-taking research,” she says.
The concept of venture philanthropy is not entirely new. As far back as 2006, Fortune magazine referred to it as a hot buzzword. But in biotechnology, most of the funding focus has been on corporate, government and grant opportunities.
The alignment with biotech R&D makes sense because, as Anderson points out, “philanthropic money fills funding gaps in research that is high-risk but also with potential of high return.”
BIO President and CEO Jim Greenwood, who recently led a panel discussion at the Partnering for Cures conference in New York, views philanthropic support as worthwhile because funding is not readily available to support the high-risk, high-reward science being pursued by many biotech startups.
“At BIO, we have been pleased to see many more partnerships developing between our companies and medical research foundations and philanthropic and patient group communities,” he says. “As these new funding models have matured, they challenge our companies to think about research in a more patient-centric way.”
Additionally, in disease research, this type of investment often can give a bigger boost to biomedical efforts than funding from the National Institutes of Health, says Rudy Tanzi, lead researcher for the Alzheimer’s Genome Project at Massachusetts General Hospital.
“The NIH is conservative; they generally fund studies that get you the two-yard run, the five-yard pass — if it was football,” Tanzi says, who was also on the panel. “Foundations generally will come out and allow you to throw the Hail Mary pass, the Doug Flutie with Boston College or the 50-yard bomb. Without that, we’re nowhere.”
A willingness to take the big risk is crucial, Brooks points out, because such investments can fund proof-of-concept studies that could catalyze further VC funding down the road for clinical trials. “Start-up companies struggle for seed and early-stage funding,” she says.