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Strategic Partnerships: The Key to Venture Capital in Industrial Biotech

June 17, 2013
This morning at BIO’s World Congress on Industrial Biotech, the Clean Tech Investor Sessions kicked off with a panel called, “Global Perspectives for Project Financing in Clean Technology.” Moderated by Taite McDonald, Senior Advisor, Energy & Clean Technology Government Initiatives, Wilson Sonsini Goodrich & Rosati, the panel consisted of dynamic, international experts including Dirk Den Ouden, Senior Manager, Kempen & Co Corporate Finance; Felipe Pereira, Sector Manager, AIB, Department of Chemical Industry, BNDES; Josko Bobanovic, Partner, Green Chemistry and Bioenergy, Sofinnova Partners; Michael Curry, Managing Partner, Investeco Capital; Neil Cameron, PhD, Investment Director, Emerald Technology Ventures; and Thomas J. Erickson, Co-President and Director, First Green Partners.

The panel discussed investment opportunities and funding sources to help identify the right funding for clean tech businesses. Each panelist expressed that their companies have the funds and the interest to invest in industrial biotech. Felipe Pereira said the Brazilian development bank (BNDES), as a state-owned institution, is the main source of funding for long-term financing in Brazil. Dirk Den Ouden called biobased a “sector to focus on” and said Kempen works with late-stage companies in an effort to connect the companies to the investors.

The Paris-based venture capital fund, Sofinnova Partners, has about $1.3 billion euros to invest across Europe and North America with the idea of finding companies creating alternative sources of petroleum. Michael Curry shared that Investeco’s focus from the beginning has been on the bioeconomy and switching from fossil fuels to cleaner alternatives adding that they have a $50 million fund under management to invest toward this. Emerald Technology Ventures has invested in 50 companies during the past 13 years with three of them being in the industrial biotech space. First Green Partners has a $355 million fund focused on starting 10 early-stage companies in the carbon value chain.

While the money is there, Taite McDonald said the key obstacle in creating a biobased economy is accessing low cost capital at scale. She asked the panelists what early-stage companies can do to best position themselves for commercialization. The answer right down the line of panelists was strategic partnerships.

“Derisk it, derisk it, derisk it,” said Dirk Dirk Den Ouden when emphasizing partnerships. Michael Curry added that companies should follow a few simple steps to achieve financing: “develop a product, realize revenue and form strategic partnerships.” “The solution is partnering relatively early on and derisking,” echoed Thomas Erickson.

The panel wrapped up with a discussion of what trends to expect in financing over the next two years. “We can all agree it’s not a one-stop-shop approach,” said Taite. Neil Cameron summed it up well saying, “It’s false to suggest venture capital is THE solution to biotech, but it is A solution to some of biotech.” He hopes to see an increased and more sophisticated understanding of what the needs are on both sides of the table over the next couple years. “The big challenge is finding opportunities where we can have a profound impact and can help your company grow, but also realize a return,” added Cameron.

For the rest of the day today and all-day tomorrow, investor sessions are taking place where company executives make formal 25-minute presentations showcasing their new technologies, accomplishments, milestones, value proposition and business case. These sessions are designed to spur investment in companies seeking to raise money.