Horses for Courses: Why VCs Stick with Private, Not Public Investing
This article was originally published in Start Up
With public markets up but private equity markets still in the doldrums, why don't VCs shift their strategies to favor purchasing public biotechs? They have--a bit. But public investing doesn't exploit a VC's competitive advantages or justify the relatively high management fees they charge.
You may also be interested in...
Question: How does the distressed state of the public market for biotech stocks impact venture capital funding of private biotech companies?Answer: Public market conditions should have no material effect on the total amount of venture capital funding available for biotech companies, although it may well have an impact on the investment profile of venture capital fund commitments,
With the markets down, it's time to explore alternatives to straight equity deals for public companies: PIPEs, equity lines of credit, convertible debt, and "toxic preferred" securities.
Is there an explanation for the recent spate of biotech Phase II and Phase III clinical trial failures? It's almost impossible to give general reasons for specific clinical failures. Several hypotheses, borrowed from the tenets of behavioral finance, however, may help explain some recent, unanticipated later-stage setbacks. They may also support other studies that suggest that small biotech companies fail more often in clinical development than their larger biotech and pharma brethren.