Nelson TENGManaging Partner, Charter Life Sciences

Biotech investments in the past two decades has as a whole been successful until the recent world wide financial down turn. In fact, the return for life sciences investments has outperformed the tech and IT sectors. During the same period, early stage biotech investments consistently performed better than latter stage. Dedicated and specialized VC funds outperformed the balanced funds. Recently, there is a trend for most early stage VCs to migrate to later stage investment mainly because the lack of exit in the public market and the perception of risk reduction in late stage investment. As a result, the attrition of early stage VC funds creates a great opportunity for those who persist especially when the financial market returns. Early stage investment needs significant technical skills and know-how not only to understand and evaluate the technology, but also to provide value to the entrepreneurs. The strategy of moving from research to clinical development and commercialization is critical and it is important to achieve each milestone in a capital efficient manner. The first proof in men and successful human clinical data are the most significant value inflection points, therefore, need to be well managed by a team with appropriate leadership. Judicial syndication with like mind investors is another important investment strategy that can provide financial leverage and a board of directors with complimentary skill set. Finally, the process of closing an investment with the proper terms will be discussed.