WRF Capital Managing Director Discusses VC Investment in Healthcare
June 28, 2013
In an interview published in PitchBook’s recently released 2013 VC Healthcare Report, WRF Capital managing director Thong Le discusses general investing in the healthcare industry, pharmaceuticals & biotechnology and the effects of the Affordable Care Act on VC investors. Here’s a peek at the interview:
Q: What do you see as the current tailwinds/headwinds for VC investors in healthcare?
A: I think we’ll continue to see an overall decrease in total VC investments in the healthcare sector this year. This is largely driven by a decrease in the total number of VC firms still actively investing in healthcare, which has steered investment capital to the very best quality companies with the most capital-efficient business models.
Consistent with this observation, we’re seeing a shift in VC firms investing in companies with very lean operating infrastructure focused on single-asset development, meaning the company is only spending money raised to pay for largely outsourced preclinical and clinical development, whether that be for a single drug product or medical device. We’re also seeing some larger Series A rounds—greater than $10 million—in the biotechnology and pharmaceutical sectors; however, these financings are typically tranched to specific milestones that, in theory, should lead to either a lucrative partnering deal or an outright acquisition.
Overall, we remain concerned that innovative science will not be able to attract VC investment, given the decreased appetite to take on technology development risk that is not more specifically focused.
Q: What are the current trends you see in the pharmaceuticals & biotechnology space?
To read the interview in its entirety or to check out the full 2013 VC Healthcare Report, click here.