70 VC financing in the biotech sector. 2024 has already seen some noteworthy IPOs (CG Oncology, Arrivent Pharmaceuticals and Kyverna Therapeutics) and impressive financing rounds (Tubulis, focussing on ADC-based treatments, secured a Series B-2 financing round just recently). The VC Life Cycle in Biotech Depending on the maturity of a start-up company, usually an increasing amount of investment is needed to grow the company as the funding is used to achieve different objectives. This entails different types of investors. While in the “Pre-Seed” to “Seed” stages the main objectives usually are the acquisition of IP rights, development of technology or preclinical testing and investors are comprised of friends, family and fools (the “3Fs”), business angels and VCs with investments amounts from EUR 100,000 to EUR 500,000 (in case of VCs up to EUR 1m to 1,5m or more) in the early stages (Series A to B) funding is used for further development of technology or clinical evaluation (Phases I, IIa and IIb). Investors in these stages are VCs as well as family offices and corporates with investments amounts from EUR 5m up to EUR 15m or more. In even later stages (Series C, D etc.) the same types of investors invest from EUR 20m onwards to extend clinical evaluation to larger patient groups or randomized control trials (Phase III). As a result of these differences between (Pre-) Seed and later stages, different financing instruments will become suitable. Besides equity rounds in the (Pre-) Seed stages the conclusion of convertibles might be a viable option whereas in later stages venture debt might be better suited. In the biotech sector, substantial funding may also be obtained by applying for public funding. There is a variety of EU wide or domestic funding options available, e.g., the EXIST program administered by the German Federal Ministry of Economic Affairs, which helps to test the technical feasibility of the given technology as well as make the company investor-ready. Typical VC Requirements – The Investor View While each VC investment is unique in nature, VC investments in general require certain business and operational aspects to be present such as a functioning team with valuable know-how regarding their (unique) technology and product preferably having experience in the area of business (e.g., “Big Pharma”). Typically, investors monitor the IP situation carefully and examine market size as well as viable exit strategies before obtaining a minority stake (10 to 25% per round) in the company depending on the funding required to reach the next stages of technology development or clinical testing. Valuations in prerevenue / early stages depend on a combination of funding needed,
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