Venture capitalists operating in the biotech space are confident the sector will not be as badly hit by recession as others, but are still expecting some effects.
The report, by recruitment company Ruston Poole International, aimed to investigate the mood of investors. It was based on the responses of 20 senior individuals representing the venture capital, private equity and investment banking sectors. They were asked to consider 10 statements, and select a response ranging from ‘strongly agree’ to ‘strongly disagree’.
The general sentiment amongst respondents was that the life science sector is one of the more resilient to recession, but it will certainly not be immune from the major problems of raising funds and raising debt.
For 2009, investors are likely to scale back their investments. Forty per cent of respondents believed their investments into life sciences would fall. In terms of recruitment, although major job losses are unlikely, the level of new recruitment is expected to be subdued. Thirty five per cent of respondents said they would employ slightly more people in twelve months time.
Investors are focusing on their existing portfolios. Eighty per cent of respondents said they would spend more time on their portfolios. Acknowledging the difficult fundraising and exit climate for 2009, only 5% of respondents believe that exits will be easier in 2009.
Respondents believe the IPO route is unlikely to provide an exit for companies until at least 2010 or 2011, with more pessimistic respondents believing that the times of emerging companies raising substantial funds in public markets was firmly in the past.
The geographic spread of the respondents covered the UK, the Netherlands, France, Italy, Germany and Switzerland. The investment bankers were the most pessimistic, with the main optimism coming from the German and Swiss VCs.