CHRISTIAN WYSS
VISCHER AG, Aeschenvorstadt 4, 4010 Basel, Switzerland

Abstract

Times are changing for venture capital in general and also for the life sciences: even without the weak economic situation in Europe and other regions a financing round with venture capital funds (VCs) presents a balancing act for start-ups. Drawing from existing legal practice as well as experience in the field, the article shows the investment process from the perspective of start-up entrepreneurs. Key insights on understanding the VCs’ needs are followed by recommendations on preparations for the campaign. Finally, the deal-making process is described, from sending in the business plan to entering a new collaborative relationship between the VC and the start-up company.

THE BALANCING ACT
Venture capital usually comes in to finance expansion and growth. From the author’s legal practice and business experience, finding venture capital is a balancing act for start-up businesses. This challenge is currently even bigger in times when Europe and other regions are showing little or no growth. The venture capital market has inevitably been affected. You shouldn't compare today's market with the market of the boom times. The boom times are over. This does not mean, however, that the venture capital market no longer exists (1). The chart below shows venture capital funding in the US biotech industry. The blue graph shows that quarterly venture capital funding currently stands at around 850 million US dollars. This is a slightly higher range than in the year 2000, which was a boom year for the entire venture capital industry. For the biotech industry the boom years were rather 2006 and 2007, with funding levels well above today's 850 million US dollars per quarter. The red graph shows that the number of deals with companies fluctuates between 60 and 160 per quarter. However, there has not been a significant decrease in the numbe ...