Today we have a guest blogger. Welcome Afif Ghannoum!
In these trying economic times, biotech entrepreneurs are being put to the test to not only raise capital, but just to survive. Start-ups that a year or two ago would have been flush with capital from several sources, have been forced to closely monitor their burn rates and conserve capital through a new-found mindset of frugality.
But it is not just entrepreneurs who are struggling. Venture capitalist and private equity firms have also been forced to re-examine their spending habits, and in many cases, their investing philosophies. Many firms have turned their attention away from new opportunities, instead preferring to cultivate current investments. A number of new firms are struggling to raise capital, and we have even seen some funds close.
Now more than ever, biotech companies must consider applying for SBIR and STTR grants. While the application process may seem laborious and time-consuming, there are several reasons for companies to concentrate their efforts on securing SBIR or STTR funding. For example, in normal economic conditions, less than one percent of proposals sent to venture capital and private equity firms will get funded. Most of those that do get funded are a result of previous relationships, or “warm introductions.” The simple truth is that funding sources like to work with people they already know and trust. Unfortunately, most biotech companies do not have such relationships to turn to in times like these.
In comparison, conservative figures estimate that at least twenty percent of SBIR and STTR applications are funded. Applications are peer-reviewed, and decisions are made objectively. In short, you have a realistic chance of success, and you do not need to know anyone to get funded.
These are just a few of the reasons entrepreneurs should consider applying for an SBIR or STTR grant. To be clear, I am certainly not opposed to venture capital and private equity funding. Capital from such sources has been, and will continue to be, integral to supporting and fostering the entrepreneurs of this country. Venture capital and private equity firms are able to provide extremely large amounts of capital, and give small companies access to tremendous resources and expertise. My point is simply that they are not, and cannot, be the only funding that biotech companies pursue.
Afif Ghannoum is a principal at BioVentis Consulting. An attorney by training, Afif helps biotechnology companies at every phase of development, including raising capital through grants and private sources.
His team has been successful in securing multiple “fast-track” SBIR grants, and includes Dr. Mahmoud Ghannoum who has been continuously funded by the NIH since 1995, and is a recipient of the prestigious Bristol-Myers Squibb “Freedom to Discover” award. Dr. Ghannoum also happens to be Afif’s father.He can be contacted at afif@bioventisconsulting.com Also see: http://twitter.com/Afif_Ghannoum
