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Early-stage investor says funding gap does not exist, only “expectation gap”

By David Schwartz
Published: June 18th, 2008

Early-stage biotech investor Carl Weissman, president and CEO of Seattle-based venture firm Accelerator, takes both VCs and university TTOs to task for blaming a lack of access to early-stage funding on what he says is a non-existent funding gap. He cites instead an “expectation gap” as the main barrier to securing dollars for research commercialization. Weissman also rips VCs for their recent insistence that technologies be “de-risked” to qualify for their backing, a stance that he views as counter to the very nature and purpose of venture investing. “VCs are happy to blame the funding gap on everything and everyone (but themselves), from recalcitrant academic ivory tower scientists to bureaucratic technology transfer offices to the NIH to the public markets…. Too easy,” Weissman argues. “VCs that spew this propaganda either need to admit that they are no longer in the “venture” business, where there is — by the very nature of the activity — risk; or, they need to find mechanisms and models that will enable them to invest earlier and pull some interesting emerging technologies forward.”

He doesn’t spare university researchers or TTOs from criticism either, citing an era of easy money in the late 1990s as fomenting unrealistic expectations for what constitutes technology worthy of funding. For research that does meet realistic criteria and is not burdened by pie-in-the-sky financial expectations, a funding gap will not be a barrier, he asserts. “Academic investigators need to face facts. If you have a great technology, with reasonable and lucid proof-of-concept, addressing a significant unmet need, and that can be protected as proprietary; and, if — and this is the big IF — you have reasonable expectations in terms of valuation and risk-sharing, then you will be able to attract venture funding. Plenty of it,” Weissberg says. To prove his point, he points to his own company’s string of successful investments, as well other early-stage VCs with a similar track record, and maintains that great ideas need not go begging for funds if the backers and the innovators both can approach the commercialization process with a bit more give and take. “If you are an academic and you cannot get someone to back your idea, do three things: take a hard look at your technology (or even ask someone else to do so); take a hard look at your expectations; and, take a hard look in the mirror. Honest assessment in these three efforts will tell you why,” he opines. “If you are a VC crying crocodile tears over all of the impediments between your partnership and early-stage biotechnology investment, quit it. You make us all look like complete asses. Pull up your britches, wipe your nose, and admit it — ‘I am no longer a VC. I am now a private equity investor with an exceedingly small fund.’ Go to: Xconomy

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