Burrill & Company’s June 2012 report indicates that that pharma corporate venture capital (CVC)-backed companies have a higher rate of overall success than those without their involvement. The analysis includes 2907 therapeutics companies that raised VC dollars between 2000-2010 across 5100 rounds of financing. Corporate VCs were investors in about 10% of companies, and this pool of 286 companies had what appears to be a markedly higher hit rate: a ~60% higher rate of licensing deals, M&As and IPOs. See Life Sci VC blog.
These new data from Burrill are entirely consistent with pharma corporate VC playing an important role in the ecosystem, and that they seem to get involved in good companies that possess better than average probabilities of success. It is uncertain whether corporate VCs are just good company pickers because they look for things their Pharma R&D organizations may want, or if they actually help shape a better outcome once they get involved either through the value-added “stamp” of Pharma validation or through active deal management contributions.
I suspect they add value both by picking companies working in areas where they have keen interest and knowledge -- and by helping to shape and manage deals in areas where they have honed expertise. One thing for sure, it looks like having a CVC on your side heightens your odds of success.
Posted by Bruce Lehr June 1st 2012.