BIO, the powerful Biotechnology Industry Organization, made a June 16th posting on their blog titled “Who is Short-sighted?” in response to an earlier posting on this site (see June 8th “Just How Short-sighted is the VC Community?”).
The BIO response makes the point that a VC funded company may have multiple projects in their pipeline with only one receiving the VC backing. BIO states that other early-stage projects the company has may be SBIR appropriate and are not funded by VC so they should be allowed to compete as if the company were not majority owned by VC. Good point but at some level of funding it breaks down.
I believe VC are smart people who usually know the science and the marketplace. If they have invested tens of millions of dollars in a company, why would they not be interested in a modest investment in another, probably related, project the company wants to pursue?
Other provisions of the bill (H.R. 5819) that BIO is trying to push through Congress cast doubt on their statement that “The purpose is not to help VCs leverage their private investments in later stage companies.” Provisions of the BIO backed bill that will triple award sizes, eliminate the need to start with Phase I and allow a company to receive multiple Phase II awards for a single topic change SBIR from a seed capital program to a program that will help VC at the cost of hundreds and hundreds of new ideas not being funded.
Fewer new ideas receiving SBIR seed capital funding now will mean fewer companies in the future that VC may have interest in investing in. That is short-sighted.