The DTI's findings portray European biotech as a rapidly deteriorating sector: 7% of the region's biotech SMEs need capital immediately, 40% must raise capital within a year and nearly 75% over the next 2 years. “Some SMEs are going to go out of business, and many are stretching resources and cutting back on programs” says Thomas Saylor, chair of the SME platform of the European Association for Bioindustries (EuropaBio). The data were gathered through a survey of 87 biopharma companies in Europe throughout May and June 2009, desk research of reports and interviews with experts. The survey is deemed to be representative of the state of European biopharma, although there is an intentional bias toward smaller and younger companies, following the EC's requested sampling criterion.
“The core of the problem is that there is less venture capital money for small biotechs,” says Chantelot, and lack of cash creates funding gaps in the chain from startup to initial public offering. The most severe gaps are at the early, high-risk stages, making it hard for fledgling companies to get off the ground or even stay afloat. The key reason for this gap in Europe, says Ivica Cerina, a partner at NGN Capital in Heidelberg, Germany, is pressure over the past five years to “de-risk,” pushing investors to focus on later stages and avoid risky startups. Private sources of equity account, on average, for some 60% of all SME funding.
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