Yes, you're absolutely right, and YC and other SV funders really have no clue what they're doing. It's a boon for biotech startups because the relevant VCs are very puckered up right now when it comes to biotech/pharma.
> the relevant VCs are very puckered up right now when it comes to biotech/pharma.
There are some great posts on the LifeSciVC blog on this topic (and I highly recommend reading all the posts on there for anyone interested in biotech startups):
> Why is biotech startup supply so constrained? First, there aren’t dozens of breakthrough biomedical ideas created every day; while substrate for startups is very rich, figuring out which are likely translate successfully into high impact medicines diminishes the viable number of big, attractive ideas quickly. Second, there are very few biotech venture investors still active today, and fewer still that are focused on early stage company creation. Third, and of critical importance, it’s not easy to start biotech companies, and in most cases requires entrepreneurs with decades of apprenticeship inside larger R&D organizations – navigating the drug discovery and early development process requires experience well beyond simply advanced degrees (MD/PhD).
> The nature of the problems and people involved are very different [between tech and biotech]: Internet-enabled Tech startups launch products on tiny amounts of capital, led by Lean Startup Ninja’s and 22-year old soon-to-be-billionaires, these companies can iterate rapidly around things I don’t understand, minimally viable products, and real-time market feedback...Compare that to Biotech. We are trying to manage the challenge of science-based businesses: biology is full of “unknown unknowns”, drug R&D has long and unforgiving timelines, we face very high project attrition rates, we have to work in a highly regulated environment, capital intensity is typically higher, etc… The people involved are also different: the typical senior team has some grey hair and often collectively has 100+ years of experience in (or biases from) drug R&D.
Life science VCs see themselves and their industry as very different from the tech industry.
There are some great posts on the LifeSciVC blog on this topic (and I highly recommend reading all the posts on there for anyone interested in biotech startups):
* Where Does All That Biotech Venture Capital Go?: http://lifescivc.com/2015/02/where-does-all-that-biotech-ven...
* Venture-Backed Biotech Today: Reflections On Exits, Funding, and Startup Formation: http://lifescivc.com/2015/01/venture-backed-biotech-today-re...
* Talent: The Biggest Issue In Biotech Boardrooms Today: http://lifescivc.com/2014/09/talent-the-biggest-issue-in-bio...
* Early Stage Biotech Venture Scarcity: Fitness, Fear, And Greed: http://lifescivc.com/2014/09/early-stage-biotech-venture-sca...
* Startups, Exits, And Ecosystem Flux: Bullish For Biotech: http://lifescivc.com/2014/09/startups-exits-and-ecosystem-fl...
An excerpt (italics added by me):
> Why is biotech startup supply so constrained? First, there aren’t dozens of breakthrough biomedical ideas created every day; while substrate for startups is very rich, figuring out which are likely translate successfully into high impact medicines diminishes the viable number of big, attractive ideas quickly. Second, there are very few biotech venture investors still active today, and fewer still that are focused on early stage company creation. Third, and of critical importance, it’s not easy to start biotech companies, and in most cases requires entrepreneurs with decades of apprenticeship inside larger R&D organizations – navigating the drug discovery and early development process requires experience well beyond simply advanced degrees (MD/PhD).
* High-Performing Boards in Early Stage Biotech: http://lifescivc.com/2012/03/high-performing-boards-in-early...
Another excerpt:
> The nature of the problems and people involved are very different [between tech and biotech]: Internet-enabled Tech startups launch products on tiny amounts of capital, led by Lean Startup Ninja’s and 22-year old soon-to-be-billionaires, these companies can iterate rapidly around things I don’t understand, minimally viable products, and real-time market feedback...Compare that to Biotech. We are trying to manage the challenge of science-based businesses: biology is full of “unknown unknowns”, drug R&D has long and unforgiving timelines, we face very high project attrition rates, we have to work in a highly regulated environment, capital intensity is typically higher, etc… The people involved are also different: the typical senior team has some grey hair and often collectively has 100+ years of experience in (or biases from) drug R&D.
Life science VCs see themselves and their industry as very different from the tech industry.