Financing Strategies in White Biotechnology

Core Messages

• The impact of white biotech is strong (e.g. quality improvements through better products, growth through innovative product, cost-effectiveness through new processes).
• European white biotech start-ups normally use only a very limited set of growth strategies.
• The further development of white biotech in Europe depends on the ability to establish a prospering start-up scene.
• The majority of start-ups in white biotech focus on internal R&D to realise growth based on known markets and known technologies.
• Most biotech start-ups keep up very good relationships with universities and research institutions and have fast access to the latest research results.
• The interest of chemical and lifescience companies in white biotech is increasing and the contact to start-ups is developing in order to get access to the state-of-the-art technologies and products in white biotech.
• Only 15% to 20% of white biotech start-ups in Europe were able to acquire VC due to their service-oriented business model.
• The problem with regard to the financing of start-uups in white biotech is their low financial strength. Some companies have to cancel R&D projects due to lack of funding.
• About one third of start-ups consider governmental funds as an integral part of their financing strategy and use them to strengthen and enhance the technology basis.
• Debt funding is only a limited financing source for start-ups in white biotech because the low equity basis of start-ups limits the possibility of using debt.
• For IPOs, start-ups mostly lack the critical size compared to start-ups in red biotech so that white biotech start-ups are normally seen as too small for an IPO.
• Long-term oriented financial support during the seed and growth phase is the key success factor to develop a prospering white biotech start-up scene in Europe.
• The establishment of a dedicated “European White Biotech Seed and Growth Fund” would be a suitable instrument ot enable capital markets access and foster industrial growth in white biotech.