From Deep Freeze to Funding Thaw: Insights from Leaders in Life Science Venture Capital
At the 2024 LABEST conference hosted by UCLA Technology Development Group, a standout panel titled "The Latest Trends in Venture Capital Investing" brought together four distinguished investors navigating today’s uncertain biotech market. Moderated by Josh Green—former Chairman of the National Venture Capital Association and a double Bruin himself—the conversation provided rare transparency into how capital allocators assess early-stage companies in one of the most risk-intensive sectors: life sciences.
The panel featured Mira Chaurushiya (Managing Director, Westlake Village BioPartners), Sahil Chopra (Principal, Vertex Ventures HC), Jakob Dupont (Executive Partner, Sofinnova Investments), and Stacy Feld (Regional Head, West North America, Johnson & Johnson Innovation). Together, they represented decades of experience across venture capital, strategic pharma investment, and operational drug development. Despite varied backgrounds, they shared a common message: while the biotech funding landscape has been frigid, a thaw is underway—but only for companies with focus, discipline, and adaptability.
A Market in Flux: Signs of a Thaw in the Deep Freeze
The discussion opened with a frank assessment of the current macro environment. Green described it as a “deep freeze”—a welcome euphemism compared to “nuclear winter”—and asked the panelists whether things were finally starting to warm.
Chaurushiya noted that while capital is still available, the bar for funding has risen sharply. “There is still a lot of capital sitting in the early-stage ecosystem,” she said. “But the stories that get funded today are around products that are close to the clinic. The capital is there, but it’s more conservative.”
Chopra echoed this sentiment, highlighting that investors are clustering around “hot areas” like radiopharmaceuticals, antibody-drug conjugates (ADCs), and cardiometabolic diseases. “People with momentum are raising $150 million rounds, while others can’t get to $20 million,” he said. “It’s a game of haves and have-nots.”
Dupont observed signs of health in the M&A and IPO landscape—key outlets for venture returns. “We’ve seen some strong IPO filings and strategic acquisitions recently. That’s encouraging,” he said, but added that biotech investors remain risk-averse and laser-focused on rigorous plans, credible timelines, and tight budgets.
Feld provided a strategic investor’s lens, noting that Johnson & Johnson Innovation’s long-term view allows them to invest through the cycles. “The business cases have to be really compelling,” she said, “but we are built to help de-risk early-stage science and help accelerate it, whether through JLABS, partnerships, or investment.”
The New Rules of Getting Funded
Green pushed the panel to distill what separates the funded from the unfunded in today’s environment. The answers coalesced around a few core themes: focus, adaptability, and people.
“The best entrepreneurs know what they don’t know,” said Feld, emphasizing the importance of self-awareness and team-building. “They build cultures that are collaborative and able to pivot when necessary. Execution is everything.”
Chaurushiya reinforced that idea. “I’ve seen promising science fail because of poor leadership. The best companies are built by teams who know how to turn great science into real medicines. We call our model ‘people first’ because we start with the team and then match them with the right science.”
Dupont and Chopra both stressed the role of adaptability. “Biotech evolves every six months,” said Chopra. “The companies that pivot quickly—like shifting from oncology to autoimmunity in cell therapy—are the ones that survive and thrive.”
Execution was another non-negotiable. “The truly great entrepreneurs are execution animals,” said Green. “They do what they say they’ll do, and they adjust quickly when something doesn’t work.”
Operating During Hibernation: What to Do When You Can’t Raise
Not every company is in a position to raise capital today. Green asked the panel what entrepreneurs should do during this "semi-hibernation period" while waiting for the funding environment to improve.
“Prioritize and focus,” said Feld. “Make sure you’re spending cash only on what gets you to a real value inflection point. Know what your go/no-go decision points are.”
Chaurushiya shared a story of a two-person startup that had bootstrapped for three years by piecing together non-dilutive grants and executing only the most critical experiments. “They iterated until they got the data that mattered—and now they’re ready to raise,” she said.
Chopra emphasized alternative funding sources like NIH grants, CIRM, and translational funding programs. “There is a lot of non-dilutive capital out there if you’re creative and resourceful,” he said.
Feld agreed and added a critical insight: “If you’re out telling your story and seeking feedback, you may find new insights that reposition your value. Don’t disappear—engage with the ecosystem.”
A Candid Look at Business Models and Risk
An audience member asked about de-risking business models in addition to science. Feld pointed to Johnson & Johnson’s recent partnership with BigHat Biosciences, which uses generative AI to design antibodies. “That’s a form of business model de-risking—applying AI to reduce the trial-and-error cost of discovery,” she explained.
Chaurushiya responded that Westlake doesn’t “innovate on business models.” Their focus is on therapeutics with a clear path to IND or Phase 1 on $30–50M. “We’ll back strong teams even if the program pivots five times—we just need to know what that first clinical card is.”
Dupont added that “de-risking” also includes assembling domain-specific teams. “If your CMO is a neurologist and you’re developing an oncology asset, that’s a red flag.”
Paths Into Venture Capital: Advice from the Inside
In a final shift, Green invited the panelists to share how they entered venture capital—a path many in the audience likely aspired to follow.
“I got in by accident,” said Chaurushiya. “I was interviewing at portfolio companies and they told me to talk to their investors. I ended up joining the firm instead.” She stressed the importance of building relationships and being recommended by people who are trusted in the ecosystem.
Chopra advocated for understanding the role through fellowships and interviews. “Be a jack-of-all-trades, master of one,” he said. “You need to know the basics of biotech, but also go deep in one therapeutic area.”
Feld advised prospective VCs to “have a thesis and a point of view. Show that you can think about markets, patterns, and convergence in a new way.”
Dupont reflected on joining venture after a long operational and academic career. “You can come in early through fellowships, or later with deep domain experience. But always bring critical thinking, collaboration, and the ability to make decisions under time pressure.”
Final Reflections: Perseverance and Realism
As the session closed, each panelist offered a closing prediction or piece of advice.
“Perseverance matters,” said Chopra. “Your day will come if you stay focused and keep going.”
“The openness to pivot is critical,” added Dupont. “The drug you’re working on may be perfect for another indication, and that flexibility can be the difference between failure and success.”
Feld pointed to the growing AI-biotech convergence as one of the most dynamic frontiers. “We're landscaping aggressively in AI/ML-driven discovery, and we believe it will reshape the business model of biopharma.”
And as Green wrapped up the panel, he reminded the audience: “It’s not you, the entrepreneur. It’s not me, the venture capitalist. It’s the macro environment. But great science, led by great people, always finds a way through.”
This LABEST 2024 panel was more than a high-level look at funding trends—it was a crash course in the realities of raising biotech capital in a turbulent market. The panelists didn’t sugarcoat the challenges, but they offered hope grounded in discipline, strategy, and execution. For entrepreneurs navigating today’s icy fundraising climate, the message was clear: resilience, rigor, and the right team can still open doors—even in a deep freeze.