Almost 80 per cent of these companies, which are involved in therapeutics, diagnostics and devices, said they have found it more difficult to raise money over the last 12 months. More than a third of those looking to raise equity finance failed to do, while a further 47 per cent were not able to obtain all the money they wanted.
This is all the more desperate given that 44 per cent of companies were seeking less than £1 million, while 44 per cent wanted between £1 million and £10 million.
The most frequently cited reason for investors’ reluctance was that the sector, or the company, was too risky.
The BIA published the figures as discussions roll on over where to direct the science stimulus package that is due to be announced in the government’s annual budget later this month.
The failure to raise money has resulted in staff cuts and the suspension of development plans. The majority of finance was required for research and development, closely followed by working capital requirements, and protecting intellectual property.
The BIA is asking for money from the government to reinvigorate the investment environment for small biotechs. Clive Dix, BIA Chairman, said investors’ risk appetite has declined dramatically, even for relatively small sums of finance. “The findings of this survey demonstrate that serious financial commitment is now needed from government to support levels of fund raising up to £10 million.”
In particular, the BIA called the formation of a government-backed UK investment fund to match venture capital investment in early-stage companies.
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