Investors bet biotech will be next boom business

The Swiss corporate community moves towards biotech investments Keystone Archive

The Swiss Venture 2002 competition provides further evidence that pharmaceuticals and biotechnology are seen as the next boom industries.

A full third of the 93 finalists in the Swiss Venture 2002 competition – for the most promising business plans – were chosen for ideas based on advances in molecular biology and chemistry.

The result confirms a trend in the Swiss corporate community, where venture capital has shifted away from telecommunications, new media, and information technology towards businesses based on advances in pharmaceuticals and biotechnology.

Nevertheless, the organisers of Venture 2002 – McKinsey and Company – were quick to point out that the strong showing by biotech businesses was in no way influenced by the choice of jury.

“It is a fact that this year’s contest reflects a Biotech/Pharma/MedTech boom,” says Dr Cyril Wipfli, the McKinsey consultant in charge of Venture 2002. “Last time, it was the dot.com boom. The contest does not reflect a biotech bias in our jury as the 60 jury members come from a range of industries.”

Selling science

The trend towards biotech is backed up by other anecdotal evidence such as the number of people taking courses in entrepreneurship at the Federal Institute of Technology in Lausanne (EPFL).

Jayne Royston, Branco Weiss Professor of Entrepreneurship and Innovation at the EPFL says about half of those taking the course come from the pharma and biotech sectors. “The other half is a mixture of IT, software, photonics, and engineering-based startups.”

Past Venture competitions have spawned a number of successful businesses in Switzerland. Sensirion and Dartfish, which won in 1998, now employ more than 100 people. And the winner in 2000, Xitact SA, now employs 30 highly qualified workers.

Its joint winner, Olmero, now employs 15 workers, reporting more than SFr1 billion worth of transactions on its construction industry Internet platform.

Swiss innovation

“The first Venture competition in 1998 helped to awaken the Swiss innovation process -a tradition that was not entirely asleep as you can see successful innovative firms, such as Phonak, Swatch, Logitech, Disetronic, and Sylvac,” points out Gary O Martini, President and co-founder of the APTE Association, an international networking organisation for the Swiss microtechnology and nanotechnology industries.

Experts say business plan competitions are effective way of bringing university research results into the market place. “Narrowly focused competitions, such as those that encourage university technology transfer have a positive ‘trigger effect’ on economic development by encouraging academics to think entrepreneurially,” says Dr Andreas Pyka, of the University of Augsburg, a lecturer and researcher on Evolutionary Economics, Schumpeter, and innovation.

There are a growing number of these competitions in Switzerland. As well as the Venture contest, there is the well-established IMD/EPFL competition, the yearly Swiss Economic Award in May, and the Location: High-Tech Switzerland awards.

New on the scene is the Science2Market competition, organised on a pan-European level, and the Innovation ’02 competition, organised locally by Hewlett-Packard and “brains-to-venture”.

Budding entrepreneurs

To help budding entrepreneurs take their research to the market, the Venture 2002 competition offers winners training from a pool of some 200 volunteers, who come mainly from the finance sector.

The entrepreneurs learn basic commercial skills required to hire talent and attract venture capital. They also are directed towards service providers, such as patent attorneys, headhunters, and accountants, who can support entrepreneurial activities.

Most of this year’s coaches are venture capitalists, who are seeking viable invest opportunities. The earlier venture capital investors takes share in a growing business, the greater the return when they take profits, typically in a stock market flotation or a trade sale.

“It is a long shot but it is part of our early stage marketing efforts,” says Ben Goette, a partner at Armada Venture Capital Group.

by Valerie Thompson