Startups run dry: the numbers speak

I wrote here about a potential entrepreneurial freeze in the biotech and pharmaceutical world, and it appears to be underway. Take a look at the figures for IPOs in the area (and thanks to the Wall Street Journal's Health Blog for pointing these out). Last year was the worst year for taking a biotech company public since at least 1996 (there was one IPO) and it's hard to imagine that 2009 will be much better.


And existing companies are running low on funds as well. According to Burrill & Co., there are about 360 publicly traded biotech firms, and at the end of 2008, 120 of them had less than six months of cash left at current burn rates. Again, it's hard to see how those figures are going to look any better as the year goes on. It's just not an environment in which many investors feel like reaching into their pockets to help out startups. The benificiaries of all this will be the companies that auction off used lab equipment - that is, if anyone's in the mood to buy it.

So here we have the flip side of the 1999-2000 period, when all sorts of inadequate business plans found themselves floating upwards on bubbling geysers of cash. I have to say, neither excess is very appealing. There were a lot of idiotic valuations back then, but I'd rather see some money being wasted in the tech sector than seeing nothing spent at all. There's going to be a deep notch cut into the ranks of new companies by the current crisis, and we're going to be seeing it for years to come. 

Presented by

Derek Lowe

Derek Lowe is a drug discovery chemist with 20 years of experience in the pharmaceutical industry, which is still very much his day job. He's worked on projects targeted at Alzheimer's, cancer, diabetes, infectious diseases, and other areas, but like most discovery scientists in the business, he has yet to produce a marketed drug. Explaining how and why this happens is what led to the launch of his blog, "In the Pipeline", in 2002, and the explaining continues. . .

How a Psychedelic Masterpiece Is Made

A short documentary about Bruce Riley, an artist who paints abstract wonders with poured resin

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register with Disqus.

Please note that The Atlantic's account system is separate from our commenting system. To log in or register with The Atlantic, use the Sign In button at the top of every page.

blog comments powered by Disqus

Video

How a Psychedelic Masterpiece Is Made

A short documentary about Bruce Riley, an artist who paints abstract wonders with poured resin

Videos

Why Is Google Making Skin?

Hidden away on Google’s campus, doctors are changing the way people think about health.

Video

How to Build a Tornado

A Canadian inventor believes his tornado machine could solve the world's energy crisis.

Video

A New York City Minute, Frozen in Time

This short film takes you on a whirling tour of the Big Apple

Video

What Happened to the Milky Way?

Light pollution has taken away our ability to see the stars. Can we save the night sky?

More in Business

Just In