“Companies have been kept on a very short leash”

Jane Fisken of DrKC argues that European investors are getting better at providing companies with enough cash to concentrate on growing their businesses.

Jane Fisken leads Dresdner Kleinwort Capital’s investment effort in life sciences, which currently is by far the most dynamic sector in international venture capital.

Currently on the road raising a new fund, Fisken knows that investors have seen their fair share of biotechnology funds knocking on their doors recently. She estimates that around $10bn has been raised in the US and Europe over the past three years for investment, but insists that this is not an indication that the sector may be overheating.

'There is still a significant funding gap', she says. To illustrate why, Fisken applies some 'conservative' arithmetic that assumes that there are currently around 3,000 private life sciences companies in the world with an average cash burn rate of $1m. The corresponding total of $3bn would be in excess of what venture capitalists invested in 2001.

Fisken also points to the research efforts undertaken by the large pharmaceutical companies: 'Pfizer invested $4.8bn in R&D last year alone, twice as much as has been invested by the venture base.'

She accepts that the US market may be getting 'a little crowded', but sees Europe and Asia as having a lot of untapped potential. She says it is vital that Europe in particular should catch up with the American market, which in 2000, despite a record year for funding in Europe, still remained more than five times the size of the European market. A more level playing field will make a substantial difference to the competitive position of European companies, she says.

What growing businesses should also be benefiting is a change in attitude on the part of investors towards funding young companies in Europe. Fisken says that in the past, companies have been kept on a very short leash, particularly in the UK. 'Investors have been very cautious and kept companies on a drip-feed financing. Anyone that’s ever helped a company raise money knows how distracting this can be from managing the business', she says. Now there is a growing recognition that it is better to give companies enough money to be able to concentrate on maximising the commercial value of their technology rather than having to come back to the market every 12 to 18 months.

Fisken has experience in working in the industry and managing international cancer clinical trials herself and thus has a good handle on the benefits that such changes will yield for entrepreneurs.

Having begun her finance career as a pharmaceuticals analyst at Williams De Broë and Dresdner Kleinwort Benson, Fisken was among the first specialised biotech analysts in Europe. She then spent some time working on the buy side. In 1996 she help British Biotech with its biggest right issue which raised £150m. In 1998, when public equities were out of favour, Fisken saw an opportunity in private equity and changed sides once more.

In 2001, her life science team participated in four of the ten largest funding rounds for European companies, including the $47m financing for Cyclacel, the Dundee-based specialist in therapeutics based on cell cycle control.