Where are the VCs on stem cell research?
November 6, 2006
In 2001 President Bush opened the flood gates and allowed government funding of stem cell research to the tune of $250MM per year ($1.25B to date). Prior to that there was no federal funding of stem cell research. The only thing we have learned is that spending $1.25 billion on stem cell research doesn’t necessarily create a business opportunity. Less than $40MM has been invested by venture capitalists in stem cell related business ventures since 2001. There just isn’t a business case for investment in the stem cell space. What do VCs know that the Bush administration can’t seem to figure out?
Now the talk in Congress is that MORE federal dollars need to be pumped into stem cell research. This is despite a lack of private investment and wide social and practical criticism. In fact, some criticism has even come from researchers themselves.
For example, in November 2004, Princeton University president and geneticist Shirley Tilghman said, “Some of the public pronouncements in the field of stem-cell research come close to overpromising at best and delusional fantasizing at worst.”[13] Similarly, fertility expert and current president of the British Association for the Advancement of Science, Lord Winston has warned of a public backlash against stem cell research if it fails to deliver on some of the “hype” surrounding potential treatments.[14]
Arnold Shwarzenegger’s Prop 71 earmarks $3 billion for stem cell research that has created an interest in stem cell research companies like Advanced Cell Technology who might be the recipient of a good portion of that $3 billion. The business opportunity IS access to cash from California’s taxpayers ~ not the research which according to Kristen Philipkoski, “the science is promising, no one has proven yet that embryonic stem cells will lead to blockbuster therapies.” Hopefully the American taxpayers won’t create stem cell business opportunities for the private equity community, lets get them to use their own money to do the research…
