Irina Haivas, recently promoted to Partner at Atomico, has a big vision for the future of biology … [+]
As Europe’s deep tech startup ecosystem grows into a new decade, the investment to match the potential must be available, and VCs must catch up – says Atomico’s Irina Haivas.
In a new manifesto released this morning, titled “Where biology and tech unite: Atomico’s take on building a Biology 2.0 company”, Haivas argues that “one of the greatest opportunities of our century” lies in what she terms “Biology 2.0”: applying engineering and computer science principles and tools to biological problems.
The manifesto comes alongside the announcement of Haivas’s promotion to Partner, following her lead of Atomico investments in Healx, AccuRx and Kherion Medical, putting a firmer life science stake in the ground at the London-based VC.
But laying out a manifesto isn’t just about announcing a VC call for so-called Biology 2.0 startups; Haivas has bigger ideas about how to inject enthusiasm, investment and bigger thinking into the European biotech sector.
“Europe doesn’t have a ‘Silicon Valley’, it’s more distributed…and that’s both an opportunity and a challenge, ” Haivas says in an exclusive interview with Forbes. And she’s right. According to a report launched yesterday by Tech Nation, the UK alone has several major tech hubs that measure up to some of Europe’s capitals, with Manchester and Dublin not far behind Amsterdam and Paris in investment per capita. There are many places for European startups to build a healthy company.
The challenge for Biology 2.0 startups though, is that this distribution doesn’t always make for a united enthusiasm and understanding around their potential opportunity. The manifesto then, for Haivas, is a reflection of the reality of that opportunity, and an effort to impact talent and downstream funds to step up: “We’re just surfacing it – it’s already happening,” she says.
Indeed, with later stage funding being a well-known gap for life science entrepreneurs in Europe, prompting many to switch to US and Asian investors as they scale, Haivas hopes that having the large well-respected earlier-stage funds in Europe point their noses deliberately and expertly at Biology 2.0, it will create excitement and “realness” about what it takes to start a business in this space. “We’re trying to educate that part of the funding ecosystem,” she says. “There’s a mismatch between the entrepreneurs and the investors, the entrepreneurs are ahead; they know it’s an opportunity. The VCs are now catching up.”
The worry with these kind of loud manifestos coming from respected VCs (Andreessen Horowitz having released a similar document last year), is that hype can easily spur “bandwagon investors” who are less expert and more driven by FOMO mentality. You only have to look at the story of Theranos to see what happens when investors are taken in by a personality, a “world-changing idea” and a blinding by what looks like fancy science. Deep tech is not an easy field to play in.
The question therefore to Haivas: is putting out these kinds of manifestos irresponsibly hype-inducing?
“I don’t know how you avoid that phase of over-hype, before people become more realistic and cautious…but you can’t just be opportunistic in this space,” she says. “It’s not that trivial.”
Her choice of wording: “Biology 2.0”, does seem to take the “biotech” term and separate it from the Silicon Roundabout crowd. Instead of it being another vertical duly named by crudely gluing “tech” onto half an industry (“fintech”, “insurtech”, “proptech”), Biology 2.0 has an air of seriousness and conviction.
It makes sense, considering the fact that creating a digital startup is nothing like creating a deep tech startup, an important fact which lays at the root of the worry around deep tech hype in the London VC crowd.
Haivas is keenly aware of the skill and experience required to build and fund these companies, however. “You have to be extra creative; you have much more complexity in building these businesses,” Haivas says. “You need quite a deep expertise…you need long-term thinking.”
Long-term thinking, though, isn’t always in the strategy of the venture capitalist. In fact, the “short-termism”, low-risk appetite and pressure for fast growth which VCs project onto their portfolio companies is often the complaint deep tech startups have about the availability of relevant funding in Europe.
“I don’t think VCs should fund research with a limited amount of validation; they can come in when there is a business to be formed,” Haivas argues. “When you need to turn from research to business; that’s when a VC makes sense.” It ties in then, with her vision of prompting those downstream investors, or even alternative forms of investment, by “stepping up” somewhat.
Speaking of visions, the promise of Biology 2.0: a world where engineering biology results in new forms of food, medicines and materials, kinder to both people and planet, can only really be realised if investors do indeed jump in for the long haul, even once the research has been spun out into a business. Changing the world happens neither overnight nor in five-to-ten-year return cycles.
Except, of course, if the IP-factory approach of traditional biotech companies continues into this new era; where startups develop the early stages of a drug, and exit for huge sums by selling the IP, or the company as a whole, to a pharmaceutical giant. There’s a strong argument to be made that we don’t need more of these kinds of companies, especially those creating drugs or medical devices which only provide an incremental-shift in treatment efficacy yet can make pharmaceuticals huge profits in sales post-FDA approval. There’s an argument to be made that, instead, we need companies willing to build long-term value. Selling early to larger companies – often to satisfy investor pressure – which may not continue any kind of social mission initially embedded in the startup, means putting aside any kind of Biology 2.0 vision, and continuing with the status quo.
Opening up this world, and the financial opportunity, to quick-buck VCs who don’t share Haivas’ vision, could simply exacerbate the issue. Outside of life sciences, you only have to look at Felix Capital’s latest fundraise announced yesterday, the London-based VC which backs pseudoscience outfit Goop, to see that extra money into a system doesn’t always mean good money going into a system.
For Haivas, though, it’s about ensuring Atomico focuses on building these European companies of value: “we are looking for founders who are not just looking for an opportunity to sell,” she states.
Haivas is optimistic, and sees the hype in this space as both warranted and positive if Europe is to realise its potential in the future of the life sciences. Success in working towards that bigger vision can only breed confidence in others to work towards that harder, but more socially conscious, goal.
“I’m from Romania, and after UiPath, all the VCs are talking about the impact on people’s belief that they can do something bigger.”
“We need the first big European Biology 2.0 company.”