There's a problem in the venture capital world. The amount of venture funding flowing into startups has been reduced by the financial crisis, but VCs are still looking to make money off new technology businesses. Biotech is another story. A mobile application or social networking website can turn to gold far quicker than a biomedical play.
"[Information] technology has faster exits than biomedical," said Dr. Jacob Levin, Assistant Vice Chancellor of Research Development at the UC Irvine Medical Center. "The burden of the FDA approval process isn't there. It can take eight years to get a new technology or treatment approved."
According to Levin, the dreaded "valley of death" — the point at which a startup moves from early stage funding to more serious investment, commercialization, and revenue — for biomedical is "expanding." This is a major challenge in Southern California, where biotech is often viewed as the region's answer to Silicon Valley's tech juggernaut.
An interesting comment came out of Gov. Jerry Brown's biotech mini-summit in San Diego yesterday, where he predicted that he'd be able to win over enough Republicans in the next three days to pass his "jobs-and-taxes proposal." This is from the LA Times PolitiCal blog:
"We all know this economy is not going to self-correct," said David Gollaher, president and chief executive of the California Healthcare Institute, a trade group for the biomedical industry. "San Diego and the U.S., we have the talent ... but it's going to take creativity on the part of our political leaders."
Actually, given enough time, the economy — nationally and regionally — will self-correct. The problem is that the nature of the financial crisis and its aftermath would drag out the process so much that the American Way of Life would be completely changed. We've endured what economists call a "balance sheet recession," in which businesses and consumers have to reorganize, renegotiate and rid themselves of debt. That's why we have such high unemployment. That's why why the stock market is so unstable. That why the yield on 10-year treasuries is below 2 percent. Everyone is too busy dealing with the debt orgy of the past 30 years to be able to concentrate on reviving demand.