Tenmile Managing Director Dr Steve Burnell says it is often overlooked that success in biotech rests not on the science alone, but on a company's capital structure and on whether its investors understand the full development pathway.
Biotech is, by its nature, a long-term endeavour characterised by patience. Its development timelines run to years and often decades, with costs and risks that remain high for most of that period. The trade-off is that when the science does come good, the impact can be substantial for both patients and the investors who backed it. But what tends to get overlooked is how much of that outcome rests not on the science alone, but on a company's capital structure, and on whether its investors understand the full development pathway.
The difficulty is that biotech development does not sit comfortably within the conventional venture capital model. Getting from early discovery to a commercially meaningful asset can take well over a decade, while many funds are built around shorter timelines. This structural gap between long-term value and short-term funding cycles shapes how companies are financed. It has very little to do with the company's underlying scientific potential.
The pattern that follows is reasonably consistent. Capital is rarely the binding constraint at the outset, but too little of it is typically reserved for Phase I and II, which is precisely where execution risk is highest and where careful de-risking adds the most value. Exits are too often timed to suit a fund's lifecycle, rather than the actual maturity of an asset. The cumulative effect is that genuinely promising programmes can stall or be sold well before their value has been properly realised.
The remedy requires discipline the current model doesn't always reward, and a change in mindset. Funding can be tied much more closely to defined technical and clinical milestones, so that each round buys measurable progress in de-risking. Round sizes, in turn, can be set by the actual cost of reaching those milestones, not by whatever happens to fit a fund's cycle, which often deepens a company's reliance on dilutive raises. Investors can also reserve a larger share of capital for follow-on rounds, so that backing is at its strongest at the very stages where it is most needed.
Deploying capital intelligently determines whether biotech's long-term value is realised or wasted. For founders and investors weighing where to commit, this is the consideration that matters most. There is no shortage of good science or good ideas; what is missing is a capital structure to support it all the way through. Venture capital that aligns its expectations with biotech’s inherent timelines and doesn’t force the science to fit a fund’s schedule is far more likely to unlock the sector’s unique long-term value.
