While getting funding from a star investor can be great for business, many biotech entrepreneurs dread the possibility of investors taking control in a situation that eerily resembles a hostile takeover. But it needn’t be that way at all.
Biotech founders often complain that investors, especially VCs, demand too much control over company operations. This happens particularly at the early stages of development, and companies in these situations tend to become more independent as they mature, for example, at the point of doing an IPO.
Many investment firms push for placing one of its partners on the company’s board. Others also place an entrepreneur-in-residence as a representative in their portfolio companies. An example is Boston-based Third Rock and Arch Ventures, which often builds companies from scratch, pitching business ideas to scientists even before the prospective founders have fully articulated them themselves.
On the opposite side of the spectrum are business angels and family offices, who typically will not interfere with operations at all. The catch is that they won’t offer much help,