A couple of weeks ago an intriguing tweet from Bruce Booth caught my attention:
I decided to read the referred article from STAT, where I found an interesting fact:
Y Combinator said that 25 percent of the 142 startups in this year’s summer class are working on biology — up from none at all in 2010. That’s a category that includes the usual mix of health care diagnostics, therapeutics, devices, tools, and technology, as well as food tech, agricultural tech, and industrial biology.
Y Combinator’s move toward biology is one of the more high-profile examples of a trend that’s increasingly sweeping Silicon Valley: tech investors looking to biology in search of disruption and, someday, a return on their investment.
At Demo Day, most of the pitches were only a little bit more in-depth than the ones featured on the CNBC show “Shark Tank.”
So here we are, with biotech startups carving out an increasing share of the startup industry, while the explanations of the science are increasingly dumbed down, which is also understandable given the complexity of modern biotechnology.
What this means is that an increasing number of startups will be looking for financing from investors who don't have the expertise to dissect the investment opportunities and 'separate the wheat from the chaff', since this is no longer a small niche but a major industry segment.
But wait, there's more! According to this article,
US SEC chairman wants more main street investors to invest in private companies
I'm all for the retail investors having the same opportunities as the 'big guys' for investing in disrupting science and reaping the rewards. And I don't buy "protecting the retail investors" as the main argument for having a separate class of 'Accredited investors'. Lack of money doesn't mean lack of brains, and vice versa. With some safeguards in place (mainly around dishonest marketing), everyone could enjoy this regardless of how much money they have. Even professionals and accredited investors can get ripped off, as history shows.
But although I praise equal opportunities for investing, the truth is that few retail investors (and even many VCs and other professional/institutional investors) don't have the expertise or resources to understand the advanced scientific concepts behind some startups. Do we have a perfect storm brewing where a liberalized startup investing market comes crashing down due to poorly made investments and causes a drastic tightening in regulations a few years later? Knee-jerk regulation is a hallmark of any government, and we certainly don't want this to happen. We believe Avogadro One will be a perfect solution to avoid a disaster, helping investors, big and small, to navigate the complexities of science-based startups. Sign up here to get notified when we go live!