Venture Financing: Is China the answer? 
Posted by Carlos on Aug 07, 2012

As we read the continuing bad news regarding venture financing in biotech, we came across this bit of news from the UK:

BioCity Nottingham-based CompanDX Limited, the Nottingham Trent University spinout applying novel bio-informatics technology to the issues of personalised medicine, is pleased to announce the raising of 39,600,000 Renminbi (CN¥) for development of products in China…‘Investors’ gain a proportion of downstream revenue from successful products sold in China, rather than equity in the company. Pace of product development is also enhanced in China with work accelerated in comparison to UK and US markets by the nature of the regulatory regime, and the willingness of major regional Science Parks to provide funding for accelerated development for products relevant to the Chinese marketplace…

This is quite interesting, on two main levels:

1. It’s non-dilutive financing. In fact, it sounds like investors are getting a Royalty on sales.

2. It enables product development in a lower-cost environment, with a keen eye towards Western markets.

We’ve discussed this model in the past, at least internally. It’s good to see at least one company actually executing it.

Please let us know if there are others!

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