Venture capital? Some biotechs tap friends instead

By Sam Cage and Ben Hirschler

ZURICH/LONDON (Reuters) - It helps to have rich friends -- especially when you are running a biotechnology company in Europe.

As traditional sources of venture capital and public equity funding dry up in a global flight from risk, some young biotech firms are turning instead to an informal network of high net worth individuals.

Switzerland, with its clubby business environment and long history of drug research, is leading the way but rich private investors are also becoming a force in Germany.

Geneva-based NovImmune -- a specialist in developing drugs to treat autoimmune disease -- raised 58 million Swiss francs ($57.3 million) in just such a private financing round in 2006.

"It was initially a challenge, but no longer," NovImmune Chief Executive Jack Barbut told Reuters.

"We couldn't go and mix venture and high net worth individuals. We had to go either one way or the other way, so we explored both.

"And in the end -- to my surprise, and I think it was probably linked to what stage we had reached -- the attraction to the high net worth individual network was sufficiently compelling."

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