– Tania Fernandez, director, Burrill & Company, India
In a free-wheeling conversation with BioSpectrum,
Tania Fernandez, director, India, Burrill & Company, throws light
on the reasons for the firm not finding the right partner in India till
date, the challenges that overseas investment firms face in India; and
Burill & Co’s strategy for India.
is the fund allocation by Burill & Co for life sciences sector in
We do not have a set allocation for investments in the life sciences
space in India. Burrill & Co is a global firm, and we have a large
footprint, in both developed and emerging economies. We invest where
the best opportunities present themselves; and therefore, do not like
to limit ourselves by predetermining allocations to a country. Our deal
flow is global. Burrill has been eyeing India for a long time now, and
we have studied the life sciences landscape very intensely and
carefully. We are still looking for the right partner in India, for our
Burrill India Healthcare Fund. When that fund is up and running, the
fund worth `690-`920 crore ($150-$200 million) will be allocated to
India. Not having that fund in place, however, has not impacted us,
since we have continued to analyze the investment opportunities that
the Indian life sciences industry offers; and will continue to invest
in the region from our global funds. In terms of a portfolio, our
domain expertise is in the life sciences sector; and we have applied
the same model for all the regions we operate in. In India, it will be
no different. Life sciences, pharmaceutical, biotechnology, healthcare
and healthcare delivery, remain areas of top priority for us.
are the challenges faced by life sciences industry in terms of
financing and funding their initiatives?
The Indian venture capital (VC) industry has adopted a
late-stage/private equity (PE) investment model. Just take a snapshot
of deals that are being done today, or over the past two-three years.
They can, with some exceptions, be characterized in the same buckets:
generics, CRAMS offerings, pharmaceutical and hospital deals. So,
recognizing that next wave is important for sustainability of the
Indian life sciences industry, it is important that we are able to
groom our Indian life sciences companies. If not, we fall into the risk
of saturating ourselves with the shortsightedness of vision, and
capitalizing on the present exuberance, without building for the
future, and a time may come when we will be unpleasantly surprised. I
think entrepreneurs fall into a trap of taking whatever capital is
available. The life sciences industry is a very regulated industry.
There are a couple of great mid-tier companies that I have met with,
that have the potential to enter regulated markets. It takes more than
capital though, it takes having the right VCs around your table,
putting the right boards together, making sure you have the right
networks, building a business plan that is well thought of with long
The lack of early stage VC funds (and I would go even further to say VC
funds in general) is disheartening. There is no ecosystem that exists
today, where you can take a technology out of a university, form a
company around it; and then bring to the management team the kind of
expertise, that is required at each level of company maturation, right
to the point of exit. We, at Burrill, have fought that culture very
hard, and strongly advise entrepreneurs to spend more time with their
investors flushing out business plans. If all you are thinking about is
dilution, when you are raising funds, then the outcome is evident.
you see a change in the mindset among financial firms towards the
Yes, and I have commented on this earlier. There are also very few
formal angel networks, unlike in the US. I also do not believe the
situation will change, unless something is done at the government
level. I do give the Indian government credit for a number of
initiatives that they have put in place; but to exploit its full
potential, public-private partnerships may well be a solution. There is
progress, and one must always commend that progress. There is a change
in the mindset towards funding of the biotechnology industry, but, I
don’t think the change has been enough to rectify the fundamentals that
need to be changed.
have been many overseas firms looking at investing in India. However,
nothing concrete has happened. What do you think are the reasons?
Everyone has a different metric of success. To say nothing concrete has
happened may not be true.
India is challenging for the many reasons, but Burill & Co
continues to bet on India. It remains a region of high priority for the
firm. We are very big on cross-border (US-India) and technology
infusion. This is why, for example, we do not participate in hospital
deals. Our strength and our belief lies in the fact that it is
technology infusion and global business models that will drive the next
breed of companies. Our first cross-border investment “Bioimagene”,
while domiciled in the US, had started off, having India as an integral
component, exited within two years of investment. We would like to
carve a very unique niche in India—a fund that will invest in companies
that have India as an integral component of their business strategy;
and Indian companies that are seeking to build global business models.
We want to be careful in our investments. Over valued companies, lack
of realism in business plans, inability to focus on getting the right
kind of capital and sometimes even lack of transparency have
hampered direct investments.
strategic alliances and joint ventures with big-sized companies the
more feasible model for getting funds? What are the other models,
companies should explore?
The management of the company needs to focus on getting the right
capital. If strategic alliance and joint ventures are the way to go,
then companies should be encouraged to take that route. The questions
management need to ask themselves are: “Are we building a stand-alone
company, or a company whose business model is built on a partnership
model?” “Are we going to build a company that is going to dominate the
Indian/APAC/emerging markets, or will this be a company that can enter
regulated market?” Key questions like these will help management, to
search for the right source of capital.
Companies cannot bootstrap themselves to an exit. I think, a lot of
investors also come in with the mentality, not that they will take a
company right to the exit, but that at some point, they will sell to
another investor. This seems to be a favored mode of exit in India.
While understandable, since companies take so long to exit, having a
dedicated set of investors that will groom the company from start to
finish, is what is required.
My favorite story, when we were discussing capital in India, and Steve
asked me who my competition was, in terms of being able to procure a
proprietary deal, I had to tell him it was actually a real estate
developer. Without naming the company, here was an excellent technology
in India that needed to be groomed and nurtured with the right
investors. Very young blood, fresh into the company, decided it was
better to take money from a real estate developer rather than going
through the process of extreme due diligence. A year from that raise,
the gentleman was back with none of the raise having gone to getting to
a value inflexion point. Grooming life sciences companies requires a
lot of discipline, and a lot of rigor. There sure is no easy way out.
And if you are in it, it is a grind from start to finish; but the
journey made with the right team, is a journey to remember.