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Looks like venture investors aren’t too bothered by the gyrating life sciences markets

“I’m a skeptic of public market valuations, but a true believer in biotechnology,” said Hans Hinrichs, managing director of Silicon Valley Bank’s Life Sciences and Healthcare Group. “We’re probably sitting on the biggest opportunity in the history of investment.”

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A cadre of venture investors speaking on a panel at this week’s INVEST conference in Chicago aren’t particularly concerned about the gyrations in the life sciences public markets. Venture capital remains fairly agnostic of the troughs and peaks of the stock market, and life sciences investment will likely continue on at a strong pace, they said – largely because of the quality of the science.

“I’m a skeptic of public market valuations, but a true believer in biotechnology,” said Hans Hinrichs, managing director of Silicon Valley Bank‘s Life Sciences and Healthcare Group. “We’re probably sitting on the biggest opportunity in the history of investment.”

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We’re in the midst of a rebalancing of the market, he said, but rebalancing doesn’t invalidate the core technologies at play. After all, of the Of course, the valuations still remain a touch too high – though they’re getting lower from last year’s peak.

“On the strategic side, it’s the valuations that have been a little concerning – but it’s not dissuading us from investing, because the science is there,” said Margarita Chavez, senior director of investments at AbbVie.

There’s of course much more caution around life sciences companies going public these days, because the pricing is more constrained. There are a lot more negotiations required to take a company public these days, and more reticence from the generalist investors.

“But it’s not armageddon by any means – things are still healthy, and there’s still opportunity for really great companies to come out,” said Colin Cahill, vice president of Venrock. “But it’s definitely a more measured environment than it was before.”

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The current markets only really impact companies right on the verge of filing for an initial public offering, Cahill said – because this financing winds up being a short term decision.

“For most folks that are earlier – Series A, B, C, D investment stages – this is a longterm game,” Cahill said. “The longterm financing strategy is driven by raising capital and value creation – and tying those together to make it work.”

Just a few years ago, after all, there was barely an IPO market at all in the life sciences. The idea of launching a company and going public within two years was practically unheard of – but in the last few years, the potential arose to move really quickly. This caused high interim prices for early stage assets.

“Maybe private markets are pulling back more slowly than you would expect,” Cahill said. “But I think for two years, we were really running. And if you look at the indexes from five years ago, we’re still way above where we were five years ago.”