Many VCs have lost interest in early-stage investing, but angels - individuals who invest their own money alone or in groups - are stepping up to fill the gap. Angels are an especially good fit for for biotech start-ups that don't want to cede control of their companies to VCs too early, if at all. In addition to bringing valuable cash, angels put less pressure on start-ups to achieve an exit within a given time frame than traditional venture investors, and are more willing to accept buyers that may not be the highest bidders but will nevertheless be good stewards for their assets. For their part, companies looking to angels must understand the goals of their potential backers, since these financiers are often motivated by philanthropy and personal interest in a disease.
When oncology biotech start-up Karyopharm Therapeutics Inc. began its search for Series A investors in
the summer of 2010, the young company's founders expected to take
the traditional route of assembling a venture capital syndicate,
with one early-stage firm adopting the lead and soliciting others
to fill out the round. Given Karoypharm's lofty goal of raising
double-digit millions, the start-up anticipated a complicated and
potentially arduous process that could take months.
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