In the “Funding Success Stories” panel, Alex Wu, CEO of Crown Biosciences, shared his nontypical path to success. “Most U.S. VCs don’t invest in service companies because they view service as low margin and low multiple business. On the contrary, Chinese VCs and U.S./European VCs with China presence look to service companies with revenue as the prime target for attractive investment.”
Many Chinese CRO companies try to expand their services beyond their core areas of expertise by M&A or organic growth. Crown Biosciences chose to stick to its niche, where it has its best capabilities: oncology preclinical services, a substantial and growing sector with strong demand for specialized service.
Acorn Campus Ventures was among Crown’s early investors. Hambrecht Suma Capital and China Renaissance Capital Investment invested in Crown’s series B round, which closed in July 2008. Karen Liu, vice president of China Renaissance Capital Investment commented about things to look for in an investment deal.
“Companies with strong differentiating advantages in their technology, market, and/or business model are of great interest to us.” On investing in Crown Bio, “it was one of a few leading companies focusing on biology and translational research,” Liu continued.
At the time of the conference, a number of Chinese early-stage companies were in term-sheet negotiations with VCs, while here in the U.S., the picture for start-ups is much bleaker and investors are sitting on the sideline as the global economy goes down the drain.