The buzz and excitement at JPM might well have been from another era. On Tuesday, the second and final day of of the Investival Showcase USA in Miami, the mood was decidedly glum when it came to raising capital.
From early stage investors to private equity experts and operators, the only question was how to survive the current funding environment. Investors have an appetite for risk but generally prefer market certainty. They can pay for disruption as long as markets are not disruptive. And that has precisely what has shifted markedly in the past two months. U.S. stocks suffered their worst day in 2025 on Monday with the Dow dropping 900 points. Add to that the news about broad research cuts at the NIH — including it cutting $250 million in funding to just one U.S. university — two deaths from the West Texas measles outbreak in individuals that were not vaccinated, a tariff war of words, job cuts at the VA and Health and Human Services. All of this has created an environment of unprecedented chaos.
And yet, ideas will still need to find capital and innovation must continue. So what do you do in such a world?
Get creative
Mary Schaheen, president at Prevail Partners, said that companies have to look for alternative ways to find capital given that later stage startups are going to find the IPO markets fairly closed, though she hopes the IPO market will rebound at the end of the year or early next year.
“We do a lot of matching funds ourselves. We have the states stepping up. We just talked to a company who has got a million dollars committed by the state of Delaware and they want us to match it, which we will gladly do,” Schaheen said. “It’s all kinds of interesting ways to keep it going….”
So, how has the IPO market fared in the last few years? Andrew Lam, managing director and Head of Biotech Private Equity at Ally Bridge Group, said that we are in a kind of “IPO nuclear winter” The 10-year median for biotech IPOs is 35. In 2020 and 2021 it was 75 each; 2021 had 10, 2022 had another 10 IPOs as did 2023. Then in 2024 there were 17 IPOs and 2025 is projected to be only slightly better than 2024.
“The bankers tell me they expect to close the year at 25 given the macro weakness,” Lam said. “I’m skeptical that we’ll get to that number, but we are still very much in the cleansing periods after the heydays of 2020, 2021.”
Crowdfunding
Another creative path — other than looking to states to get funds — is to seek help from the average consumer.
“If I were a small company now, a private company looking for $4 to $10 million, I’d be looking very seriously at crowdfunding,” said Jeff Luber, CEO of Clarity.
As soon as someone laughed in the audience, Luber shot back, “It’s no joke. Good luck trying to raise $5 million from an investor as a pre-revenue startup right now. I’d rather do it $500 at a time and then you can go raise up to $75 million through Reg A plus.”
He explained that through Reg CF (crowdfunding) from the SEC, companies can raise up to $5 million without any filings. However, SEC does require an annual report from companies engaging in crowdfunding. Reg A+ is an alternative to an IPO and is an exemption that allows small companies to sell their shares, making it possible for almost anyone to invest in a business through crowdfunding. In other words, companies can use the Reg A + to raise money from both accredited and non-accredited investors.
Reach out to incubators
An investor with AbbVie pointed to incubators as a great starting point noting for entrepreneurs. Doug Faunce, executive director, head of search and evaluation for eye care, named incubators Mission Bio Capital, BioLabs, and SoCal Bio as incubators worthwhile for entrepreneurs to reach out to. He added that incubators are a way for entrepreneurs to begin to “get that early network” that will ultimately help in getting funding.
As a large strategic investor, Faunce also had some advice on how to engage with AbbVie Ventures.
“Don’t be afraid to connect with us early. A lot of folks think, ‘Well, I’m too early, maybe I don’t want to share yet.’ Share. Openly. Early. Often. We take your information and your data as seriously as we take our own. The earlier that we can build that relationship on your journey to search and establish that first funding is all the better.”
Have a commercial and clinical development plan
It’s not just enough to have a regulatory plan for success. Startups need to have a commercial as well as clinical development plan. according to Peter Bojo, principal at TPG Life Sciences.
“It’s not just all about getting through regulatory milestones, but you can start to think about commercially how is this going to be positioned,” Bojo said.
Photo: bayhayalet, Getty Images
