Why the West Coast Might Win Biotech (But Probably Not)
I want to make a compelling case for why I think West Coast venture capital firms actually have a chance to win in biotech. It's well agreed upon that we're currently in a biotech winter. This involves a shortage of funding, both public and private.
This presents a uniquely interesting opportunity for the next generation of biotech companies to be seeded by the West Coast venture capital firms.
First, we ought to define what West Coast VCs are.
Who am I defining as West Coast VCs?
There are probably thousands of venture capital firms in San Francisco and the Bay Area. Thus, there is a large amount of diversity in terms of verticals. There are plenty of biotech and healthcare-focused venture capital firms in these regions. Yet, when people think of biotech, they commonly think of Boston and Cambridge. The Harvard and MIT ecosystem, associated with several hospitals and research institutes, has been able to supercharge biotech and life sciences innovation for the past few decades.
Along with this, a plethora of venture capital firms focused on biotech and healthcare with specialist PhDs and MDs have populated Boston and the greater East Coast. VCs like Flagship, RA Capital, Third Rock, 5AM are pretty notable.
What I define as "West Coast VCs" include two categories:
- Generalists like a16 who invest broadly but within their a16z bio + health portfolio have a preference for techbio and healthcare AI.
- The YCs etc.
I'm not including the biotech specialists over in SF. They fit my definition of East Coast VCs.
Ok, now onto the substance.
Why biotech is becoming like tech
The conventional wisdom in biotech investing has long favored a playbook centered on discrete asset development: identify a promising molecule or therapy, de-risk it through preclinical and clinical trials, and then either sell it to big pharma or shepherd it through to market. This model often prioritizes expert management and clinical execution over scientific founder vision.
The rise of platform biotech from ML-driven discovery to programmable cell therapies is growing in terms of % of funded co's. These companies aren't asset plays where you can swap in a CEO after a Series A.
The typical argument against founder-led biotech goes like this: "They’re brilliant scientists but don’t know how to run companies."
This is lazy thinking. When biotech VCs replace founders with "professional operators," (especially those without advanced technical degrees) they often kill the very things that made the startup interesting.
Founder-CEOs, by virtue of their substantial equity stake and intellectual ownership, are also inherently more bought-in and accountable. This contrasts sharply with the often-observed phenomenon of decades-old biotech companies chugging along, losing $50M/quarter with seemingly no pressure on the "professional operator" founder to genuinely perform. At least with techbio companies like Ginkgo Bioworks, you see the founder actively trying to adapt, throw new strategies against the wall, and openly grappling with the challenges, rather than coasting on a mid-seven-figure compensation package.
All these random thoughts led me to a thesis:
What if West Coast VCs with deep pockets (due to huge funds they raised from tech) can lean into founder-led science and beat traditional East Coast shops to the best deals.
East Coast VCs lean PE and don't back as early
During a funding drought, capital is king. West Coast VCs, having raised colossal funds from the tech (and AI) boom(s), possess a distinct advantage: a much larger war chest and, crucially, a longer time horizon for returns.
Unlike many traditional biotech funds that operate with a more private equity-like mindset, West Coast generalist funds are accustomed to the long, often winding path of technology development. They don't understand the science (and that's clear - most of their bio/HC portfolios are really bad & run by partners with no scientific or technical background who don't understand biotech well). BUT, they understand that biotech takes time, multiple funding rounds, and patience.
This is extremely attractive during the so-called "winter." Their ability to deploy significant capital early, even into highly technical and seemingly nebulous "platform" plays, allows them to anchor rounds and secure the best valuations when other funds are hesitant.
Furthermore, their inherent comfort with highly technical, often academic founders, and their willingness to back companies before a clear product-market fit (or even a clear therapeutic asset) emerges, aligns perfectly with the nascent stages of platform biotech. They value the intellectual property of the founder's mind and are less inclined to immediately parachute in a seasoned CEO.
How West Coast VCs can "win" and start excluding East Coast/trad partners
While traditional East Coast firms are accustomed to evaluating companies with established preclinical data packages, West Coast VCs can leverage their tech-investing DNA to fund founders and ideas at the "pre-company" stage.
It's become common in AI to even fund pre-idea teams just based on their technical merits etc. This is a bit questionable (the execution sucks - west coast VCs just spam fund Stanford "dropouts" who fraud and never had a strong intention to build a great company) sometimes, but the idea theoretically makes sense.
This involves actively scouting brilliant postdocs and principal investigators directly from academic labs, offering them not just capital but a partnership to build a company from scratch.
By the time the company is mature enough to even appear on an East Coast VC's radar for a Series A, the West Coast firm is already deeply entrenched as a founding partner, has shaped the cap table, and has aligned the company's long-term strategy around a founder-led, platform-first ethos. The West Coast VCs can then push out East Coast PE-style funding on the future rounds, maintaining a huge presence on the cap tables.
Conclusion
So, am I saying this is a sure thing and the West Coast is gonna crush it?
Absolutely not. I know how this sounds, and a lot of people will rightly point out that these generalist VCs have made some pretty bad bio investments. But you just can't ignore the setup.
Capital is king rn and bio is turning into an engineering problem. The best founders want to be treated like founders, not like disposable assets (I'm here at Harvard surrounded by some genius soon-to-be biotech founders).
It's less of a hot take and more of an observation. It just seems like a legit possibility. Curious what people think!