The Sixth Biotech CFO Summit Calls on Policymakers to Improve Investment Conditions in Germany
Angela Merkel has announced an investment grant to finance young innovative companies. OECD Secretary-General Angel Gurría has called for growth in Germany to be strengthened by tax credits for research and development (R&D). And Christian Linder, who was the FDP’s spokesperson on technology policy until recently, and his counterpart from the CDU, Heinz Riesenhuber, have set up a new initiative for tax incentives for R&D. However, these promising signals from policymakers must now be followed up by concrete action in order to safeguard the financing of biotechnological innovations by venture capital. It is not enough to only support business angels by providing investment grants. Instead, the availability of venture capital to innovative entrepreneurs must be improved across the board. Apart from abolishing tax discrimination, this also includes an appropriate form of risk partnership, for instance through the provision of fiscal support to companies or their investors. This conclusion was reached at a panel discussion held at this year’s sixth biotech CFO Summit, which was organised by BIO Deutschland and took place in Frankfurt am Main at the end of March.
The summit was attended by some 80 financial experts. Discussion focused on the current data on the financing of innovations: in 2011, only around 141 million euro of new capital went to German biotechnology companies, in comparison with 650 million euro the previous year. This year’s CFO Summit agenda also covered new developments in the financing environment, the path to profitability, and cooperation and scientific expertise as a tool to safeguard and acquire capital for R&D activities.
“Innovative biotechnology companies rely on venture capital from private investors, as banks will not lend to them. This means that it is all the more important that innovation-friendly conditions safeguard the hitherto constant flow of products for fields including health, environmental protection and energy supply,” underlined Jan Schmidt-Brand, a member of the board of BIO Deutschland and co-chairperson of BIO Deutschland’s Working Group on Finance and Taxation.
Dirk Honold, co-chairperson of the working group and a co-organiser of the summit, called on the Federal Government to provide specific incentives for investments in R&D in the form of a new tax policy rather than discriminating against such investments in small and medium-sized enterprises (SMEs). “It is innovative SMEs that safeguard Germany’s position as an economic location in the long term,” he added. Honold said that equity capital investors must be specifically encouraged to invest directly or indirectly in innovative companies via options for loss carry-forward not based on revenue in order to make sustainable and reliable venture capital financing possible once again. He explained that loss carry-forward should not continue to be made difficult or impossible for SMEs that conduct research, as this disrupts market equilibrium by lowering the business valuations.
This year’s event was generously supported by Deutsche Bank as the platinum sponsor and by the gold sponsors CMS Hasche Sigle and KPMG, the silver sponsors Kaye Scholer und MIG Fonds, and the regional partner Hessen-Biotech.
The programme of the CFO Summit is available in German at: www.biodeutschland.org/files/tlf_content/veranstaltungen/2012/CFO-Gipfel/CFO-Gipfel_2012_Programm_final.pdf