Technology

For people who make investment decisions based on revenues and projected earnings, biotech IPOs are kind of a non-starter. Not only are new market entrants universally unprofitable, most have zero revenue. Going public is mostly a means to raise money for clinical trials, with red ink expected for years to come.

That pattern may be one reason the venture capital press,Crunchbase Newsincluded, tends to devote a disproportionately small portion of coverage to biotech IPOs. Itmore exciting to watch a big-name internet companypopin first-day trading orpoke funat an underperforming dud.

But with our fixation on all things tech, we&re missing out on the big picture. There are actually a lot more biotech and healthcare startup IPOs than tech offerings. In the second quarter of this year, for instance, at least 16 U.S. venture-backed biotech and healthcare companies went public, compared to just 11 tech startups. In three of the past four years, bio offerings outnumbered tech IPOs, according to Crunchbase data.

In the following analysis, we attempt to get up to speed on the pace of biotech offerings, assess where we are in the cycle and spotlight some of the rising stars.

Biotech outpaces tech

As mentioned above, U.S. bio IPOs outnumber tech offerings in most years. However, the bio cohort raises less total capital, partly because the largest technology IPOs tend to be much bigger than the largest bio IPOs. In the chart below, we compare the two sectors over the past four years.

Globally, the numbers are much higher. Using Crunchbase data, we&ve put together a chart looking at global VC-backed biotech and healthcare IPOs over the past four years. While we&re just over halfway through 2018, biotech and health IPOs have already raised more money than in any of the prior three full calendar years.

Fundamentals driven, cycle amplified

Itpretty clear we&re in an upcycle for all things startup-related. VCs are flush with cash, late-stage rounds are ballooning in size and IPO and M-A action is picking up, too.

So what does that mean for bio IPOs Is the uptick in the pace and size of offerings mostly a result of bullish market conditions Or is the current slate of pre-IPO candidates more compelling than in the past

We turned to Bob Nelsen, co-founder ofARCH Venture Partners, one of the top-performing biotech investors, for his take, which is that ita &fundamentals driven, cycle amplified& IPO boomlet.

More companies are launching well-received IPOs because the pace of startup innovation is faster than in the past. Nelson calls it &the result of the previous 30 years of investment and innovation in biotech that has finally led to essentially data-driven innovation.& Thatleading to more curative treatments, disease-modifying therapies and preventative technologies.

Yet we&re also in a bullish segment of the market cycle for biotech. Thatprompting companies that might have stayed private under other conditions to give going public a shot. Italso providing bigger outcomes for emerging companies that were already on the IPO track.

The latest example of a big outcome IPO isRubius Therapeutics, which develops drugs based on genetically engineered red blood cells. This week, the five-year-old company raised $241 million at an initial valuation of over $2 billion, making it the largest bio offering of 2018. The Cambridge, Mass. company, which previously raised nearly a quarter-billion-dollars in venture funding, is still in the pre-clinical trial phase.

This year has delivered several other good-sized offerings as well, including drug developersEidos TherapeuticsandHomology Medicines, recently valued around $800 million each, along withTricida, valued around $1.2 billion. (See the full list of 2018 global bio and health offeringshere.)

As for aftermarket performance, thatbeen up and down, but includes some big ups. Last year, biotech led the pack for best-performing IPOs on U.S. exchanges. The sector accounted for four of the six top spots, according to Renaissance Capital, led by drug developersAnaptysBio,Argenx andUroGen, along withCalyxt, an agbio startup.

Looking ahead

While things are already up, bio VCs, generally an optimistic bunch, see several reasons why bio IPOs could go higher.

Nelson points to what he sees as the lagging pace of in-house innovation at big pharma and biotech players. Increasingly, they need to acquire startups and recently public companies to stay competitive and build out new product pipelines.

There is also tons of fresh capital earmarked for healthcare startups. In the U.S. in 2017, healthcare-focused venture capitalists raised $9.1 billion. That figure was up 26 percent from 2016, per Silicon Valley Bank.

More dollars also are flowing from venture firms that invest in a mix of tech and life sciences through a single fund. That list includes well-established VCs with dry powder to invest, includingPolaris Partners,Founders Fund,Kleiner Perkins andSequoia Capital.

Still, Nelson observes, deep into an IPO bull market, the average quality of offerings does tend to decline. That said, hebeen through similar inflection points in previous cycles and &for the same point in the cycle, the quality is markedly higher.&

Is there any space on kids& homescreens for another social sharing app to poke in Y Combinator backedSplish wants to have a splash at it ( ) — with a super-short-form video and photo sharing app aimed at the under-25s.

The SF-based startup began bootstrapping out of their college dorm rooms last July, playing around with app ideas before settling on goofy video loops to be their social sharing steed of choice.

The Splish app pops content into video loops of between 1-5 seconds. Photos can be uploaded too but motion must be added in the form of an animated effect of your choice. So basically nothing on Splish stays still. (Hence its watery name.) But while wobbly,content on Splish is intended to stick around — rather than ephemerally pass away (a la snaps).

Here are a few examples of Splishes (embedded below as GIFs… but you can see them on its platform here, here and here):

Itthe first startup for the four college buddy co-founders: Drake Rehfeld, Alex Pareto,Jackson Berry andZac Denham, though between them they&ve also clocked up engineering hours working for Snapchat, Facebook and Team 10.

Their initialweb productwent up in March and they landed a place on YCprogram at the start of May — when they also released theiriOS app. An Android app is pending, and they&ll be on the hunt for funding come YC demo day.

The gap in the social sharing market this young team reckons itspotted is a sort of ‘anti-Instagram& — offering a playful contrast to the photo sharing platformpolished (and at times preening) performances.

The idea is that sharing stuff on Splish is a bonding experience; part of an ongoing smartphone-enabled conversation between mates, rather than a selectively manicured photoshoot which also has to be carefully packaged for public ‘gram consumption.

Splish does have a public feed, though, so itnot a pure messaging app — but the co-founders say the focus is friend group sharing rather than public grandstanding.

&Splish is a social app for sharing casual looping videos with close friends,& says Rehfeld, giving the teamelevator pitch. &It came out of our own experience, and we&re building for ourselves because we noticed that the way you socialize right now in real life is you do activities with your friends. You go to the beach, you go to the bar, the bowling alley. We&re working to bring this same type of experience online using Splish through photo and video. So itmore about interaction and hanging out with your friends online.&

&When you use Instagram you really feel like you&re looking at a magazine. Itjust the highlights of peoplelives,& he adds. &And so we&re trying to make a place where you&re getting to know your friends better and meeting new people as well. And then on the other side, on Snapchat, you&re really sharing interesting moments of your lives but itnot really pushing the boundaries or creating with your friends. Itmore just a communication messaging tool.

&So itkind of the space in between broadcast and chat — talking and interacting with your close friends through Splish, through photo and video.&

Users of the Splish app can apply low-fi GIF(ish) retro filters and other photographic effects (such as a reverse negative look) to the video snippets and photos they want to send to friends or share more widely — with the effects intended to strip away at reality, rather than gloss it over. Which means content on Splish tends to look and feel grungy and/or goofy. Much like an animated GIF in fact. And much less like Instagram.

The teamhope is the format adds a bit of everyday grit and/or wit to the standard smartphone visual record, and that swapping Splishes gets taken up as a more fun and casual way of communicating vs other types of messaging or social sharing.

And also that people will want to use Splish to capture and store fun times with friends because they can be checked out again later, having been conveniently packaged for GIF-style repeat lols.

&Part of the power here in Splish is that relationships are built on shared experiences and nostalgia and so while [Snapchat-style] ephemerality reduced a lot of the barriers for posting what it didn&t do is strengthen relationships long term or over time because the chats and the photos disappeared,& saysRehfeld.

The idea is a content format to gives people &shared experience that lasts&, he adds.

They&re also directly nudging users to get creative via a little gamification, adding a new feature (called Jams) that lets users prompt each other to make a Splish in response to a specific content creation challenge.

And filming actual (playful) physical shoulder pokes has apparently been an early thing on Splish. Thatthe merry-go-round of social for ya.

Being a fair march north of Splishtarget age-range, I have to confess the apploopy effects end up triggering something closer to motion sickness/vertigo/puking up for me. But words are my firm social currency of choice. Whereas Rehfeld argues the teenager-plus target for Splish is most comfortable with a smartphone in its hand, and letting a lens tell the tale of what they&re up to or how they&re feeling.

&We started with that niche first because therea population in that age range that really enjoys this creative challenge of expressing yourself in pretty intuitive ways, and they understand how to do that. And they&re pretty excited about it,& he tells TechCrunch.

&Therealso been a little bit of a shift here where users no longer just capture what they have in real-life using the camera, but the cameraused as an extension of communication — especially in that age range, where people use the camera as part of their relationship, rather than just capturing what happens offline.&

As with other social video apps, vertical full screen is the preferred Splish frame — for a more &immersive experience& and, well, because thathow the kids do it.

&Itthe way users, especially in this age range, hold and use their phones. Itpretty natural to this age range just because itwhat they do everyday,& he says, adding: &Itjust the best way to consume on the phone because it fills the whole screen, ithow you were already using the phone before you clicked into the video.&

Notably, as part of the teamsoft-edged stance against social media influencer culture, Rehfeld says Splish is choosing not to bake &viral components& into the app — ergo:&Nobodyrewarded for likes or ‘re-vines&. Thereno reblog, retweet.&

Although, pressed on how firm that anti-social features stance is, he concedes they&re not abandoning the usual social suite entirely — but rather implementing that sort of stuff in relative moderation.

&We have likes and we have a concept of friends or follows but the difference is we&re building those with the intention of not incentivizing virality or ‘influencership&,& he says. &So we always release them with some sort of limit, so with likes you can&t see a list of everybody wholiked a post for example. So thatone example of how we&ve, kind of, brought in a feature that people feel comfortable with and love but with our own spin thata little bit less geared towards building a following.&

Asked if they&re trying to respond to the criticism thatbeen leveled at a lot of consumer technology lately — i.e. that itengineered to be highly and even mindlessly addictive —Rehfeld says yes, the team wants to try and take a less viral path, less well travelled, adding: &We&re building as much as possible for user experience. And a lot of the big brands build and optimize towards engagement metrics… and so we&re focused on this reduction of virality so that we can promote personal connections.&

Though it will be interesting to see if they can stick to medium-powered stun guns as they fight to carve out a niche in the shadow of social techattention-sapping giants.

Of course Splishpublic feed is a bit of a digital shop window. But, again, the idea is to make sure ita casual space, and not such a perfectionist hothouse as Instagram.

&The way the product is built allows people to feel pretty comfortable even in the more public feeds, the more featured feeds,& adds Rehfeld. &They post still very casual moments, with a creative spin of course. So itstayed pretty similar content, private and public.&

Short and long

Itfair to say that short form video for social sharing has a long but choppy history online. Todaysmartphone users aren&t exactly short of apps and online spaces to share moving pictures publicly or with followers or friends.And animated GIFs have had incredible staying power as the marathon runner of the short loop social sharing format.

On the super-short form video side, the most notable app player of recent years — TwitterVine —sprouted andspreadvirally in 2013, amassing a sizable community of fans. Although Instagram soonrained on its video party, albeit with a slightly less super-short form. The Facebook-owned behemoth has gatecrashed other social sharing parties in recent years too. Most notably bycloning Snapchat‘video-ish& social sharing slideshow Stories format, and using its long reach and deep resources to sap momentum fromthe rival product.

Twitter voluntarily threw in the towel with Vine in 2016, focusing instead on itslivestreaming video product, Periscope, which is certainly a better fit for its core business of being a real-time social information network, and its ambition to also become a mainstream entertainment network.

Meanwhile Googlefocus in the social video space has long been on longer form content, via YouTube, and longer videos mesh better with the needs of its ad network (at least when YouTube content isn&t being accused of being toxic). Though Mountain View also of course plays in messaging, including the rich media sharing messaging space.

Apple too has been adding more powerful and personalized visual effects for its iMessage users — such as face-mapping animoji. So smartphone users are indeed very, very spoiled for sharing choice.

Vinesuccess in building a community did show that super-short loops can win a new generation of fans, though. But in May its original co-founder,Dom Hofmann, indefinitely postponed the idea of reviving the app by building Vine 2 — citing financial and legal roadblocks, plus other commitments on his time.

Though he did urge those &missing the original Vine experience& to check out some of the apps he said had &sprung up lately& (albeit, without namechecking any of the newbs). So perhaps a Splish or two had caught his eye.

Thereno doubt the space will be a tough one to sustain. Plenty of apps have cracked in and had a moment but very few go the distance. Overly distinctive filters can also feel faddish and fall out of fashion as quickly as they blew up. Witness, for example, the viral rise of art effect photo app Prisma. (And now try and remember the last time you saw one of its art filtered photos in the wild… )

So sustaining a novel look and feel can be tough. Not least because socialbig beast, Facebook, has the resources and inclination to clone any innovations that look like they might be threatening. Add in network effects and the story of the space has been defined by a shrinking handful of dominant apps and platforms.

And yet — therestill always the chance that a new generation of smartphone users will shake things up because they see things differently and want to find new ways and new spaces to share their personal stuff.

Thatthe splash that Splishteam is hoping to make.

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