Economies are dependent on both the sustaining power of established businesses and the development of innovative business concepts in young new companies. This is best exemplified in the pharmaceutical industry. Here, in the right financing environment, smaller newly formed entities with the right financial backing can take on higher risks with low or no profits far more easily than can mature and profitable businesses. Newly formed businesses have the potential to become giant corporations that could contribute significantly to the economies of the future as markets and technologies change. In this evolving situation, such companies also have the advantage of being able to adapt quickly. Entrepreneurs play an important role in these new companies, especially in the biotechnology industry, and it is important that countries that wish to further entrepreneurialism should develop an economic regime that encourages them to become serial entrepreneurs - and business angels. Methods of achieving this include rewarding those who take risks. This has become an issue in the UK, where capital gains tax changes are to include imposing higher taxes on entrepreneurs who sell their businesses. The entrepreneurial environment in the UK could be seriously affected by these changes, particularly where the risks are higher, as in the biotech sector.

Economies are dependent on both the sustaining power of established businesses and the development of innovative business concepts in young new companies. This is best exemplified in the pharmaceutical industry. Here, in the right financing environment, smaller newly formed entities with the right financial backing can take on higher risks with low or no profits far more easily than can mature and profitable businesses. Profitable businesses require improved profitability year on year, while newly formed businesses have the potential to become giant corporations that could employ thousands and contribute significantly to the economies of the future as markets and technologies change. In this evolving situation, newly formed companies also have the advantage of being able to adapt quickly. Successful biotechnology companies tend to evolve around clusters in a manner described by Michael Porter in The Competitive Advantage of Nations (New York: Free Press, 1990). The evolution of biotechs in Silicon Valley, California, and in Cambridge, Massachusetts, demonstrates the importance of clusters. The Porterian cluster includes the siting of financiers as well as entrepreneurs in a single place and, in fact, “Countries that wish to further … entrepreneurialism should develop an economic regime that encourages entrepreneurs to become serial entrepreneurs … [or business angels] … Methods to achieve that include rewarding those who take risks. This has become an issue in the UK, where capital gains tax … changes [are to] include imposing higher taxes on …entrepreneurs who sell their businesses. The entrepreneurial environment in the UK could be … seriously affected by such changes, particularly where the risks are higher, as … in the biotech sector.” experienced or serial entrepreneurs tend also to reinvest in their historical locations. The same applies to entrepreneurs who have turned into business angels who are prepared to take on the risks of financing start-up companies. Indeed, ex-entrepreneurs who have become business angels are critical to the emergence of high technology-based biotech companies. Countries that wish to further the emergence of entrepreneurialism should develop an economic regime that encourages entrepreneurs to become serial entrepreneurs. Methods to achieve that include rewarding those who take risks. This has become an issue in the UK, where capital gains tax rules are about to change, and these changes include imposing higher taxes on those entrepreneurs who sell their businesses. The entrepreneurial environment in the UK could be severally – and seriously – affected by such changes, particularly where the risks are higher, as they are in the biotech sector. There is still time for the UK Government to reverse these changes and to prevent the decline of biotechnology entrepreneurialism in the UK. -Fintan Walton, Chief Executive Officer, PharmaVentures Ltd.