It’s a brave new world when it comes to financing startup and early stage biotechs, and particularly for pharmaceutical development groups. No longer are there hundreds of pharma-focused VC firms able to independently fuel and sustain the growth of drug development programs.  These development paths are long-term and extremely risky investments that more often than not fail to generate sufficient returns to back startups.

Plus, it’s been tough for VCs all around since the economic crisis.  According to the National Venture Capital Association, the number of VC firms in the last decade has dropped from 1,022 down to just 462; and the biotech sector—with its extended timelines and lower probability of success—was arguably hit hardest by the shrinkage.

But with all that said, new models are emerging that give small and startup drug developers a chance to secure early capital and survive, and more importantly to share more effectively with investors and partners in both the risks and the rewards of the drug development process. And don’t worry—VCs haven’t dropped out of the race (total VC financing is up 34% from Q1 last year, according to BioWorld). Because after all, there are still enormous rewards to be earned; and often the focused effort of a small biotech is the most effective way to reach them.

A FierceBiotech report from VC heavy-hitter Burrill & Co. tracked $2.6B worth of the most recent biotech investing, which revealed several interesting players, partnerships, and trends. What stands out is the dramatically enhanced collaboration, co-investment, and partnership among various players as compared to years past. VCs, for example, are playing more nicely than ever before with governments, big pharma, academia, hospitals, trusts and foundations—and the result is a landscape of shared responsibility that enables biotechs to continue doing business.

Of course, this model won’t allow for the development of the next Amgen—with R&D, manufacturing, packaging, labeling, marketing, and just about everything else under one roof supported by bricks and mortar. But partnerships with major research foundations, governments, and big pharma—and the allocation of resources, responsibilities, and revenue that go along with them—may very well be the way of the future start-up and early-stage biotechs.

For more information, check out an Xconomy article by Luke Timmerman which does a good job identifying and explaining some of the newest trends and models in biotech financing. For regulatory, clinical, or product development support with your biotech, contact Pearl.