note: IT is a vc with medical home darling. Mention IT, people always think of such technology hub in California and Massachusetts, where medical investment by investors, but far away from the east coast of silicon valley develop popular, these coastal cities also benefit a lot.
recently, Dennis Keohane, published an article on risk investment analysis agencies CB Insight in the first quarter of the vc report some of important discoveries were analyzed. An important finding of this paper is: the medical health gradually from the main city of science and technology investment boom has waned. Since 2013, the report found that first appeared in California and Massachusetts million dollars so the hub city of science and technology, health care investment in health as a proportion of the total share less than 50%.
this is one of the news in the vc industry is not, as early as at the beginning of the industry is the trend. In theory, the medical investment should is very popular with vc’s house. But big pharma is a bit too big, fall into the predicament of the innovation: if continue to develop franchising commonly used drugs, such as the treatment of insomnia, depression, heart disease, erectile dysfunction such drugs, at the same time make some form of television marketing hyperbole, can make a lot of interest in return. But if you want to develop the market of smaller recessionary conditions, income is relatively small.
indeed, early venture capital giant mostly, getting rich off the medical and IT from Kleiner to IVP to Mohr Davidow to NEA, abound. The Internet is changing the valley at the same time it also changed the harmony between partners. In the 1990 s, the network industry investment is much higher than other industries, the relationship between some vc with pharmaceutical companies so burst. Reason is that a company can completely by the information technology revolution wave big money playing with the new economy rules, such as the rise of Redpoint Ventures capital (red). And want to invest in the health care industry players, such as clinical trials and for examination and approval of the government risks a bigger problem.
who act (note: about accounting and corporate governance reform package “sarbanes – oxley act of corporate governance (hereinafter referred to as” the sarbanes-oxley “)), research department, separating from the banking sector, on the market in this time became more complex, want to make health care investment, vc firms to rely on a lot of small listed companies to support clinical trials, which caused some difficulties in the process of marketing and trading. And catch up with the human genome project is successful, Amgen and Genentech the two companies did not wish to become a new generation of biological science and technology giants. But that does not mean that the medical industry of vc firms have accomplished nothing, they are really made some good investments, drug research has made some contribution to save people’s life. Some companies so rich, just less quantity. But before the data show that 95% of all venture capital returns from 5% of the transaction, which affects the medical industry is attractive to investors, also affect the interests of investors and the rate of return.
a few years ago, I was curious why the vc company will also invest IT and medical. The two pattern, strategy, market, profit way and attract investors types are very different. But these two industries are able to make money is the common ground that also can make some contribution to society.
today’s report confirmed the development trend of the current medical investment, not some legendary cooperation relations, but the geographical reasons. At the same time and not just in the United States at the industry boom. Research points out that network investment in the first quarter is still concentrated in the main city of science and technology, and increased, but the health investment is drifting away.
it is important to note that is the rise in medical investment quarter on quarter, they don’t have a tech industry listed in the first quarter encountered difficulties. Vc 131 investment in the health care industry, a total of about $2 billion, compared with the same quarter last year increased by 34%, six more than $50 million in total amount of the investment, but there is no single investment sum especially large projects.
report made it clear that, in the hub cities in California and Massachusetts medical investment is still the elysian fields. Medical investment projects in the city of Cambridge than south of San Francisco, st. Louis and durham more projects, and ten life science companies listed in the first quarter in California and Massachusetts.
in terms of geography, the extension of network investment and health investment direction is relative.
so, the health care industry in silicon valley, dismissed, who will be the beneficiary? Report pointed out that the technology center of the states other than health investment from the nearly 44% of the share, most transactions occurred in Missouri, Roland, north Carolina, Pennsylvania and Tennessee.
the emergence of Tennessee does not let a person very surprise. I said to Nashville business week before, it is hard to imagine the Tennessee in the medical investment growth has left the east coast cities of major science and technology pose a threat. Health and IT is a completely different industry, although medical investment in a typical silicon valley venture capitalist thinking under the poor performance, but in the above mentioned that several states are very outstanding, these places more regular sales cycle, professional knowledge is more useful, investors hope to be able to see benefits, improve the valuation as soon as possible. Nashville from long ago began to solicit domain experts, investors, and good at dealing with insurance giant, hospitals and government managers, speed is slow but made good progress.
it’s fair to say that happened in Tennessee accounts for only 4% of the national investment, investment activities but it startups in medical industry accounts for a share of total startup are among the best in nationwide.
with this in mind: Facebook and sets a experience seems to be very good, but if you want to follow the trend, attracting investors’ money, the best way is to focus on silicon valley do bad things, or giving up in silicon valley.