Venture Capital Returning to Medical Device and Biotech Sector after burning money in healthcare IT.
The year 2013 will be one of climbing out from a long era of darkness for venture capital. After all, you have to go all the way back to 1999 dotcom to find a time when VC earned market-beating returns. When recession hit, the VCs regressed to what they know made money for them IT. Suddenly the VC all jumped on social media play in healthcare, healthcare records, apps that monitor heart rate, blood pressure, oxygenations..silly stuff..thinking this is the way to go.y
Silicon Valley professionals must step out of their 10Mile radius to see what the country need. Just because their next door neighbor worked and made money at FB or twitter the investor thinks the whole life science industry is now moving to their smart phones to figure out how to treat problems. IT firms can bring knowledge, not treatments. For example, it can tell a patient all about their errectile dysfunction but will not be able to treat them. VCs learned this the hard way, all of 2008to 2013 was spent on these new apps, health care record technology and now realizing there is no IP, no patent protection, no exits, instead dealing with crazy competition and no chance of exits.
A general survey of VCs conducted in 2012 " tyipical herd mentality" generated the following results of the survey : Capital is expected to flow into start-ups that provide information technology to businesses. More specifically, 61% of respondents expected increased investment in business IT, while 57% predict a rise in investment in health-care IT.
What happened: Typical VC fund was a big money-loser, generating an internal rate of return of -5.2%
In 2013, Some VCs started buying stake in start-ups that were winding down just to show the deals to their LPs. They would put their associates in-charge of the start ups. The associates supposed to be from top notch schools, thought this is promotion. It was the paradox, they were set to fail with a poorly run and bad technologies. But the VCs firm looked good on the books. That's what matters when it comes to "CYA"
It appeared that the VCs were reorganizing and making a lean team, but infact were buring more on inefficient companies in the hands of rookies!
Smaller VCs who follow large VCs blindly put good money after bad money. What are the small VC firms thinking?. The large VCs acted because of their frustration with FDA, recession and tax issues.
Now after burning their money in the IT space, they are back to medical device and biotech sectors. They are seeing FDA turning around, more demand for med device sector worldwide. 2014 will see the return of the VC to the medtech and biotech sector.
10 Hot spots for investment:
1) antibodies against cancer and anti-inflammatory ailments, specializes in double-target
2) Cancer diagnostics
3) Age related dementia research
4) Obesity both devices and drugs
5) Diabetes with new technologies on biologic and insulin therapies
6) Nutrition
7) Orthopedic and spine
8) Technologies treating renal disorders
9) Psychiatric disorders
10) neurostimilation and neuro-biologics
The year 2013 will be one of climbing out from a long era of darkness for venture capital. After all, you have to go all the way back to 1999 dotcom to find a time when VC earned market-beating returns. When recession hit, the VCs regressed to what they know made money for them IT. Suddenly the VC all jumped on social media play in healthcare, healthcare records, apps that monitor heart rate, blood pressure, oxygenations..silly stuff..thinking this is the way to go.ySilicon Valley professionals must step out of their 10Mile radius to see what the country need. Just because their next door neighbor worked and made money at FB or twitter the investor thinks the whole life science industry is now moving to their smart phones to figure out how to treat problems. IT firms can bring knowledge, not treatments. For example, it can tell a patient all about their errectile dysfunction but will not be able to treat them. VCs learned this the hard way, all of 2008to 2013 was spent on these new apps, health care record technology and now realizing there is no IP, no patent protection, no exits, instead dealing with crazy competition and no chance of exits.
A general survey of VCs conducted in 2012 " tyipical herd mentality" generated the following results of the survey : Capital is expected to flow into start-ups that provide information technology to businesses. More specifically, 61% of respondents expected increased investment in business IT, while 57% predict a rise in investment in health-care IT.
What happened: Typical VC fund was a big money-loser, generating an internal rate of return of -5.2%
In 2013, Some VCs started buying stake in start-ups that were winding down just to show the deals to their LPs. They would put their associates in-charge of the start ups. The associates supposed to be from top notch schools, thought this is promotion. It was the paradox, they were set to fail with a poorly run and bad technologies. But the VCs firm looked good on the books. That's what matters when it comes to "CYA"
It appeared that the VCs were reorganizing and making a lean team, but infact were buring more on inefficient companies in the hands of rookies!
Smaller VCs who follow large VCs blindly put good money after bad money. What are the small VC firms thinking?. The large VCs acted because of their frustration with FDA, recession and tax issues.
Now after burning their money in the IT space, they are back to medical device and biotech sectors. They are seeing FDA turning around, more demand for med device sector worldwide. 2014 will see the return of the VC to the medtech and biotech sector.
10 Hot spots for investment:
1) antibodies against cancer and anti-inflammatory ailments, specializes in double-target
2) Cancer diagnostics
3) Age related dementia research
4) Obesity both devices and drugs
5) Diabetes with new technologies on biologic and insulin therapies
6) Nutrition
7) Orthopedic and spine
8) Technologies treating renal disorders
9) Psychiatric disorders
10) neurostimilation and neuro-biologics
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