Category Archives: moneytree

Life Science Entrepreneurs Still Shaking the MoneyTree

Guest Post by:
Mike Schmitt, MD
Life Science Analyst and Editor of the Florida BioDatabase
Mike can be reached at [email protected]

Ok, enough already! Amidst all the economic “doom and gloom” from the daily news feeds—I actually do have something encouraging to share (well, at least for the moment until the Dow plunges another 10%).

The National Venture Capital Association along with Pricewaterhouse Coopers released their VC funding update in its recent Moneytree Report for Q3 2008.  PWC’s MoneyTree is a great site for info on VC investing trends on the national as well as regional levels with the capability to search by industry. Even better yet—it’s free with a simple registration.

It seems that on a national level, VC investments have remained relatively stable (naysayers look out!) through the 3Q of this year at $7.1B. The biotech industry, which had fallen to 3rd place in the 2Q (first time that had happened since 2003) once again reclaimed its top position inching out software by a narrow margin of $1.35B to $1.34B.  The medical device segment placed 4th at $864M, giving the overall life science sector (biotechnology and med device combined) a relatively strong $2.21B (and represented a 10% increase from the 2Q). This brings the 2008 total for all categories (through 3Q) to $21.6B and is on track to be in the same ballpark as 2007 when VC investments were $29.4B for the year.

The life science industries do tend to be more resilient in difficult economic conditions—after all, people don’t stop getting sick and we still need to treat their illnesses.  But in this market—anything can happen. When the ultra-conservative stock of Berkshire Hathaway moves up or down by more than 25% in a single day—you know we are not in ordinary times—and no company is immune to the current market conditions.

Can we expect more good news or will VC investing get hammered by year end?    PricewaterhouseCooper’s managing partner, Tracy Lefteroff does not expect funding to dry up. “VCs have slugged through difficult times before and this one should be no different.” Personally, I’m not so sure.  Stay tuned for the 4Q follow up in February 2009. It’s difficult to predict at this point, but I’m putting my bets on a tough market ahead.

Dan’s Note: Short answer, if you can avoid raising a VC round in 2009, do so.  Good deals will get funded, but given the increased macroeconomic and financing risks, valuations will take a hit — particularly during the next 6 months of uncertainty.  The added creative innovation to bootstrap your runway to 2010 will also pay long-term dividends for your business.

Another Day, Another Set of FL Venture Numbers

PWC/NVCA/VentureEconomics/[insert brand here] MoneyTree report came out just after E&Y/VOne with same Florida story, different numbers. Florida venture investing hit $361M for 2005, up from $318M in 2004 — not as big a jump as reported by E&Y. Deals were just a nudge down, with 55 in 2005 vs. 58 in 2004. It was the largest year for Florida venture investing since 2002 and after a 2004 of zero VC-backed IPOs, 2005 saw three reach the public markets.

MoneyTree numbers show continued strength in FL venture investments, although expansion/growth deals continue to outpace seed/early. Greed is slowly catching Fear on the chart — hopefully fast enough for those entrepreneurs with great ideas, pursuing first institutional dollars.

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