Some VC Funds Have Miles To Go While Others Have Burned What's In The Tank

Article preview from Start-Up - July, 2011

The slowdown and shake-out predicted to occur in the world of venture capital has come. But has it also already gone, too? The industry has certainly retrenched, but there are also signs of new life in the venture sector. For the past two years, we've tracked a few dozen life sciences firms, with an eye on which ones have nearly tapped out their older funds and which have fresh cash to invest in young start-ups. Here's an updated look at the venture fund landscape, showing the firms with full tanks and the ones who are running on empty, based on SEC filings, firm announcements, and our own database and reporting.

Some VC Funds Have Miles To Go While Others Have Burned What's In The Tank

Article preview from Start-Up - July, 2011

The slowdown and shake-out predicted to occur in the world of venture capital has come. But has it also already gone, too? Late in 2008 as the housing crisis came to a head, dire predictions suggested that the venture industry could shrink to half its former size, as weaker-performing firms were weeded out. A long, painful process of downsizing seemed to be taking place and firms struggled to reach their targets when raising new funds as limited partners pulled back in their capital allocations.

The industry has certainly retrenched, but there are also signs of new life in the venture sector. While some firms set fundraising goals they couldn't reach, others have found their LPs to be even more generous than anticipated, buoyed by a warming IPO market that's been especially good to VCs who invest in technology as well as life sciences. It's a case of haves vs. have-nots: in just the same way that top start-ups with "it" technology seem to be having no trouble inking deals, certain VCs who can demonstrate returns from prior funds have been able to finance themselves, albeit via a slower fundraising process or by expanding their LP base.

Avalon Ventures, for instance, topped off a $200 million ninth fund that's a third larger than its target amount. Health care specialists with big exits to their credit have also enjoyed the continued faith of LPs; in the fall of 2010, early-stage specialist Third Rock Ventures landed a $426 million second fund, larger than its first, and opened a West Coast office.

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No publication reviews leading edge companies and technology better than START-UP. Each issue of START-UP profiles the most important new product companies, identifies the hottest technology areas, reviews funds flowing into private companies and investment trends, and reports on university tech transfer licensing. Industries covered: pharmaceuticals, biotechnology, medical equipment & devices, and in vitro diagnostics.

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