Venture capital

Finding Venture Capital Investors

Venture capital firms are the most common and the largest providers of necessary investment capital for biotechnology, medical device, health care software and service companies. In addition to venture capital, they provide critical support in the areas of strategy, management, and funding syndication (funding from other medical technology investment firms). It is important for biotech companies to understand each venture capital firm’s funding preferences, and the process it uses in evaluating an opportunity before it is approached for investment capital. While the venture capital community is large, it is tight-knit; therefore entrepreneurs need to make strong and positive first impressions when approaching each capital provider.

Understanding Venture Capital Investors

Venture capital firms provide start up funding to biotech companies with innovative ideas, strong management teams, and sound business plans. It is extremely helpful for entrepreneurs to understand the pressures and requirements put on venture capital firms by the firm’s investors. An excellent description of raising capital from the perspective of venture capital firms is available from the Evergreen Venture Association.

Securing Investment Capital

The biotechnology, health care, or medical device arenas remain a very attractive space for many venture capital investors. When investigating medical technology investment, the venture capital firms evaluate three key factors:

  • management team experience
  • market size for the proposed biotechnology, health care, or medical device innovation
  • basis of sustainable competitive differentiation (patents, know-how, etc.)

Potential investors will research how a company will compete in the market, make money, and build value. Entrepreneurs can expect investors to disect their business model, including research & development plans, alliance strategies, and commercialization and exit approaches. They will also require details of intellectual property before making any biotechology, health care, pharmaceutical or medical device investment.

Investment Capital Links:

The National Venture Capital Association , an industry trade association, provides an informative overview of start up funding. The website is a good starting point for biotech companies.

De Novo Ventures, an activeu venture capital firm from Palo Alto, has compiled a list of articles that discuss raising venture capital for medical technology investments, the basics of biotechnology market research, and information on venture capital firms.

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