Venture Capital Seminar – What We Learned
December 16th, 2010Startup University Seminar Recap: Venture Capital for Life Science Companies on December 15, 2010
Thank you to Dan Wood, CFA, for taking valuable time to meet with the Startup University™ community!
Things We Learned at the Seminar!
There are only a handful of seed-stage/startup-stage life science venture funds with a focus on the Southwestern United States. Dan’s fund is one of those.
Venture Capital firms are currently investing about $20 billion year. Below are the major categories receiving funding from the VC industry:
$4 billion going toward software
$4 billion to Biotechnology
$2 billion to Energy
$2 billion to Medical Devices
$1 billion to Media and Entertainment
$1 billion to Semiconductor technology
$500 to IT services
Vast majority (about 70%) of VC money is going to “late-stage” deals . Only about 6% is going to seed/startup-stage deals.
Typical (ballpark) funding structure by seed-stage VCs:
Bridge Loan for working capital ($250,000 – $500,000) to company
8% interest on loan charged to the company, with the VC getting a 15% discount on Series A Preferred Round when it occurs.
What do VC’s typically look at when deciding on whether to invest?
- Management team – by far most important (afterall the CEO is the one (a) attacts the executive team, (b) attracts the board of directors, and (c) raises the capital (future rounds).
- Size of the market
- Potential exit value
We learned these things and more. Thanks again to Dan Wood, CFA, of Mesa Verde Venture Partners for spending some time with the Startup University™ community!
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