The Virtual Strategy

Published: May 1, 2003
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The Virtual Strategy

By: Stacey L. Bell


Originally Published MX May/June 2003

FINANCE

Outsourcing company capabilities offers a viable strategy for advancing company objectives—and increasing company valuations—in tough economic times.

Stacey L. Bell


Start-up medtech companies are known for their great product innovations, so it shouldn't be surprising that smaller companies are applying that innovation to their business models as well. After all, the availability of venture capital isn't what it used to be during the go-go 1990s.

In 2002, 542 privately held biotechnology, pharmaceutical, medical device, and other healthcare companies raised $6.3 billion in venture capital, according to Growthink Research (Venice, CA).1 Those figures reflect a slight decline from 2001, when 610 healthcare companies raised $7.1 billion. However, the 2002 healthcare companies snagged 25.7% of the total venture dollars invested nationwide compared with 15.8% in 2001, demonstrating that investors are still interested in the sector even though fewer dollars are being committed (see Table I).


Industry Amount Invested
($)		 Pct. of Total Number of Companies Pct. of Total Average Deal
Size ($)
Connectivity 9,574,239,000 38.8 775 32.7 12,353,857
Healthcare 6,338,664,140 25.7 542 22.9 11,694,952
Business Software
& Services		 6,068,768,000 24.6 763 32.2 7,953,824
E-Content &
Commerce		 1,137,197,000 4.6 169 7.1 6,728,976
Other 1,562,350,000 6.3 119 5.0 12,128,992
Totals 24,681,218,140 100.0 2368 100.0 10,422,812
Table
I. Total U.S. venture capital funding in 2002, by industry sector. Source:
Growthink Research (Venice, CA).

A Challenging Investment Climate


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