Tales from the VC Trenches
May 1, 2001
Originally Published MX May/June 2001
Finance
A VC shares lessons learned from working with early-stage medtech ventures.
Daniel C. Wood
Venture capitalists (VCs) raise funds for investment from limited partners, including private and public pension funds, endowment funds, foundations, corporations, wealthy individuals, and foreign investors. Those funds are then invested in early-stage companies with high growth potential. Yet despite the predictable pattern of VC investment—raise funds, invest them, achieve liquidity—the New Economy has changed things. Thanks to the wild excesses of the tech boom, the state of venture capital today is an amalgam of superlatives: fastest to market, highest valuations, greatest amounts raised. Limited partners, having realized incredible returns from previous VC funds, are clamoring to subscribe to new funds. Such eagerness has led to more money being invested. Accounting for all industries, VCs invested $38.2 billion in 1999—a figure greater than the amounts invested in 1996, 1997, and 1998 combined. See Table I.
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