[Posted on November 5, 2007 - 11:15 AM]
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DiggVenture capitalists tried to pop a few myths Friday morning at the Texas Life Science Conference in Houston presented by BioHouston and the Texas Healthcare & Bioscience Institute.
Myth one: that big venture capital firms are only interested in big deals.
Not so, said Douglass Given, a partner at Bay City Capital LLC, who said his firm is willing to invest $3 million to $4 million in a company even if Bay may not be able to inject more money before an exit, especially if the deal involves a technology "we intend to accelerate." (His firm happens to be in the middle of raising $500 million for its fifth fund.)
Myth two: that VCs are only looking for sky-high returns.
Said Robert Garland (right), a partner at New Enterprise Associates, an $8.5 billion firm, "We don't need a 10 times return. We'll invest where there's a likelihood of a good return where we can mitigate the risk." Myth three: that there's not enough venture money to go around.
Garland said capital is not the issue, but rather whether the opportunity fits with the firm's investment strategy. "There's a shortage of good quality management teams and good ideas," he said.
Added Michael Wasserman, a venture investor at HIG Ventures, a $5 billion firm in Miami, "It's not a lack of capital; it's finding what's right for us."
Niven said his firm keeps a database of biotech firms in major cities and the amount of funding they've raised from the National Institutes of Health. "We talk four, five or six years before we make an investment," he said.
Garland also said he makes a point to develop relationships with serial investors, noting that it can lead to future investment opportunities. Yet Niven contended that there just aren't enough skilled entrepreneurs to get good ideas off and running, requiring Bay to build a stable of venture partners. "They read business plans and help spot the next big deal," he said. "You can get their attention." - Claire Poole
