I [Carin Canale Theakston] love asking Google questions. In preparation for an upcoming panel at the San Diego Venture Group’s monthly breakfast meeting, I decided to ask the mighty search engine “Is the venture capital model dead?” In .24 seconds I had over 19 million results that addressed the question. Astonishing. I continue to be amazed by Google’s depth and speed but more importantly, I’m shocked that there are so many conversations which specifically address the death of the venture capital industry.
While the conversation is controversial and intriguing, it’s clear that the venture capital industry is not going away. Even in a down year like 2009, venture firms invested more than $21 billion. Notably, for the first time on record, the largest percentage of funding went to health care companies versus IT; however, at less than $5 million, the median amount invested was by far the lowest since the new millennium began.
But clearly the venture capital model is evolving. Few things ever stay the same, and the venture capital model is no different. As this evolution occurs, it is becoming increasingly difficult for capital-intensive life science companies to raise money, especially in the early rounds before proof of concept is established.
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Author: Carin Canale
Theakston
