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VCs' Most Common Mistakes

This article was originally published in Start Up

Executive Summary

Our VC correspondent details the 10 most common mistakes his colleagues make in investing in biotech--from investing in dataless hypothesis to firing management too soon (or too late).

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Biotech Entrepreneurs' Biggest Mistakes

The most common mistakes made by biotech entrepreneurs in raising money and in managing venture-backed companies are: 1) Raising large amounts of pre-venture angel financing at increasingly high valuations before seeking venture funding; 2) Using a placement agent to raise an initial round of venture funding and/or investing time and money in fancy/lengthy presentation materials; 3) Raising more money than needed; 4) Choosing a venture fund based on valuation; 5) Racing to do a significant corporate partnering deal before the first round of venture financing; 6) Failing to be honest with investors and manage their expectations; 7) Deferring difficult personnel decisions; 8) betting on the timing of a clinical milestone, corporate partnering deal, or IPO; 9) relying on patent filings as an enduring corporate asset; and 10) failing to leave enough runway for the next financing.

The In and the Out Crowds of Biotech Investing

Michael Lytton reviews "what's hot" and "what's cold" in biotech investing. .

Determining Biotech Valuations

Michael Lytton, a General Partner at Oxford Bioscience Partners, discusses how venture capital funds determine appropriate valuations for biotech companies in which they decide to invest.

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