As VC Industry Contracts, Limited Partners Look To Specialists
This article was originally published in Start Up
While some venture firms struggle to raise money, others are closing oversubscribed funds. The limited partners that supply their capital are increasingly favoring specialist firms rather than generalist ones, preferring to allocate their own risk rather than leave it in VCs’ hands. Can hybrid firms survive the industry’s painful transition?
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Bristol-Myers Squibb Co.'s purchase of Amira Pharmaceuticals Inc. for $325 million upfront and another $150 million in downstream milestones shows that prior licensing deals and multiple programs in a pipeline don't necessarily curb a start-up's acquisition potential, provided investors are thinking smartly about deal structures that create separate value streams for the various products in the portfolio.
The slowdown and shake-out predicted to occur in the world of venture capital has come. But has it also already gone, too? The industry has certainly retrenched, but there are also signs of new life in the venture sector. For the past two years, we've tracked a few dozen life sciences firms, with an eye on which ones have nearly tapped out their older funds and which have fresh cash to invest in young start-ups. Here's an updated look at the venture fund landscape, showing the firms with full tanks and the ones who are running on empty, based on SEC filings, firm announcements, and our own database and reporting.