Guide to Health Care Venture Capital News and Trends

Increase profits by capitalizing on the latest health care venture capital news and trends

By Jessica Drew, Freelance Business Writer & Editor

Action Steps
The best contacts and resources to help you get it done

Stay on top of venture capital for healthcare news

If you're looking to get venture capital funding for your healthcare start up, you'll want to keep up to date on news relating to healthcare venture capital firms. A medical breakthrough or discovery can lead VC firms to change what they're looking for in an investment company. If you're aware of this news, you can angle your presentation and business plan to address this change.

I recommend: The Health Care Market from Irving Levin Associates is an online news publication that reports and interprets how changes in the medical field affects healthcare VC firms. The Healthcare Sales & Marketing Network has a daily news round up of important events and changes related to healthcare VC firms.

Stay informed about the latest trends of venture capital companies

The key to having your start-up capitalize on changes and trends in the healthcare industry and obtain venture capital funding is being aware of and catering to these trends as early as possible. To do this you need to stay informed about the latest trends.

I recommend: BusinessWeek features articles that cover interviews from industry experts and healthcare VC firm owners, who discuss the latest trends and how they'll affect new start ups. AllBusiness.com also features articles explaining and discussing the latest trends of healthcare VC firms.

Gain an in depth knowledge about medical venture capital

To really be the best healthcare facility out of the many that a healthcare VC firm might consider for funding, it helps to have an extensive knowledge about the news and trends of venture capitalists in the medical field at large.

I recommend: “Exit Strategies for Health Care Companies” is a book that takes an in depth look at IPOs, leading venture capitalists mergers and acquisitions, and attaining the best valuation possible. “Health Care Venture Capital Investments” is an eBook that’s all about using trends in the industry to your fullest advantage.

Helpful advice for making the most of this Guide

• •  Experts say that healthcare venture capital firms are looking for start-ups that plan to operate on a regional scale, to begin with at least. They say start-ups who want to pursue national plans are often overly ambitious.

Action Steps
The best contacts and resources to help you get it done

Develop a bullet proof business plan

Healthcare venture capital firms use business plans to decide who receives money. Without a professional business plan, your company will move to the bottom of the list.

I recommend: Business plan software, such as Plan Magic, simplifies the process of writing a business plan.

Seek healthcare venture capital if your company develops devices, not drugs

Pharmaceutical drugs are a high risk venture. Years of development and testing by the FDA is no guarantee that they may not pull a drug from the market at any time. Medical devices have a shorter development and approval process. They also have less risk of interactions, and lawsuits, that cut profits once the device reaches the market. This makes them an attractive choice for healthcare venture capital firms.

I recommend: Choose a health venture capital firm that prefers to invest in medical devices. They understand the stages of development and approval and will not expect the quick return on investment that a company specializing in technology will.

Choose a healthcare venture capital firm with a record of accomplishment of financing winning ideas

Healthcare finance is a highly competitive business. If you win an audience with a health venture capital firm that has a strong track record of backing profitable ideas, your odds of being successful increase. In addition, they offer experienced managers to guide you through the development and approval process.

I recommend: Choose a healthcare finance firm that has money to make deals and invests heavily in healthcare.

Helpful advice for making the most of this Guide

• •  Healthcare makes up 30% of the investments made by venture capital firms.
• •  Many venture capital firms will provide management and operational support, whether you want it or not. Find out the details before accepting any money.
• •  Consider bringing partners on board that have experience you lack. Scientists present many ideas to venture capital firms. Strong ideas do not outweigh a lack of business experience.

Guide to Health Care Venture Capital Basics

Knowing health care venture capital basics can maximize your chances for funding success

By Virginia Franco, Freelance Writer

Action Steps
The best contacts and resources to help you get it done

Compile a list of healthcare venture capital firms to help narrow your focus

If your company needs VC from a healthcare firm, you can increase your chances at receiving funding by knowing where to target your efforts. Compiling a list of groups that specialize in providing venture capital for healthcare is a great place to start.

I recommend: Canon Communications' Medicaldevicelink website includes an extensive list of venture capital firms active in the medical device field. VentureDeal allows you to search for venture capital firms by amount, location, industry focus and even funding history. They are offering a 14-day free trial.

Look for current angles appealing to healthcare venture capital firms

Venture Capital firms are not unlike other industries in that they are influenced by current trends. Knowing what the trends are in the healthcare industry, and which trends are appealing to venture capitalists in healthcare, will allow you to adjust your business plan and increase your chances for being awarded funding.

I recommend: Capital Broadcasting's Local Tech Wire website includes an article on the venture capital outlook that quotes several VC partner opinions. Regarding healthcare VC, one partner is of the opinion that personalized medicine based on genetic advances could be an area VC funders will be considering. The San Francisco Chronicle's online article, published by Hearst, discusses the venture capital outlook for the coming year. The article corroborates the idea that personalized medicine is an up and coming trend and may be a bright spot on an otherwise bleak outlook for venture capitalists and those seeking funding.

Target health venture capital firms whose aim is to fund businesses like yours

Every healthcare venture capital firm focuses on a specific area of the health care industry. In addition, the range of funding amounts can vary drastically from firm to firm. Make sure your business plan is aligned with the goals and funding amounts of the venture capital sources you approach.

I recommend: Versant Venture Management invests primarily in early stage companies that focus on medical devices, life sciences, health care services and health care IT. Health Capital Investors funds doctors, medical practices, nursing homes, hospitals, home health care companies and rehab clinics with funding needs between $100,000 and $100 million.

Helpful advice for making the most of this Guide

• •  Do your homework when it comes to the bottom line financial figures of your healthcare venture capital business plan. It is essential you be confident that your plan can deliver what it promises and that your facts and figures can back this up. Remember that investment firms are looking for quick returns on investment and they will pour over your financials to assure themselves your idea is worth the investment risk.

Action Steps
The best contacts and resources to help you get it done

Target market selection

Target market selection is the selection process to choose the health care market you want to invest the venture capital in. The market can often be a prime determinant in health care venture funding.

I recommend: Study the target market selection tutorial available at Net MBA. Read Health Care Corporate Finance News for more information about venture funding.

Health Care Financing Administration

The Health Care Financing Administration controls the funding for Medicare and Medicaid in the United States. The Medicare and Medicaid programs account for over a trillion dollars a year in medical spending. If a health care venture fund can invest in a product or program likely to receive approval by the Health Care Financing Administration, it's much more likely to become profitable.

I recommend: Evaluate the scope and mission of the Health Care Financing Administration for more details.

Development phase

The development phase for a health care drug or product is often the longest and most important. It's in this stage that a health care company tests the viability of the product. Health care venture capital firms need to monitor this phase of the product life cycle very closely.

I recommend: Examine the development phase primer from Master Control for more information.

Pipeline

In the health care industry, the pipeline refers to how many products a company has in development and their various stages. Investing in a company where most of their products are early in the pipeline can be risky.

I recommend: Assess the pipeline primer available from Money Terms for more information on the process.

U.S. Food and Drug Administration or FDA

The U.S. Food and Drug Administration or FDA regulates all medical products coming to market. FDA approval is the last and most important step in the medical product development process.

I recommend: Review the U.S. Food and Drug Administration rules and regulations information. Read Venture Capital Dispatch to learn why health care venture capitalists keep close tabs on the FDA.