Living with Limits: Device and Biotech Venture Capital

Executive Summary

Lacking exits from either IPOs or acquisitions, squeezing returns out of biotech and device start-ups has become an increasingly difficult game. Many generalist VC firms have fled to the far more lucrative business of Internet and IT investing, particularly since both health care and IT have become far more technologically complex. Thus specialists have been taking over a much greater percentage of health care dealmaking, though shunning most of the high-risk biotech and device investing of the 80s and 90s. Their investments begin with a clearly defined, and sometimes pre-arranged, exit.