Venture capital investment into life sciences companies is supposed to be experiencing a boom reminiscent of the early 1990s. Some pundits even have gone so far as to suggest that many of today’s biotech and health-care deals are being transacted atop a recently inflated bubble, recalling the early 1990s, when public biotech stocks rose and then fell sharply. The implication, of course, is that many of today’s life sciences investors not to mention entrepreneurs are setting themselves up for a giant fall from grace.
The only problem, however, is that the implication is based on feeling rather than fact.
While public equities investors may have abandoned life sciences for a time, the VC community has collectively stuck with it over the last 10 years. Sure, there have been some ebbs and flows, and other sectors have moved to the center stage, but it isn’t as if venture investors just recently warmed up to this hot sector.
“I don’t necessarily think that [life sciences investing] was abandoned after the early 1990’s, or that the absolute investments have really risen much in 2002 or 2003,” says Arthur Klausner, a Princeton, N.J.-based general partner with Domain Associates. “I think it was just eclipsed for a while by other things.”
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