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March 20, 2007
Why Have a Biotech Venture Fund?
I was playing with some CalPERS venture investing data today while on planes. I decided to split the data into pre-2004 vintage non-biotech and biotech funds. The results were as follows:Multiple | IRR | |
| Biotech | 0.33 | 1.9% |
| Non-bio | 0.58 | 3.0% |
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Paul, I'm not sure I understand the results. Does multiple mean the return multiple on money invested? Meaning, 1.0 just gets your money back with zero return and 1.2 gets it back with 20% return? If so, .33 and .58 don't even make back the invested cash.
IRR's of 2% and 3% aren't as good as US Savings bonds.
I agree the VC investment business has been pretty tough the last 6 years. Only the very top VCs are generating returns. I created a table of raw investments and returns through IPO and M&A transactions over the past 6 years. There wasn't a single positive return year. For more details see http://dondodge.typepad.com/the_next_big_thing/2007/03/venture_capital.html
Paul, I know you read my earlier post. Does your research confirm my results?
Don