Posted by MedTech Expert on 2008-01-15
Tags: Venture Business Events
I have just returned from a week in San Francisco working the JP Morgan Life Science Investors Conference. This is the granddaddy and largest of them all. The meeting was packed. Hotels (near, and not so near, to Union Square) were filled with VCs who rented rooms and were booked solid listening to pitches, Investment Bankers unrelated to JP Morgan meeting with existing and potential clients, boutique investment banks helping both private and public funds in their fund raising, and a raft of service providers seeking business.
JP Morgan provides a one-stop shopping experience for all. My team personally made pitches at the St. Regis, the Sheraton Palace, the Hyatt Union Square, The Ritz-Carlton, and the Warwick. We also found ourselves pitching at several local eateries - Lefty O'Douls, Max's, Lori's Diner, and The Grill - which also proved popular for many other convention attendees. Lefty's proved to be the most spacious and peaceful...the food was quick and good, making this the ideal meeting spot.
There were some great receptions. I had the opportunity to attend several, sponsored by law firms and venture funds. The biggest I attended was the VC reception at the Asian Art Museum in the Civic Center. Not only was it old home week here for many (remember many VCs had been locked up in hotel rooms hearing pitches), but it also provided the best reception food of the week.
One experienced VC whom I have known for some time proferred that the big firms have really become risk averse while the smaller firms, while being risk oriented, are careful to invest in deals requiring significant FDA oversight for fear they would be squeezed in a future round. He also commented that the industry is being overrun by consultants. "Consultants" are running the show. He claims this is due to the changing nature of VC investing from a building business model to a resource allocation model. "Few large firms are really equipped to dig in and help create and/or build companies - the amount invested per partner is too great."
A much younger and inexperienced VC opined at the VC reception that fewer than 33% of the funds attending will ever recover their capital. Even fewer will participate in the override. "Competition is fierce." I would argue that competition is fierce due to the resource allocation model and the herd instinct that most are using.
Clearly, there is room for a new VC model. The one in place now is broke. It will be interesting to see the returns provided over the next few years.PRIVATE: Members Only