Entrepreneurial

Can VCs serve the medical device market?

– John Lonergan is the managing member of Mach Ventures. This article previously appeared on PE Hub. The views expressed are his own. –

Traditional venture capital firms are struggling to remain relevant to new company formation, the development of new technologies, and the capability of bringing new medical device technologies to market. Although my comments are specific to medical device venture investing, my friends in Silicon Valley will agree, if even only in a quiet moment of reflection, that the same applies in biotechnology and general technology investing.

There are four reasons the traditional venture capital model has failed with regard to backing medical device companies.

With a permanently closed IPO window for devices, buyouts are the way to go. The big companies readily admit they can’t invent their own products, and look to acquisition as the way to fill their needs. They complain, however, venture-backed pickings are not attractive. Targets are too expensive, and it is too difficult to incorporate bloated venture-backed companies into their own infrastructure. They want products, not companies.

Also, larger funds reward partners more through management fees than carry. A $500 million fund returns $100 million to its few partners over 10 years. Nice living. There is no need to actually deliver successful products, which is why returns remain low.

Cloud storage company Cirtas raises $22 million

– Alastair Goldfisher is the Editor-in-Charge of the Venture Capital Journal, a Thomson Reuters publication. –

Venture capitalists and cloud storage companies are picking up in 2011 where they left off in 2010.

San Jose, California-based Cirtas Systems, a provider of cloud storage hardware, announced on Tuesday it has raised a $22.5 million Series B round that was co-led by Shasta Ventures and Bessemer Venture Partners and included previous investors New Enterprise Associates, Lightspeed Venture Partners and Amazon.

Super angels and the startup bloodletting of 2011

– Mark Boslet is a contributor for PE Hub, a Thomson Reuters publication. The views expressed are his own. –

Super angels have been super active over the past year. Now their business models will be put to the test, and a bloodletting of startups may be on the way.

Both they and the new crop of micro-cap funds actively pursued seed and early stage opportunities in 2010. They funded scores of companies, including many in the Internet space, where shoestring startup costs make business plan experimentation relatively painless.

3 worst ways to find a potential investor

stop-sign-e1286542310834- Adam Hoeksema is the founder and CEO of ExecutivePlan and a contributor to Under30CEO. The opinions expressed are his own. -

Only one to four percent of angel investor applicants successfully raise angel investment, according to the Angel Capital Education Foundation. I suspect that part of the reason that the success rate is so low is because entrepreneurs are using the following ill-advised tactics to meet potential investors.

The Office Visit

So maybe you are located out in San Francisco, California and you hop on to California Venture Capital to locate a VC firm in your neighborhood.  It turns out that there are dozens of VC firms nearby so you throw on your best suit, stuff a pile of business cards in your pocket and follow your GPS to the front door of Sequoia Capital.  Obviously you will be stopped at the front desk unless you have an appointment.  Maybe you are good enough to sweet talk your way past the receptionist and you simply push your way in to introduce yourself to Mr. VC.  Venture capitalists might like ambitious entrepreneurs, but don’t fool yourself, this tactic is not ambitious, it is disrespectful and will certainly end in failure.

from MediaFile:

For Web startups, 2011 kicks off with flood of funding

MARKETS-KOREA-FOREX/The East Coast has been buried in copious amounts of snow this winter. In Silicon Valley, the only thing falling from the sky seems to be money.

If the first couple of weeks of the new year are any indication, Web startups appear to be awash in cash, with every day bringing one or more high-profile funding announcements.

The latest company to join the fund-raising parade is Formspring, which announced Wednesday it has raised $11.5 million in a round led by Redpoint Ventures. The San Francisco online social networking service, which has garnered more than 20 million registered users since launching 14 months ago, actually raised the money late last year, but had not disclosed the round until now, CEO Ade Olonoh told Reuters.

Top 10 tech investing trends for 2011

– Dave McClure is a Silicon Valley venture capitalist and the founder of Internet seed fund 500Startups. He has worked with companies such as PayPal, Mint, Founders Fund, Facebook, LinkedIn, SlideShare, Twilio, Simply Hired, O’Reilly Media, Intel and Microsoft. The views expressed are his own. –

Over the holidays Silicon Valley is a ghost town while most geeks and venture capitalists are busy hitting the slopes at Tahoe or playing Angry Birds Holiday Edition.

If you haven’t had enough football or eggnog yet, stop reading this blather and go watch some grown men beat the snot out of each other while drinking yourself into yuletide stupor. If that doesn’t sound more appealing then you’ll just have to settle for my crazy tech predictions for this year.

Hot healthcare investing trends for 2011

– Dr. David J. Brailer is the chairman for San Francisco-based venture firm Health Evolution Partners and served as the National Coordinator for Health Information Technology under President George W. Bush. The views expressed are his own. –

2011 will be a chaotic and unpredictable year for investors.

We will see the first big changes of health reform play through – regardless of what the incoming Congress does. No one can predict what health reform means, particularly alongside the dwindling of the financial crisis and the ongoing jobs bust. The only sure thing is that 2011 won’t be a replay of the last two years where safe deals got done and a lot of companies traded from investor to investor.

Here are a few trends – and a few pitfalls – to pay attention to:

1. Please, no more meaningful use. Health information technology has been hyped into the stratosphere, and every entrepreneur is trying to raise capital while they can. Many are spinning their wheels because they mistake the investment bubble for their own shrewdness. The market will figure out in 2011 that federal subsidies will happen far slower than planned or that they may be cut back by a deficit-hawk Congress. Once the bubble pops and people get their feet back on Earth, deals will start to happen again. There are some very good health information technology companies coming to market in 2011 and they are going to rock healthcare in the coming years.

10 tips for securing angel or venture funding

– Chris Lynch is vice president of economic development at the Irvine Chamber of Commerce. The views expressed are his own. –

During the Internet boom, investors were mostly interested in the potential of a company. These days nothing is considered a sure thing and if your startup business isn’t on the right track, or if you haven’t done your homework as an entrepreneur, then you won’t have much luck raising capital.

The following are 10 tips to help you secure the financial support and funding your business may need to succeed.

Don’t celebrate until the cash is in the bank

– Mark Suster is a partner at Los Angeles-based venture capital firm GRP Partners. This article originally appeared on his blog “Both Sides of the Table”. –

Recently I wrote a blog post about how I hated losing, but I embrace it as a way to learn, improve and increase my win rates.

One of the things I learned from my “post-game analysis” is that you’re most vulnerable right after you’ve won the deal. I know it sounds counter-intuitive, but my experience tells me it’s true. At the moment you pop the champagne cork and let down your guard is when you’re easiest to attack.

Invest in lines, not dots

– Mark Suster is a former serial entrepreneur and a partner at Los Angeles-based venture capital firm GRP Partners. This article originally appeared on his blog “Both Sides of the Table”. The views expressed are his own. –

Everyone seems to be in such a rush to get shacked up these days.

In normal times investors will look for “traction” before investing. We want to make sure we’re in love. This sometimes frustrates entrepreneurs who just want to “get back to running the business.” But if you understand it you’ll see that it’s perfectly rational and it should also influence how you form relationships with investors. And remember, if we get married you’re stuck with us, too.

The first time I meet you, you are a single data point. A dot. I have no reference point from which to judge whether you were higher on the y-axis three months ago, or lower. Because I have no observation points from the past, I have no sense for where you will be in the future. Thus, it’s very hard to make a commitment to fund you.

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