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Venture capital shifts strategies, startups suffer

Nature Biotechnology volume 27, pages 103–104 (2009)Cite this article

An Erratum to this article was published on 01 July 2009

This article has been updated

Even before Lehman Brothers' collapse triggered the global banking crisis at the end of last September, venture capital (VC) firms were finding it harder to raise new funds. In the nine months from January to September 2008, US VC firms raised only $19.7 billion from their limited partners compared with $32 billion for the entire previous year and $30 billion in 2006 (Dow Jones Venture figures). About 25–30% of this money typically goes into the healthcare sector.

However, the crisis has changed the structure of VC investing, as firms shift more cash into their existing portfolios at the expense of startups. “Not only is it taking longer for these firms to get an exit,” says Jonathan McQuitty of VC firm Abingworth, based in London and Boston, “but also there are fewer potential co-investors than [there were] previously...That means we have to have some pretty hefty reserves.”

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Figure 1

Change history

  • 08 July 2009

    In the version of this article initially published, “GSK Ventures” should have read “GlaxoSmithKline’s SR One.” The error has been corrected in the HTML and PDF versions of the article.

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    Peter Mitchell

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Mitchell, P. Venture capital shifts strategies, startups suffer. Nat Biotechnol 27, 103–104 (2009). https://doi.org/10.1038/nbt0209-103

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