Skip to main content

Thank you for visiting nature.com. You are using a browser version with limited support for CSS. To obtain the best experience, we recommend you use a more up to date browser (or turn off compatibility mode in Internet Explorer). In the meantime, to ensure continued support, we are displaying the site without styles and JavaScript.

In defense of life sciences venture investing

Nature Biotechnology volume 29, pages 579–583 (2011)Cite this article

Subjects

An Erratum to this article was published on 09 January 2012

This article has been updated

Contrary to widely held perceptions, data on venture returns show that life sciences startups have outperformed other sectors over the past decade.

Although life sciences investing creates new medicines, diagnostics and devices that ultimately save or improve lives, within the venture capital asset class it has often been treated like an ugly stepchild relative to its 'high tech' sisters focused on new software, Web 2.0, clean tech and social media. The incredible recent successes of Facebook (Palo Alto, CA, USA), Groupon (Chicago), Zynga (San Francisco), LinkedIn (Mountain View, CA, USA) and Twitter (San Francisco) have only increased the pressure on life sciences venture capital and have helped contribute to a general malaise toward life sciences by those limited partners who invest in new venture funds.

This is a preview of subscription content, access via your institution

Access options

Rent or buy this article

Get just this article for as long as you need it

$39.95

Learn more

Prices may be subject to local taxes which are calculated during checkout

Figure 1: IRRs for venture capital in different sectors.
Figure 2: Distribution of investment multiples across different sectors.
Figure 3: Post-IPO performance of technology versus life sciences companies backed by venture capital.

Change history

  • 11 July 2011

    In the version of this article initially published, the x axis in Figure 1 should not have contained the category “Technology.” In addition, on p.579, col. 3, paragraph 1, the last sentence should have read “comparative realized performance” instead of “comparative performance.” The errors have been corrected in the HTML and PDF versions of the article.

References

  1. Booth, B.L. Nat. Biotechnol. 27, 705–709 (2009).

    Article  CAS  PubMed  Google Scholar 

  2. Austin, S. Venture Capital Dispatch (26 February 2011) <http://blogs.wsj.com/venturecapital/2011/02/26/facebook-groupon-zynga-off-the-chart-revenue/>

Download references

Acknowledgements

The authors would like to thank the NVCA and J. Taylor.

Author information

Author notes

  1. Bruce L. Booth is with Atlas Venture, Cambridge, Massachusetts, USA, and Bijan Salehizadeh is at Highland Capital Partners, Menlo Park, California, USA. Both authors focus on early stage healthcare and life sciences investments. Both also blog about healthcare and venture capital at http://www.LifeSciVC.com and http://www.thebij.com, respectively.

Authors and Affiliations

  1. Bruce L Booth

Authors
  1. Bruce L Booth
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Bijan Salehizadeh
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Bruce L Booth.

Ethics declarations

Competing interests

B.L.B. and B.S. participate in partnerships that invest in both LS and Tech venture capital, and have a pecuniary financial interest in the success of those investments.

Rights and permissions

Reprints and Permissions

About this article

Cite this article

Booth, B., Salehizadeh, B. In defense of life sciences venture investing. Nat Biotechnol 29, 579–583 (2011). https://doi.org/10.1038/nbt.1908

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1038/nbt.1908

This article is cited by

Search

Advanced search

Quick links

Nature Briefing: Translational Research

Sign up for the Nature Briefing: Translational Research newsletter — top stories in biotechnology, drug discovery and pharma.

Get what matters in translational research, free to your inbox weekly. Sign up for Nature Briefing: Translational Research