Health Care Venture Capital

Guide to Health Care Venture Capital

Healthcare venture capital firms provide funding for high growth health technology
By Amy Hunter

Healthcare venture firms invest money in companies that develop innovative new medical technologies. Venture capital companies typically look for a fast growing company with the ability to make a substantial profit within 5 years.

Raising venture capital provides your company with money, which you use for development. Seed funding is the initial investment from a venture capital firm. Venture capital firms also provide first and second round funding for product development and expansion.

Your company is a good candidate for venture capital finding if:

1. You expect to make a substantial profit within 5 years. Healthcare venture capital firms generally want their money and profits repaid within 5 to 7 years.

2. Your product will make you a leader in the healthcare industry. Venture capital firms do not invest in minor improvements and everyday businesses. They invest in big innovative ideas.

3. The decision makers in your company have experience. The company may be young, but seasoned employees at the helm greatly increase your odds of winning venture capital funds.

Action Steps

The best contacts and resources to help you get it done

Develop a bullet proof business plan Healthcare venture capital firms use business plans to decide who receives money. Without a professional business plan, your company will move to the bottom of the list.

I recommend:  Business plan software, such as Plan Magic, simplifies the process of writing a business plan.

Seek healthcare venture capital if your company develops devices, not drugs Pharmaceutical drugs are a high risk venture. Years of development and testing by the FDA is no guarantee that they may not pull a drug from the market at any time. Medical devices have a shorter development and approval process. They also have less risk of interactions, and lawsuits, that cut profits once the device reaches the market. This makes them an attractive choice for healthcare venture capital firms.

I recommend:  Choose a health venture capital firm that prefers to invest in medical devices. They understand the stages of development and approval and will not expect the quick return on investment that a company specializing in technology will.

Choose a healthcare venture capital firm with a record of accomplishment of financing winning ideas Healthcare finance is a highly competitive business. If you win an audience with a health venture capital firm that has a strong track record of backing profitable ideas, your odds of being successful increase. In addition, they offer experienced managers to guide you through the development and approval process.

I recommend:  Choose a healthcare finance firm that has money to make deals and invests heavily in healthcare.

Tips & Tactics

Helpful advice for making the most of this Guide

• Healthcare makes up 30% of the investments made by venture capital firms.
• Many venture capital firms will provide management and operational support, whether you want it or not. Find out the details before accepting any money.
• Consider bringing partners on board that have experience you lack. Scientists present many ideas to venture capital firms. Strong ideas do not outweigh a lack of business experience.