Top 20 Medical Device Venture Capital Firms (2022)

Top 20 Medical Device Venture Capital Firms (1)

If you have a great idea for a medical device or have already founded your own medical company, chances are you’ll eventually need to secure some funding to bring your product to market.

Medical device venture capital firms (commonly referred to as VC firms) specialize in providing startup companies in the medical sector with the capital, resources and expertise necessary for business growth, technology maturation, compliance needs, and commercialization.

Choosing a medical device VC firm to partner with for your medical device company’s future is as much about finding the right fit as it is about getting the best deal. A venture capital firm with connections and resources in your business niche can prove to be an extremely valuable partner, as you’ll find that many medical device VC firms focus their investments on just a few types of medical devices.

To help guide your organization toward the best potential pool of investors, we've created this list of the top 20 most active venture capital firms specializing in the medical device sector.

These organizations topped our list by completing the highest number of medical device investment deals between January 1st, 2013 and the present day, according to CB Insights. We've ranked investors by total number of deals over the past five years so you can see what firms are the most active and aggressive in funding and supporting medical device development.

In addition, we're also providing highlights from each firm’s portfolio to help you identify a partner whose specialties line up with the problems that your medical device company is trying to solve.

Once your medical device company is funded, you will need to consider these 15 Items Medical Device Startups Must Address, which include implementing a quality management system, as well as the can’t-miss exclusive on how to avoid a $20 million haircut with proper design controls.

Free Download: Grab your PDF copy of the Ultimate List of Medical Device Venture Capital Firms here.

Horizon 2020

Number of Deals since January 1st, 2013: 138

Founded: 2014

Website: https://ec.europa.eu/programmes/horizon2020/en/area/health

Portfolio Highlights: HySolChem, ONEM

Horizon 2020 is a standout EU Research and Innovation program. Since 2014, they have distributed nearly €80 billion of funding towards companies and startups finding new ways to prevent diseases, developing better diagnostics and more effective therapies. They also have a hand in funding startups who are taking up new models of care and new technologies promoting health and wellbeing.

New Enterprise Associates

Number of Deals since January 1st, 2013: 85

Founded: 1977

Website: www.nea.com

Portfolio Highlights: Acclarent, Earlnes, CVRx

New Enterprise Associates is a full service venture capital firm that makes investments ranging from $50,000 to $20 million in companies in virtually every sector of the economy.

The venture capital giant focuses on new and emerging technologies, funding projects in big data, financial technology, cloud computing, solar and nuclear energy and semiconductors. On the medical side, they've invested in healthcare service firms, healthcare IT products, life sciences, biotechnology and medical devices, completing 65 medical device investment deals over the past 5 years.

A truly global firm, New Enterprise has funded companies worldwide in places like China, India, Brazil, and across the United States. The firm is based in Menlo Park, California.

SOSV

Number of Deals since January 1st, 2013: 79

Founded: 1995

Website: https://sosv.com

Portfolio Highlights: BioROSA Technologies Inc., Ostoform

In the global venture capital and accelerator world, few names carry as much clout as SOSV. The firm bases its holdings and investments on food, hardware, biotechnology, and medical device design. It also focuses closely on the Asian technology markets, specifically in China. Their accelerator programs provide funding, mentoring, and training through a variety of specialized groups throughout the world.

Though they’re based in Shanghai, SOSV has another location in San Francisco, where they can offer the same level of support and guidance to medical device startups.

Qiming Venture Partners

Number of Deals since January 1st, 2013: 74

Founded: 2006

Website: https://www.qimingvcusa.com/

Portfolio Highlights: Cardialen, Element Science, Nuvaria

First founded in China, Qiming Venture Partners has been a longtime champion of China-US synergies. The firm launched its first U.S. fund in 2017, and has since established offices in Cambridge, San Francisco, and Seattle. To date, Qiming Venture Partners boasts over $5.54 billion in assets.

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Much of this success has been due to its knack for identifying disruptive technologies in the medical device industry, as well as digital health and therapeutics. Though their portfolio displays a wide range of investment areas, medical device manufacturers looking to catch the eye of QVP might like to know they focus on tools for minimally invasive surgeries, neuromediation, and AI-connected devices.

TMCx

Number of Deals since January 1st, 2013: 61

Founded: 2014

Website: https://www.tmc.edu/innovation/about/tmc-x-companies

Portfolio Highlights: Innosphere, Cloud 9, Abilitech Medical

Texas Medical Center Accelerator (TMCx) provides a gateway to the facilities, resources, and network of the world's largest medical center. With so many patients and providers, startups who work within this network are on the front lines of the fight for public health.

Medical device giants like Johnson & Johnson have offices on its campus, as do the dozens of talented and life-changing startups funded by TMCx.

EIT health

Number of Deals since January 1st, 2013: 58

Founded: 2015

Website: https://eithealth.eu/

Portfolio Highlights: Sleepiz, Orbit Health, Mirimark

EIT Health unites startups and organizations in medical device technology, biosciences, and life sciences to provide innovative breakthroughs to the EU. Their goal is to deliver solutions which enable European citizens to live longer, healthier lives. Though the EU spans many countries, borders, and millions of miles, it connects the right people and the right topics so that innovation happens at the intersection of research, education, and business.

EIT focuses its efforts on six primary areas of innovation: Reforming Care Pathways, Harnessing Real-world Data, Bringing Care Home, and Health in the Workplace.

Versant Ventures

Number of Deals since January 1st, 2013: 57

Founded: 1999

Website: https://www.versantventures.com

Portfolio Highlights: Twelve Inc., Quanticel Pharmaceuticals, Second SIght Medical Products

Versant is a leading investor in the biotechnology, medical devices and health care space, helping exceptional entrepreneurs with great ideas make a difference in the global healthcare marketplace.

The firm invests in projects across the healthcare sector and at various stages of company development, but focuses on firms developing novel therapeutics. Versant's website boasts that since its inception in 1999, it has helped more than 65 companies achieve successful acquisitions or IPOs.

Bpifrance

Number of Deals since January 1st, 2013: 55

Founded: 2012

Website: https://www.bpifrance.com

Portfolio Highlights: Gecko Biomedical

Bpifrance (Banque Publique d'Investissement) is a French venture capital firm. They have made a significant name for themselves with startups and mid-sized companies by booting up their listing on the stock exchange and offering credit to equity. BPI France provides companies a continuum of funding at every stage of their development.

This was especially true during the COVID-19 outbreak of 2020, when Bpifrance hosted the Covid-19 International Challenge, focusing on bringing new treatment devices to market in a controlled but expedited fashion.

Y Combinator

Number of Deals since January 1st, 2013: 53

Founded: 2005

Website: https://www.ycombinator.com

Portfolio Highlights: ZenFlow, Reverie Labs

Y Combinator has become a unique and compelling model for accelerators in the medical device community. By partnering with Y Combinator, they provide a service known as seed funding for startups. Seed funding is the earliest stage of venture funding, and actually pays your expenses while you’re getting started.

Though they don’t provide lab space for life science and medical device companies, they are able to find low-cost rates for developers and engineers, and work within the lab space established by the startup.

Venture Kick

Number of Deals since January 1st, 2013: 52

Founded: 2007

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Website: https://www.venturekick.ch

Portfolio Highlights: 4Devices Medical, KOVE medical AG

Venture Kick was launched in 2007 with the vision to double the number of spin-offs from Swiss universities, to accelerate their speed-to-market and to raise the attractiveness of these young companies among professional investors and industry partners. Selected members from a jury pool with more than 150 leading startup experts in Switzerland evaluate 20 startup projects at different stages at three sessions every month.

OrbIMed Advisors

Number of Deals since January 1st, 2013: 51

Founded: 1989

Website: https://www.orbimed.com/

Portfolio Highlight: Actus, Bonovo

OrbiMed Advisors is on the hunt for game-changing health science companies that will help all of us live longer, healthier lives. From biopharmaceuticals to medical devices to gene therapy, OrbiMed’s investments run the gamut—but they all focused on treating and curing illnesses that have plagued humanity for thousands of years.

For more than 20 years, OrbiMed has been investing in companies across the healthcare industry that align with their mission. With more than $19 billion under management in both public and private investments, OrbiMed is one of the premier venture investors in the life sciences space.

Johnson & Johnson Innovation

Number of Deals since January 1st, 2013: 49

Founded: 1886

Website: https://www.jnj.com/

Portfolio Highlights: Ethicon, Biosense Webster, Zebra Medical Vision, Cartiheal

Johnson & Johnson’s strategic venture capital arm seeks out transformative opportunities within healthcare, helping solve some of the most critical problems in the medical industry. In 2020 alone, JJDC made more than 40 investments, deployed more than $500 million in capital, and had eight exits.

JJDC currently has more than 130 active portfolio companies worldwide, deploying resources in discovery, clinical development, regulatory affairs, manufacturing, and more. With 47 years in the healthcare venture capital space, JJDC is one of the leading accelerators for healthcare startups.

Boston Scientific

Number of Deals since January 1st, 2013: 46

Founded: 1979

Website: https://www.bostonscientific.com

Portfolio Highlights: Cryterion Medical

Boston Scientific’s venture arm is committed to transforming lives through cutting-edge medical solutions developed in partnership with some of the most innovative healthcare companies in theworld. With more than 40 investments spanning four continents, Boston Scientific truly takes a global approach to solving some of the most intractable problems in healthcare.

The more than $500 million they have invested in their portfolio companies is used to develop and nurture ideas from conception to fruition, helping to build a brighter future for everyone.

Hi Tech Gruenderfonds

Number of Deals since January 1st, 2013: 43

Founded: 2005

Website: https://www.en.high-tech-gruenderfonds.de

Portfolio Highlights: AYOXXA Biosystems, Trademob, Mister Spex

High-Tech Gruenderfonds, also known as HTGF, is a unique venture capital firm that operates as a public-private partnership, with investment from the Federal Ministry of Economics and Technology in Germany, the KfW Banking Group and 39 Germany industrial groups, among other investors. The firm primarily invests in high-tech projects across all sectors, typically contributing up to 1 million euros in the seed stage with the potential of additional investment in later rounds.

HTGF has an impressive portfolio of approximately 490 companies, employees 50 people, and manages assets that total nearly a billion euros. The firm is based in Bonn, Germany.

Innovate Memphis

Number of Deals since January 1st, 2013: 42

Founded: 2011

Website: https://innovatememphis.com/

Portfolio Highlights: 901 Ride Choice

Innovate Memphis develops public-private collaborations that make an impact within the greater Memphis community. From ideation to development to implementation, the team at Innovate Memphis works to ensure that each initiative serves the larger goals of the community and is deployed in a sustainable, scalable manner.

By bringing together public, private, and non-profit stakeholders, Innovate Memphis looks to understand the true causes of issues within the community and deliver solutions that tackle the underlying issues. The multi-faceted team of policy wonks, subject matter experts, design professionals, and community leaders hope to build a more equitable and innovative Memphis.

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SV Health Investors

Number of deals since January 1st, 2013: 40

Founded: 1993

Website: https://svhealthinvestors.com/

Portfolio Highlights: AdaptHealth, Endontrix, Zerigo Health

The team at SV Life Sciences is driving innovation across the medical devices industry with over $2.7 billion in capital under management in seven private healthcare funds and one publicly listed fund. For entrepreneurs seeking funding for a new medical device, SV Life Sciences can provide all of the financing and resources required to take your product to market faster than you ever thought possible.

The firm focuses on companies operating in the healthcare sector, specifically those developing in-vitro diagnostics, medical devices and instrumentation, therapeutic proteins and antibodies and healthcare IT solutions. SV Life Sciences is based in Boston, Massachusetts.

Legend Capital

Number of deals since January 1st, 2013: 40

Founded: 2001

Website: http://www.legendcapital.com.cn/en

Portfolio Highlights : Bionano Genomics, Iflytek

Anyone in the medical device investor world should be paying attention to China’s markets, especially with a VC fund like Legend Capital in the mix. The firm has raised a total of $2.9B across 8 funds, many of which focus on medical device technologies like genetic testing equipment and speech therapy technology.

U.S. Venture Partners

Number of Deals since January 1st, 2013: 37

Founded: 1981

Website: https://www.usvp.com/

Portfolio Highlights: Aptus Endosystems, Atheromed, Intuity medical, Proteolix

U.S. Venture Partners is a venture capital firm that invests in healthcare and medical technologies, enterprise service technologies, internet security technologies and consumer retail products. based in Silicon Valley, the firm has invested in over 400 companies across its 30+ year history, including some well-recognized brands like GoPro, Sun Microsystems, and SanDisk.

USVP's expertise in business scaling and product development are assets to its partners, along with the extensive financial support that USVP can provide. The firm typically makes investments of between $10 million and $25 million dollars, especially in markets where the revenue potential exceeds $1 billion.

Deerfield Management Company

Number of deals since January 1st, 2013: 37

Founded: 1994

Website: https://deerfield.com/

Portfolio Highlights: Artms, Conventus, Cathworks

At Deerfield Management Company, the idea of making the world a better place comes to life. Much of this comes from their dedication to advancing healthcare, thanks to information, investment, and philanthropy—all of which comes with the end goal of cures for disease, improved quality of life, and more affordable cost of care.

It also comes thanks to its newest addition called Cure, Deerfield’s innovation campus on 345 Park Avenue South. There, innovators from across the industry and around the world work shoulder to shoulder to develop treatments that could end deadly diseases or change the payment models of healthcare itself. As of December 2020, the firm manages over $14 billion in assets.

Silicon Valley Bank

Number of deals since January 1st, 2013: 36

Founded: 1983

Website: https://www.svb.com/

Portfolio Highlights: HLS Therapeutics, Twist Bioscience, AtriCure

For over four decades Silicon Valley Bank has been a mainstay in the venture capital world. With deep experience in funding and financials for companies of all sizes, SVB has increased its position in the medtech and healthcare sectors over the past decade. Much of this success is due to the blend of in-house services it can provide portfolio companies.

The market has continued to notice their achievements, with rising stars like Twist Bioscience signing on, as well as a number of external VC firms conducting their banking needs there, too.

Bonus: 4 Medical Device Funding Options Outside of Venture Capital

While digging into the data on venture capital firm investors, we came across several big-time names that deserve your attention. While these are not VC firms, these investors provide huge amounts of funding and resources to medical device companies around the globe. So, without keeping you any longer, here are the top 4 non-VC medical device investors of 2021.

Mass Challenge

Number of Deals since January 1, 2013: 171

Founded: 2009

Website: https://masschallenge.org

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Portfolio Highlights: Digbi Health, Ejenta, 4Blind

As a startup accelerator, MassChallenge focuses on early-stage and big-impact entrepreneurs, providing financial support with no strings attached. Over $1 million in cash prizes is awarded annually to winning startups, with zero equity taken. Additional benefits for startups include world-­class mentorship and training, free office space, access to funding, legal advice, media attention, and over $10 million of in-­kind support.

MassChallenge is a 501(c)3 nonprofit and all proceeds support the startups via the accelerator program. MassChallenge does not take equity or place any restrictions on participating startups.

In an effort to support medical device startups, MassChallenge co-founded the digital health innovation hub MassChallenge HealthTech. There, they accelerate high-impact digital health startups through strategic partnerships with established leaders in medical devices.

Med Tech Innovator

Number of Deals since January 1st, 2013: 127

Founded: 2013

Website: https://medtechinnovator.org

Portfolio Highlights: Ali, Fast BioMedical, Clara Biotech

Industry veterans and startups alike will no doubt recognize Med Tech Innovators. As the largest life science accelerator in the world for medical device, digital health, and diagnostic companies, their numerous conferences, showcases, trade shows, and road tours bring out thousands of companies and investors.

Though in-person events are still matriculating, MTI has continued to unite and inspire through inventive online events and competitions. With 340 portfolio companies, 74 devices on the market, and over $2 billion in funding, it looks like this accelerator will be a catalyst of change for years to come.

National Institutes of Health

Number of Deals since January 1st, 2013: 81

Founded: 1887

Website: https://www.nih.gov

Portfolio Highlights: 23andMe, Ginko Bioworks

As part of the U.S. Department of Health and Human Services, the National Institutes of Health is the country’s authority on medical research and devices, as well as the world’s largest public funder of biomedical research.

Thanks to their efforts to promote public health, multiple startups have been exited with major IPOs, such as 23andMe, Ginkgo Bioworks, and Recursion. The NIH also empowers dreamers and high-risk companies involved in medical devices through the NIH Common Fund.

National Science Foundation

Number of Deals since January 1st, 2013: 57

Founded: 1950

Website: https://www.nsf.gov

Portfolio Highlights: Atom Computing, Phase Scientific, Clorexo

With a name like the National Science Foundation, it should come at no surprise the organization covers a lot of scientific areas. With funding in areas such as computer science and the social sciences, NSF is the major source of federal backing. This is especially true for medical device innovation, with successful exits for companies like Caribou Biosciences.

Additionally, the organization promotes STEM programming for students K-12, as well as colleges, as the NSF also contributes large numbers of grants and funding to private universities.

Medtronic

Number of Deals since January 1st, 2013: 51

Founded: 1949

Website: https://www.medtronic.com

Portfolio Highlights: Salient Surgical Technologies, Semma Therapeutics

Medtronic is known as a global developer and manufacturer of vital medical device technologies and therapies which treat chronic diseases. However, they’ve also made quite a name for themselves by funding and acquiring small startups with massive potential. Primarily, those areas of medical device interest are in surgical equipment, therapeutics, and bioengineering.

Free Download: Grab your PDF copy of the Ultimate List of Medical Device Venture Capital Firms here.

Summary

Venture capital firms play a crucial role in the ecosystem of innovation, connecting people and ideas with the financing and resources they need to bring new products in life and improve medical care for Americans and people around the world.

The top 20 medical device venture capital firms all have the financial backing and resources to help you develop your medical device, get to market as quickly as possible, and move ahead with an acquisition or IPO at the right time for your company.

Sources

https://www.cbinsights.com

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FAQs

What is a good Moic in VC? ›

The MOIC, in this case, would be 1.5. MOIC is best used for determining the following: A GP's ability to choose investments that are likely to give good returns. A GP's ability to make good raw investments.

Who is the most successful venture capitalist? ›

Who are the top venture capitalists in the USA
  • Bill Gurley. For over 10 years he has been a general partner at Benchmark. ...
  • Peter Fenton. Fenton has expertise in open source technology, and he has been at Benchmark since 2006. ...
  • Mitch Lasky. ...
  • Matt Cohler. ...
  • Rebecca Lynn. ...
  • Lightspeed Venture Partners. ...
  • Jeremy Liew. ...
  • John Vrionis.
16 Mar 2021

What are the 5 key elements of venture capital? ›

5 Key Components To Help Your Business Attract Venture Capital Investors
  • Unique Idea. ...
  • Show Experience. ...
  • Build a Strong, Dependable Team. ...
  • Growth Potential. ...
  • Defensible Business Model.
10 Jul 2015

What percentage of venture capital firms fail? ›

The National Venture Capital Association estimates that 25% to 30% of venture-backed businesses fail.

Which is more important IRR or Moic? ›

MOIC stands for “multiple on invested capital.” If you invest $1,000,000 and return $10,000,000 in 10 years your MOIC is 10x. If you invest $1,000,000 and return $10,000,000 in 3 years your MOIC is still 10x. But IRR is different, and often more important. IRR measures your financial return in respect to time.

What IRR do VCs look for? ›

What's a Good IRR in Venture? According to research by Industry Ventures on historical venture returns, GPs should target an IRR of at least 30% when investing at the seed stage. Industry Ventures suggests targeting an IRR of 20% for later stages, given that those investments are generally less risky.

Are venture capitalists rich? ›

A successful VC for a top-tier firm can expect to earn somewhere between $10 million and $20 million a year. The very best make even more. Most everyone who has attained any kind of success in Silicon Valley seems to dream of becoming a venture capitalist.

How much do venture capitalists make? ›

Salary + Bonus and Carry: Likely total compensation is in the $250K to $400K range. You will earn carry at this level, but it will be far less than what the Partners earn. Read more about Venture Capital Principals here.

Which industries have the highest venture capital investment? ›

Venture capital investments amounted to 25.9 billion U.S. dollars in the internet industry in the United States in the first quarter 2021. Other leading VC sectors in terms of investment were healthcare, computer hardware and services, and mobile and telecommunications .

What are the 3 stages of VC business funding? ›

Early stage (also called first stage or second stage capital) Expansion stage (also called second stage or third stage capital) Bridge stage (also called mezzanine or pre-IPO stage)

What do VC firms look for? ›

VCs look for a competitive advantage in the market. They want their portfolio companies to be able to generate sales and profits before competitors enter the market and reduce profitability. The fewer direct competitors operating in the space, the better.

What VCs look for in founders? ›

According to the firm, they look for founders with (1) a deep drive and personal motivation to be an entrepreneur, paired with (2) a growth mindset and openness for self-development. This in turn, enables them to (3) attract talented people around them when scaling the business.

Why do most VCs fail? ›

And as founders become blinded by their mission to amass massive amounts of money, they often overlook the main reason why 65 percent of VC-backed startups fail: senior management issues. The reason why VC-backed startups fail more often than not is not due to external factors, but internal.

Is being a VC hard? ›

It is brutally competitive, and very hard. Most importantly — VC is not just picking. It is finding, getting into, and winning the very, very, very best deals. This is very hard.

How many VC funds lose money? ›

The “loss ratio” at early-stage VC firms is often around 40% by logo, and 20%-30% by dollars. In other words, 4/10 may go bankrupt or at least lose money … but since the winners tend to get more than the losers, in the end, maybe “only” 20%-30% of the fund is lost in losers. The thing is, that's build into the model.

What does 3x Moic mean? ›

In the example above, if an investor's $100 investment has a total value of $300 after 5 years, the investor will have tripled their investment, otherwise known as 3x MOIC.

Is Moic same as TVPI? ›

MOIC divides the total value of the investment or fund by the initial investment, whereas TVPI divides the total value of the investment by the paid-in amount.

Is Moic gross or net? ›

Allows investors to measure how much value a fund has created. MOIC can be expressed as a gross or net metric. Net MOICs are generally net of fees and carry (also called “carried interest”). Often best used at the end of a fund's life.

What does a 30% IRR mean? ›

What's an IRR of 30% Mean? An IRR of 30% means that the rate of return on an investment using projected discounted cash flows will equal the initial investment amount when the net present value (NPV) is zero. In this case, when the time value of money factors are applied to the cash flows, the resulting IRR is 30%.

What is a good IRR for 5 years? ›

For unlevered deals, commercial real estate investors today are generally targeting IRR values of somewhere between about 6% and 11% for five to ten year hold periods, with lower-risk deals with a longer projected hold period on the lower end of that spectrum, and higher-risk deals with a shorter projected hold period ...

How much return does a VC expect? ›

They expect a return of between 25% and 35% per year over the lifetime of the investment. Because these investments represent such a tiny part of the institutional investors' portfolios, venture capitalists have a lot of latitude.

Is VC a good career? ›

Overall, the career as a Venture Capitalist is a highly responsible, respected, and rewarding experience. Largely, there are two aspects that do not go well with a career in Venture Capital. Firstly, getting into this niche industry is extremely difficult.

Are VC funds risky? ›

By their very nature, venture capital investments are risky. Unsecured loans provided to start-up companies and businesses that can't get traditional loans are called venture capital.

Where do VC get their money? ›

Venture capitalists make money from the carried interest of their investments, as well as management fees. Most VC firms collect about 20% of the profits from the private equity fund, while the rest goes to their limited partners. General partners may also collect an additional 2% fee.

Do you need an MBA for VC? ›

While an MBA degree can certainly hone a technical skill set necessary for a job in VC, there's a practice much more valuable for pursuing a career in the field.

How do I approach a VC for funding? ›

Find the right VC to fund your business.

Thus, the first step in reaching out to VCs is research. Once you've got a target list of VCs to approach, it's time to set up meetings. You have two opportunities to make connections: an intro from someone in your network or a cold email to a VC partner.

How do investors get paid back? ›

There are a few primary ways you'd repay an investor: Ownership buy-outs: You purchase the shares back from your investor depending on the equity they own and the business valuation. A repayment schedule: This is perfectly suited to business loans or a temporary investment agreement with an assumption of repayment.

Which sectors are VCs investing in? ›

High-tech startups and the venture capital (VC) investment model
  • Information technology (IT)
  • Life sciences.
  • Energy and environmental technologies (clean tech)
  • Traditional—including consumer and business services, onsumer products, and manufacturing.

What industry cluster is venture capital most common within? ›

Software is the leading industry, attracting nearly $12 billion, roughly a third of all ven- ture investment (36.2 percent). Biotechnology is second with $5.7 billion, 17.3 percent of total investment. Media and entertainment is third with $3.2 billion, 9.5 percent.

How much do VC partners make? ›

Well, of the 204 VCs surveyed (172 male and 32 female), the average general partner expects to make roughly $634,000 this year, including a bonus for 2017 performance. The averages varied a bit depending on the size of the firm.

How is VC performance measured? ›

It is calculated by dividing residual value by paid-in capital. It is calculated by dividing the Total Value by Paid-in Capital.

What is the difference between PE and VC? ›

Key Takeaways: Private equity is capital invested in a company or other entity that is not publicly listed or traded. Venture capital is funding given to startups or other young businesses that show potential for long-term growth.

What is Series D funding? ›

What Does Series D Funding Mean? Series D funding is the fourth stage of fundraising that a business completes after the seed stage. The initial round of funding after the seed stage is Series A. The second is the Series B and then the third is Series C.

What questions do VCs ask startups? ›

15 Key Questions Venture Capitalists Will Ask Before Investing In Your Startup
  • Is There a Great Management Team? ...
  • Is the Market Opportunity Big? ...
  • What Positive Early Traction Has the Company Achieved? ...
  • Are the Founders Passionate and Determined? ...
  • Do the Founders Understand the Financials and Key Metrics of Their Business?
13 Apr 2019

What are the 5 questions to ask before you invest? ›

5 questions to ask before you invest
  • Am I comfortable with the level of risk? Can I afford to lose my money? ...
  • Do I understand the investment and could I get my money out easily? ...
  • Are my investments regulated? ...
  • Am I protected if the investment provider or my adviser goes out of business? ...
  • Should I get financial advice?

What questions will an investor ask? ›

10 Common Questions Investors Ask Founders
  • Why is now the right time to start the company? ...
  • What trends do you see in the market? ...
  • Why is the team uniquely capable of executing the plan? ...
  • Why do users care about your product? ...
  • How did you come up with your business idea? ...
  • Which competitor is doing the best job and why?
28 Jan 2022

How long does VC due diligence take? ›

VC firms can expect to spend 20 hours or more on due diligence for each possible investment. Rushing through only puts your firm and your venture capital investors at risk. It's a complex and lengthy process, but in venture capital, due diligence can be broken down into three core stages.

How long does it take to get venture capital funding? ›

So How Long Does it Take? The timeframe and complexity of raising capital depend on the stage and sector of the business, and the team running it. A general rule of thumb is ensuring you are prepared for at least 6 months of raising. A very quick raise may take 3 months, and a long raise may take 9 months.

What investors look for before funding a startup? ›

The characteristics that startup investors pay attention to: team, product, market size and valuation. – Size of the market: what drives most investors is finding startups that at some point can become big, large companies to get a significant return on their investment.

What does a 3X return mean? ›

Returns can also be expressed as a multiple of the fund the investment came from. For a $100M venture fund that has returned $300M, the multiple for the fund would be expressed as “a 3X return cash on cash.”

What is a good VC return? ›

So an annual 10% rate of return for an investor in a VC fund is not enough. LPs are looking for annual return percentages at least in the high teens or low twenties. Or put another way, they are looking for 5-15 percentage points above what the money would have done in a broad-based market index during the same period.

How much equity do VC firms take? ›

What Percentage of a Company Do Venture Capitalists Take? Depending on the stage of the company, its prospects, how much is being invested, and the relationship between the investors and the founders, VCs will typically take between 25 and 50% of a new company's ownership.

Is being a VC stressful? ›

The VC job is as demanding as you want it to be, and that can vary based on what you want out of the job as well as your own personality match with the role.

How many hours a week do venture capitalists work? ›

Although they worked more than traditional banking hours, most VCs in our survey reported that their workweek was by no means excessive. On average, they put 55 hours a week in on the job, spending 22 hours a week networking and sourcing deals and 18 hours working with portfolio companies.

How hard is it to break into VC? ›

It's very difficult to break into venture capital directly out of undergrad, and even if you have the background for it – i.e., you went to Stanford or Berkeley, majored in CS, and completed multiple startup and finance internships – it's not necessarily a great idea to do it.

What is a good IRR for VC? ›

What's a Good IRR in Venture? According to research by Industry Ventures on historical venture returns, GPs should target an IRR of at least 30% when investing at the seed stage. Industry Ventures suggests targeting an IRR of 20% for later stages, given that those investments are generally less risky.

What year do most startups fail? ›

About 90% of startups fail. 10% of startups fail within the first year. Across all industries, startup failure rates seem to be close to the same. Failure is most common for startups during years two through five, with 70% falling into this category.

Do you have to pay VC back? ›

While you don't technically have to “pay back” venture capital, venture capital firms are expecting a return on their investment. That means that a startup that accepts VC money needs to be planning for an exit of some kind, usually an acquisition or an IPO.

How do you calculate Moic for VC? ›

The MOIC is calculated by adding the cash values received during the holding period, starting from Year 1. The next step is to divide the sum from above by the initial investment amount, with a negative sign placed in front of the initial investment value (to convert it to a positive value).

Can you have a negative Moic? ›

MOIC is calculated by dividing cash inflows by outflows (i.e. $500/$100). While this example above does not consider the impact of the credit facilities' interest expense on the MOIC, there will generally be a small negative impact on the MOIC of the Fund.

What is 1x Moic? ›

If the company sells for $10 million, all of the sale proceeds will be paid to the preferred shareholders to cover their liquidation preference. They will make a 1x return on their investment, which will be classified as a 1x Multiple On Invested Capital (MOIC).

Is ROIC the same as Moic? ›

The "TVPI" is the "Total Value to Paid-in Capital" ratio. This ratio has other names, including Multiple of Investment Cost (MOIC) and the Return on Invested Capital (ROIC). TVPI is simply the total estimated value of an investment divided by the total capital invested.

How is VC performance measured? ›

It is calculated by dividing residual value by paid-in capital. It is calculated by dividing the Total Value by Paid-in Capital.

What do VC firms look for? ›

VCs look for a competitive advantage in the market. They want their portfolio companies to be able to generate sales and profits before competitors enter the market and reduce profitability. The fewer direct competitors operating in the space, the better.

What is a MoM return? ›

Otherwise referred to as the cash-on-cash return or multiple of invested capital (MOIC), the multiple of money (MoM) is one of the most widely used metrics for measuring the return on an investment as well as tracking the performance of a fund.

What is difference between Moic and TVPI? ›

The difference is in the denominator. MOIC divides the total value of the investment or fund by the initial investment, whereas TVPI divides the total value of the investment by the paid-in amount. When a fund is fully funded and all capital calls have been met, then TVPI will equal MOIC.

Does a negative IRR make sense? ›

A business that calculates a negative IRR for a prospective investment should not make the investment. IRR stands for internal rate of return, which is the discount rate that, when applied to a series of cash flows, would result in a present value that matches the amount of the initial investment.

Is Moic gross or net? ›

Allows investors to measure how much value a fund has created. MOIC can be expressed as a gross or net metric. Net MOICs are generally net of fees and carry (also called “carried interest”). Often best used at the end of a fund's life.

Why does private equity use IRR and Moic? ›

MOIC and IRR are both valuable to investors. MOIC's simplistic calculation clearly tells investors how much money they're ultimately receiving from an investment. On the other hand, IRR allows for investors to understand the impact of varying hold periods on investment returns.

Is Moic after tax? ›

Gross Unrealised Value and Gross MOIC (Gross Multiple of Invested Capital) are before transaction costs, taxes (approximately 21 to 27.5 per cent.

What is better ROIC or ROE? ›

A Robust Measure of Profitability

Return on assets (ROA), return on equity (ROE), and return on invested capital (ROIC) are three ratios that are commonly used to determine a firm's ability to generate returns on its capital, but ROIC is considered more informative than either ROA and ROE.

What is a high ROIC? ›

An ROIC higher than the cost of capital means a company is healthy and growing, while an ROIC lower than the cost of capital suggests an unsustainable business model. 1. The value in the numerator can also be calculated in several ways. The most straightforward way is to subtract dividends from a company's net income.

Why is ROE higher than ROIC? ›

The return on equity (ROE) tells you how much profit a company is earning relative to the value of assets after subtracting debts. Unlike ROE, ROIC focuses on the profits generated by both equity and debt.

Videos

1. IAS Distinguished Lecture: Dr. LEE Kai Fu (Aug 29, 2022)
(HKUST Jockey Club Institute for Advanced Study)
2. Benchmarking Corporate Venture Capital
(CB Insights)
3. E1048 Power of Accelerators E1 Dreamit Ventures’ Steve Barsh: top portfolio cos, nailing interviews
(This Week in Startups)
4. E26: State of Venture Capital, plus fan questions on longevity, decentralization & quantum computing
(All-In Podcast)
5. Ernestine Fu: All You Need to Know About Venture Capital
(Stanford)
6. Best STARTUP PITCH ever. Silicon Valley.
(Jeff Bax)

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