venture capital

In partnership with several major pharmaceutical companies, the United Kingdom’s (UK) Secretary of Health Jeremy Hunt announced the creation of the $100 million Dementia Discovery Fund. The UK government-led venture fund will support innovative research across the globe to help find new ways to prevent and treat dementia and Alzheimer’s disease. Private sector partners that already have agreed to invest in the project include Biogen, GlaxoSmithKline, Johnson & Johnson, Lilly and Pfizer. One of the UK’s largest Alzheimer’s-focused foundations, Alzheimer’s Research UK, also will commit funding to support the development pioneering new drugs to treat the condition. Read the press release…

California-based companies received about 56 percent of all U.S. venture capital dollars in 2014, the state's highest share of venture activity since the dot com boom of the early 2000s. Over the past 15 years, investment activity has steadily become more concentrated in California and a few other states. In 2009, about 67 percent of all deals and 74 percent of venture capital dollars flowed to the top five states. By 2014, those states' share of venture dollars grew to 80 percent, according to NVCA/Pricewaterhouse Coopers data. A recent Harvard Business Review article, however, suggests that startups are receiving first-round funding in more metropolitan areas than ever.

The first wave of year-end 2014 data on U.S. venture investment painted a portrait of a resurgent capital market. Investment activity reached its highest level of activity in a decade, finally shaking off the stagnation of the Great Recession (see last week’s article). Within the data, however, there were some concerning trends. The PricewaterhouseCoopers (PwC)/National Venture Capital Association (NVCA) Moneytree data indicated that while later-stage investments and megadeals drove the 61 percent one-year increase in total VC dollars, seed stage dollars fell by 29 percent.

U.S. venture capital investment hit $48.3 billion in 2014, its highest level since 2000, according to data from the National Venture Capital Association (NVCA) and PricewaterhouseCoopers (PwC). Investments jumped 61 percent over the previous year in terms of dollars. Deals were up as well, but by a more modest 4 percent to 4,356 deals in 2014, indicating the growth of deal size and the presence of a number of “megadeals.” NVCA also noted that investments were dispersed throughout the country, with 160 U.S. metros receiving some venture capital.

As competition increases within the venture capital industry to fund the next Google or Uber, the most highly desirable startups often have multiple investment offers and must decide upon the best. There are several factors that can affect evaluation of potential equity investors. For many startups, the decision may focus solely on the terms of the deal. However, there may be many more factors – outside of financial considerations – that impact the startup’s evaluation process.

Last week, New York Gov. Andrew Cuomo launched the New York State Innovation Venture Capital Fund (NYSIVC or The Fund), a $50 million fund that is expected to leverage at least $100 million in private capital to support early stage companies in high growth areas such as advanced materials, clean technology, life sciences/biotechnology, and information technology.

Around the world, national governments are working to cultivate their innovation economies and increase their global competiveness by creating and increasing support for government-led initiatives. Leaders of advanced economies recognize that their positions as global leaders face a murky future due to the emergence of new economies. In turn, officials from emerging economies realize that supporting innovation is necessary for their economies to continue their rapid growth. In 2014, governments from both advanced and emerging economies searched for methods that would help their high growth-firms transform their economy and increase their global competiveness. One of the global trends of 2014 was the emergence of government-backed, privately managed venture capital initiatives.

The Small Business Administration (SBA) released a request for information (RFI) on revisions to two key areas of the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) policy directives: SBIR/STTR Phase III policy; and, SBIR/STTR data rights. With regard to SBIR/STTR Phase III Policy, the SBA seeks comments on how to clarify how agencies can make more practical Phase III awards to the small businesses that initially developed the subject technology. In light of recent concerns regarding SBIR/STTR data rights by small business concerns, the SBA seeks comments that provide greater clarity and detail on these issues and recommendations to strengthen the data rights of awardees.  Comments are due January 6, 2015. Read the announcement…

Over two years, President Obama signed the JOBS Act, a bill authorizing a variety of significant changes to securities laws. Among those changes, the Securities and Exchange Commission (SEC) was mandated with implementing rules for equity crowdfunding within 270 days – approximately January 2013. However, the rules still remain in draft form. This SEC slow play has led to grassroots lobbying efforts by crowdfunding industry professionals; 30 members of the U.S. House  of Representatives’ Innovation and Entrepreneurship Caucus drafting a letter to pressure the SEC into adopting the new rules; and, federal lawmakers proposing new federal legislation to revise the original JOBS Act proposed crowdfunding rules.

Global investors are more confident investing in the U.S. than anywhere else in the world, according to a recent survey from Deloitte and the National Venture Capital Association (NVCA).  Confidence in the U.S. macroeconomy and U.S. investments has now grown for the third straight year and continues to lead among the 12 countries included in the study. Respondents, however, indicated that they had a negative opinion of the country’s investment policy environment. U.S. investors have the lowest confidence of any country in their government’s ability to enact policies favorable to domestic investment.