The life sciences venture capital industry is undergoing rapid change. Although many innovative ideas have been taken from the bench to scientific discovery to treating patients, funding today to develop new products and services is getting more difficult to attain. Getting a product to market involves not only a long scientific process, but a carefully orchestrated financial process. This article attempts to explain how a typical VC fund operates and makes investment decisions.
Although many management teams readily approach us for possible funding, more than a handful are not knowledgeable about the inner workings of a venture capital firm, specifically the process by which we decide whom we will ultimately fund. I believe an understanding of the entire funding mechanism will better help entrepreneurs understand what to expect, the types of information the venture capital fund will request, and how long the process will take.