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09

Jan

2014

Strong year for Biotech IPOs Spurs Optimism for 2014 PDF Print E-mail

Kelly Sloane

Written by Kelly Slone   
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As the flood of 2013 recaps and 2014 predictions begins to recede, one storyline continues to spur optimism among venture capitalists: the continued improvement in the venture-backed IPO market. In no sector was this trend more notable than in biotechnology.  With 42 IPOs, biotech provided nearly half of the venture-backed total in 2013. In fact, 2013 saw more biotech IPOs than the last five years combined.

Many factors impact the exit environment for venture-backed companies in a given year. But we believe that two NVCA policy initiatives in 2012 helped pave the way for biotech’s resurgence in 2013. The first is the JOBS Act of 2012, which aimed to ease the cost and regulatory burdens faced by small, innovative startups looking to go public. This past year, the average biotech IPO raised $83 million, which is exactly the type of offering that the JOBS Act’s On-Ramp was designed to enable.

The second is the FDA Reform Act of 2012. NVCA and MedIC members worked tirelessly in support of that legislation because we believed that a demonstrable commitment to reform on the part of Congress and the FDA would help improve confidence and outlooks for participants across the entire life sciences continuum. For example, we believe that the upward trend in drug approvals over the past several years has increased investor confidence in the FDA's review and approval process.  We also believe that stronger fundamentals have attracted generalist investors back to the sector, which has increased both the available pool of capital and IPO company valuations.

All of these factors drove IPO market performance in 2013. And we are cautiously optimistic that their momentum will carry over into 2014.
 

20

Dec

2013

NVCA Sponsors Mobile Medical App Roadshow PDF Print E-mail

Kelly Sloane

Written by Kelly Slone   
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Since the day the U.S. Food & Drug Administration (FDA) published its final guidance on mobile medical apps last September, app developers have been trying to determine how the FDA guidance impacts their particular apps and business plans. Now, a consortium of six leading universities, more than a dozen industry trade associations and professional societies – including NVCA, and the FDA are poised to help developers do just that through a series of educational programs called “MMA Roadshow:  Managing App Development under FDA Regulation.”

Targeting entrepreneurs and innovators, the MMA Roadshow aims to demystify the FDA requirements, improve understanding of the process for innovating in this regulated space, and identify best practices among those companies already producing regulated apps. It will consist of six events distributed evenly between the East Coast, West Coast and Midwest and Southwest. (A complete schedule can be found here.)

Each four-hour program will include a mix of presentations and panel discussions featuring participants who are either involved in or who have successfully navigated the FDA process for obtaining clearance from the agency to market their app. They will share what they have learned from a regulatory strategy perspective, as well as what they have encountered from a business perspective. Officials from the FDA will participate actively in the program, both helping to explain its requirements and fielding difficult questions.

The consortium has designed the MMA Roadshow to accomplish the larger goal of advancing patient care by encouraging the development of apps at the higher benefit/higher risk end of the spectrum – where the opportunities to improve patient outcomes and spur economic development are the greatest.

For more information about the MMA Roadshow Consortium, or to register, you can go to www.mHealthregulatorycoalition.com/events.  As a member/sponsor, NVCA can offer its members a 50 percent discount on registration. To obtain the discount code, please contact Lisa Blackburn at lblackburn@ebglaw.com.
Last Updated on Friday, 20 December 2013 12:48
 

17

Dec

2013

Hannah Veith Joins NVCA as Director of Business Development PDF Print E-mail

Janice Mawson

Written by Janice Mawson   
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The National Venture Capital Association is pleased to announce that Hannah Veith has joined the association as its director of business development. Hannah is responsible for cultivating relationships with business partners and growing non-dues revenue for the association. Her duties include managing NVCA’s preferred provider listing, as well as sponsorship opportunities for the association’s website, member directory, monthly newsletter and special events – including VentureScape, the NVCA’s annual meeting.

Prior to joining NVCA, Hannah worked at CTIA – The Wireless Association. There, she served as the liaison for marketing, public relations and partnerships for CTIA events and conventions. She began her career in CTIA’s Regulatory Affairs Department, where she was a member of the association’s regulatory policy advocacy team.

Hannah received her BSBA cum laude in management and marketing from Robert Morris University, where she played for the university's Division I volleyball team. 

You can reach Hannah at hveith@nvca.org or at 703-778-9289.

Last Updated on Tuesday, 17 December 2013 15:14
 

16

Dec

2013

In Tech Bubble Talk, Differences Outweigh Similarities with Early 2000s PDF Print E-mail

Bobby Franklin

Written by Bobby Franklin   
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In the wake of last month’s Twitter IPO, and the attention it drew to the valuations of those companies widely perceived as “next in line,” some of our members have reported fielding questions from journalists and other market observers about whether we’re seeing the beginnings of another tech bubble. Based on my conversations with these folks, the short answer is, “No.”

First, any vigorous market that features serial highs like those we’ve seen in recent months is going to attract investor attention. That, in turn, breeds higher valuations.  That said, we believe that these companies are creating and delivering real lasting value to their end users. So, while some froth may be present, it’s not fanned by hot air alone.

Second, the companies presently garnering the most attention are much further along in their development curves than the “cautionary tale” companies of the early 2000s. Far beyond the proof-of-concept stage, many of today’s tech leaders are sustainable, scalable businesses that have already built daily relationships with tens of millions – or even hundreds of millions– of users.

Third, higher valuations are somewhat part and parcel of the longer runways to exit we’ve seen since the tech bubble, and through the Great Recession. The longer a promising venture-backed company remains private and independent, the more guidance and funding it may receive from its investors – and the more it may be apt to grow. Similarly, the longer a VC firm can keep a successful company in its portfolio, the greater the value it can return to its investors – the limited partners – at the exit. This is not to say that VCs are enjoying today’s longer runways, but they are capturing more of the upside where possible.

Finally, many VCs believe that now is still a good time to invest. In each of the last five years, the industry has invested more money than it has raised. Yes, fundraising has been difficult, but the investing climate still looks good to many. Otherwise, so many VCs would not be investing ahead of their fundraising.

Yes, those who ignore the lessons of history are still doomed to repeat them. But insight lives in both the similarities and differences between yesterday and today, and we should take care to consider both in this case.

 

25

Nov

2013

Patent Litigation Reform Advances in Congress PDF Print E-mail

Kelly Sloane

Written by Kelly Slone   
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Patent litigation reform has gained significant momentum in Washington over the past month, with bills being unveiled in both houses of Congress and the White House reiterating its desire to see a measure reach the President’s desk. In more colloquial terms, Congress is once again attempting to tackle the problem of patent trolls.  While we agree with those who want to curb abusive litigation, we also recognize that the potential impacts of some of the reform proposals do not cut neatly across the traditional venture sectors in which our members invest.

For a significant number of NVCA members, abusive patent assertions and litigation have become a serious concern, as indicated in a recent study by UC Hastings law professor Robin Feldman, with participation from NVCA members and portfolio companies. This is likely because the costs of challenging or infringing upon the patents of innovative upstarts are relatively low, while the benefits can be high. Conversely, the costs and burdens of defending against infringement or assertions for those small venture-backed companies are often disproportionately high. These dynamics have made abusive and frivolous assertions and infringements popular strategies, and they must be addressed.

However, the need to address these concerns must be balanced with the needs of those start-ups that depend on strong patent protection and that believe the system is working. In addition, any remedial actions must also guard against unintended consequences that could weaken strong patent protection.

Within this context, NVCA is working with Members of Congress, as well as those in our industry, to find a consensus around appropriate solutions as discussions about patent litigation continue in both chambers. In the House, the Judiciary Committee marked up the Innovation Act of 2013 (H.R. 3309) on Nov. 20 and voted 33-5 to advance the amended bill to the House floor. Introduced by Chairman Bob Goodlatte (R-Va.), the Innovation Act aims to curb the practice of abusive and/or frivolous patent assertions by bringing more transparency to the process and easing the burdens on defenders in such cases. While NVCA supports the bill’s broader goals of limiting abuse of patent protections and ensuring that the U.S. patent system works efficiently to encourage and reward innovation, the Innovation Act of 2013 contains a number of provisions that warrant concern for venture capitalists. NVCA expressed these concerns on record in a letter to the committee prior to the markup session.

In the opposite chamber, Senate Judiciary Chairman Patrick Leahy (D-Vt.) and Sen. Mike Lee (R-Utah) have introduced the Patent Transparency and Improvements Act. This bill focuses more directly on the issue of frivolous demand letters by confirming the Federal Trade Commission’s authority to act against companies that threaten to file infringement lawsuits for which the primary goal is securing settlements from their targets. The bill does not currently contain language regarding fee shifting. An outline of the bill can be found here.

While the House appears ready to bring H.R. 3309 up for a full vote sometime next week, we believe that progress may come more slowly in the Senate, and thus temper some of the momentum we’re seeing now. In any event, NVCA is confident that we will have additional opportunities to deliver our messages on these issues – and in the process, assist lawmakers in passing legislation that strikes the right balance for all stakeholders.

Last Updated on Monday, 25 November 2013 14:27
 

22

Nov

2013

Entrepreneur’s Corner: Turn Your Investors into Rubber Ducks PDF Print E-mail
Written by Global Entrepreneurship Week   
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Guest blog post by

Phin Barnes

First Round Capital

In programming there is a concept called rubber duck debugging. As an investor, my goal is to be the best rubber duck on the planet. For software it works like this (original from lists.ethernal copied below):

1) Beg, borrow, steal, buy, fabricate or otherwise obtain a rubber duck(bathtub variety)

2) Place rubber duck on desk and inform it you are just going to go over some code with it, if that's all right.

3) Explain to the duck what you code is supposed to do, and then go into detail and explain things line by line

4) At some point you will tell the duck what you are doing next and then realize that that is not in fact what you are actually doing.  The duck will sit there serenely, happy in the knowledge that it has helped you on your way.

Works every time.  Actually, if you don't have a rubber duck you could at a pinch ask a fellow programmer or engineer to sit in.

 I don’t think investors should engage in creating the application or try to come up with the bug fixes, but good ones can add a ton of value by seeing bugs and flagging them first– sometimes I can identify them based on my start-up experience (although the half-life on this is very short for most things that matter). Generally, early signs of bugs come up through experience with other founders and their companies and new ones become clear all the time through conversations with other investors, business development partners and service providers. This is the value in “pattern matching” and it helps flag the first sign of a bug in the system so the management team can properly prioritize it, put it in the cue and fix it (or teach me why it is a feature not a bug).

I choose to be a rubber duck rather than engage in a more prescriptive debugging method because I believe that for any challenge your business faces, the the best answer is in you, the founder. My job is to help draw your best answer out and then leverage all the resources available to me, to First Round and within the First Round Community to eliminate friction so you can execute against your best answer as fast as possible.

5 steps to turn your investors into rubber ducks:

  1. Frame the problem you are facing — describe the challenge in enough detail that I can understand it without being an expert (because I am probably not an expert)
  2. Create context for an answer — Explain why this problem is a priority for you and the business and why you need to solve it now (because I am not involved in the day to day operation of your company)
  3. Propose a few solutions — Describe a few paths you might take and talk through how you would choose between them (this helps me understand the outcome you want to achieve)
  4. Be patient — Be open and engage deeply in the questions that I have and explain your answers with specific detail (even if it seems obvious)
  5. Be active – The goal is to debug the system and the builder is most likely to find the bugs we seek (and to see others along the way)

An example:

Last night I called a founder to see how it was going. At the end of the call, he said, “Thanks for the call. Talking this through really helped me figure it out.”

It was a small thing, and I know that the conversation served to confirm his thinking — but even in the 30-40 minutes we were on the phone, I heard his thinking evolve and believe it got better. The company moved a little closer to behaving as expected and doing the thing it is being built to do. This is success for me. To be helpful in this way. To help a founder adjust by one or two degrees at the start and to know that it could change the outcome by a lot.

If you can get your investors to embrace their inner rubber duck, the good ones will find ways to ask the questions that no one else has asked, to come at the problem sideways — not with the answer –but with questions that push at the edges and help you find the best answer for you and your company. An investor that embraces the rubber duck approach combined with the common things (responsiveness, access to resources, dedication of time) and the stuff that really matters (be part of the ecosystem, give more than you take, be empathetic) sounds like a great VC to me.

(Thanks to Micah Baldwin for his post What Makes a Good VC as the three common things and the three things that really matter come from him)

This column was originally published here.

In recognition of Global Entrepreneurship Week, NVCAccess is featuring guest blog posts from NVCA members about isssues that entrepreneurs commonly face in building innovative startup companies. This information is intended to provide mentoring and guidance to entrepreneurs, and is not meant as investment or fundraising advice.

Last Updated on Friday, 22 November 2013 12:11
 
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