When something like three in four venture-backed startups fail, picking the ones that won’t is definitely not an easy feat.
In search of what they call the “unicorn VCs” of healthcare – investors who have consistently invested in companies with the biggest of the big exits – analysts at research firm CB Insights combed through a decade of healthcare M&A data. They found 50 medical device and biotech companies that exited, through IPO or acquisition, with valuations of at least $500 million between 2004 and 2013.
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One hundred and thirty-six different VCs had invested in those companies prior to exit, but only 48 had invested in more than one.
The ones who invested in the most? New Enterprise Associates, OrbiMed Advisors and Alta Partners, each of which invested in six companies with $500 million+ exits.
Because the stage at which a VC invests is a critical factor in the returns generated, the analysts also looked at that metric. And for those three investors, it looked pretty good. Of NEA’s, OrbiMed’s and Alta Partners’ combined 18 investments, half were in a Series B round or prior, and 17 percent were in a Series A round or prior.
In both cases, those proportions generally got smaller among investors with fewer $500 million+ exits (see chart above).
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Interestingly, when the firm did a similar analysis of tech companies with $1 billion+ exits, a much higher percentage, 38 percent, of VCs with the most such exits (eight) invested in Series A or prior.
Of course this is only one way of looking at VC performance, but it’s interesting nonetheless. I’m also curious to know the two VCs with four $500 million+ exits who jumped in a seed or Series A round in half of those investments, but the firm didn’t provide those names in its post.
Read CB Insights’ full post here.
[Image credits: CB Insights, Flickr user jelloneck]