Things I Learned at the National Venture Capital Association Meeting

I am at the annual meeting of the National Venture Capital Association being held in Boston lastthis week. The tone was remarkably upbeat—but only for those firms with either a new fund or who somehow avoided making a lot of overvalued investments during the last few years. There was a lot of rhetoric about how/when/whether the world will improve, whether VC’s will make money in cleantech, and when LPs will begin to wade back into the asset class.

But I did learn a number of things I did not know when I woke up…

* Revenues at VC-backed companies accounted for 20.5% of the nation’s GDP

* VC-backed companies represented 8.6% of all employment

* There are 12 million jobs at public companies which were once VC-backed

* Once companies went public, headcount grew 92% (94% in the 1980’s, 76% in the 2000’s – not a great trajectory admittedly)

* There were 1,171 new VC-backed companies in 2008

* Unfortunately there were only 6 IPO’s in 2008 and 341 M&A transactions that same year

* It now takes on average 9.6 years to get VC-backed companies public (or 6.5 years for an M&A transaction)

* $4.5 billion is being spent now from the stimulus package on “smart grid” technologies

* One in three people have been meaningfully helped by VC-backed biotech companies (staggering)

* WalMart recently lowered the cost of generic drugs to $4 which they believe served to take more costs out of the healthcare system than any single act of healthcare legislation

* Shockingly this year the 65,000 annual H-1B visa cap was not hit in the first week of being available (not happened before) which speaks to the limitations instituted that foreigners are not able to displace US workers

* There is now great anxiety that the federal government will regulate the VC industry given the “concerns” that the VC industry may create something called “systemic risk”

The industry I work in has certainly been an engine of innovation and job growth; to hear some of the specific statistics only reconfirms that understanding. It also underscores the need to get the VC ecosystem back on track and should provide caution to the government to be careful on how it feels it needs to regulate the industry.

Author: Michael A. Greeley

Michael is a General Partner at Flare Capital Partners. Prior to co-founding Flare Capital Partners, Michael was the founding General Partner of Flybridge Capital Partners where he led the firm’s healthcare investments. Current and prior board seats include BlueTarp Financial, Circulation, EndoGastric Solutions, Explorys, Functional Neuromodulation, HealthVerity, Iora Health, MicroCHIPS, Nuvesse, PolyRemedy, Predictive Biosciences, Predilytics, T2 Biosystems, TARIS Biomedical, VidSys and Welltok. Previously, Michael focused on emerging-growth company financings with Polaris Venture Partners, was a senior vice president and founding partner of GCC Investments, and held positions at Wasserstein Perella & Co., Morgan Stanley & Co. and Credit Suisse First Boston. Michael currently serves as chairman of the Entrepreneurship Committee of the Massachusetts Information Collaborative and on the Investment Committee for the Partners Innovation Fund and Massachusetts Eye & Ear Infirmary. Michael also serves on the Industry Advisory Board of the Cleveland Clinic and Boston Children’s Hospital, as well as serving on several other boards including the New England Investors’ Committee of Capital Innovation. He was the former chairman of the New England Venture Capital Association and on the Executive Committee of the board of the National Venture Capital Association. Named by the Boston Globe as the “Go-To” investor for life sciences, healthcare and medical devices and a Mass High Tech All-Star, Michael earned a B.A. with honors in chemistry from Williams College and an M.B.A. from Harvard Business School. Michael authors a blog focused on venture capital, innovation and healthcare at www.ontheflyingbridge.com.