Investment performance of life-science venture capital investment funds, persistence, and subsector analysis

Venture capital investment performance data and performance attribution are not typically published. Venture investors articulate (and sell to LPs) conflicting strategies; the popular business literature and culture is rife with rapidly changing beliefs about the relative attractiveness of healthcare venture subsectors, particularly therapeutics and devices. To examine these issues in a more rigorous format I developed a dataset of healthcare venture deals, scored each deal with a new metric ("jb-score"), and assigned each portfolio company to appropriate subsectors. This dataset was then used to examine subsector performance, persistence, and fund strategy attribution (pure vs. mixed healthcare strategies.) Specifically, I found that the performance characteristics of device and therapeutic (aka biotech or drug) investments are similar: both subsectors evidence similar jb-scores and firms who invest heavily in these subsectors show similar levels of persistent overperformance with devices showing somewhat higher persistence. Firms that focus on one subsector do not perform as well as firms that follow a more balanced strategy. Finally, I examine the validity of the jb-score and offer some suggestions for future improvements.

Department dc:contributor.department

Harvard University--MIT Division of Health Sciences and Technology.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2007

Author dc:creator

• Behrens, Jeffrey S

Advisor dc:contributor.advisor

• Antoinette Schoar and Stanley N. Lapidus.

• Harvard University--MIT Division of Health Sciences and Technology.
• Sloan School of Management.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/38334

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/38334