Venture Capital, Take Note

In the generally miserable venture capital environment of that last few quarters, one bright spot has been the health sciences market.  It’s one of the area where Colorado can compete effectively, and an area where America is well ahead of the rest of the world.  It produces actual long-term savings and real quality-of-life and lifespan improvements.

And the Senate – presumably with the agreement of Colorado’s Bennet and Udall – is getting ready to kill it.

First, the numbers.  VC itself has, not surprisingly, gone cliff-diving along with the rest of investment capital recently.  After the dot-com craziness, total VC investment seemed to return to a normal growth curve this century before crashing in the recent downturn:

The one exception to this has been Life Sciences.  While well behind last year’s pace, VC in life sciences has recovered fairly well in Q2, to the average over the last 5 years, and close to 2005 levels:

Note the steep drop-off in Healthcare Services VC after 2000.  I’m not certain why that’s so, but it’d be interesting to find out.  Also note that medical device investment has grown not only in dollars, but also as a percentage of total LS investment.

While the National Venture Capital Association doesn’t provide crosstabs between regions and sectors, it’s reasonable to assume that at least some of Colorado’s growth from 3.0% of venture capital dollars in 2008 to 4.3% in 2009 is a result of our strong biotech sector.

Now, the Senate is proposing what is, in effect, a national excise tax on medical device sales, to help pay for the health care takeover.  (Hat tip: TigerHawk)  Exactly where do they think the large companies come from?  Exactly where do they think the large companies get their devices to re-sell?  They don’t free-ride on this technology, they buy it once the ideas have been developed by smaller, ie, venture firms.

Brilliant idea, gentlemen.

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