By Les Funtleyder

Recently, there has been an uptick in newsflow around the “series A crunch”/ “the valley of death” in regards to financing. Because of who we are (a firm that connects investors with private equity investments); we at Poliwogg see a lot of the “crunched” and “valley-dwellers.” We have some good news. The good news is that we are seeing increased interest on the part of accredited investors who have not invested in private companies before and who are now more open to the idea in light of lackluster returns in other asset classes. Aggregating this group of investors allows for investments in the range that are too large for a traditional “friends and family” round but are too small for traditional institutional investors where the crunch is most pronounced. The caveat is that companies need to be ready to meet the demands of this new crop of investors. Probably, what will be required will be more stringent than what companies have been asked for in the past. On the plus side in exchange for more requirements, these investors are often more patient and more passionate (especially in the disease categories) than traditional investors.

A few observations about what we are seeing (we view mostly healthcare companies):

• Asset prices seem fairer than they have been in a while especially when compared to the prices of similar assets in the public market; spurring investor interest.

• There do seem to be a large number of companies that raised seed rounds (sometimes in substantial sizes) from friends and family. That said given the lack of arms-length transactions the supporting documentation ( e.g. possessing an accountant and law firm, audited financials) often seems a bit lacking in our view and can make a more institutional looking round challenging if not impossible. More disclosure is always better.

Continue reading “Peacefully Coexisting With the Valley of Death”

By JOHN HALAMKA, MD

When I was 13 years old, the Altair 8800 appeared on the cover of Popular Electronics.   By 16, I was building enough hardware and software that I achieved the Malcolm Gladwell 10,000 hours of competency by age 18.     By 19, I founded a company that produced tax calculation software for the Kaypro, Osborne, and new IBM PC.   Every week in the Silicon Valley of the early 1980′s brought a new startup into the nascent desktop computer industry.

To me, we’re in a similar era – a perfect storm for innovation fueled by several factors.  Young entrepreneurs are identifying problems to be rapidly solved by evolving technologies in an economy where existing “old school” businesses are offering few opportunities.

This morning, I lectured to an entire classroom of MIT Sloan school entrepreneurs .   Today the Boston Globe published articles about the Harvard Innovation Lab and the Mayor’s efforts to connect entrepreneurial students with mentors.

Tonight I’ll introduce a Harvard Medical School entrepreneurial team at the Boston TechStars event.

This pace of innovation reminds of that time 30 years ago when Sand Hill Road was just beginning its evolution to the hotbed of venture investing it is today.

Who are these new entrepreneurs and what kind of work are they doing?   Tonight I’ll be introducing Lissy Hu and Gretchen Fuller.

Continue reading “The Next Generation of Entrepreneurs”