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12:00 AM
Apr 09, 2012
 |  BioCentury  |  Finance

Better signs from VCs

Cooley data: Better deals for Biotech VCs, syndicate partners, portfolio plays

VCs are providing better investment terms both to their syndicate partners and portfolio companies, potentially signaling that the outlook is improving for the venture community. That is the conclusion of Cooley LLP's analysis of life sciences venture capital financing terms in 2011.

The better terms are the result of a good year on the acquisition front. For the first time in at least five years, VCs realized more in takeouts from therapeutics companies than they invested in them. Upfront payments on therapeutic company acquisitions alone totaled $5.3 billion in 2011, versus the $4.8 billion VCs put into their portfolio companies last year (see BioCentury, Jan. 23).

None of this necessarily points to a sea change for life sciences VCs who are trying to raise fresh funds this year or are struggling to demonstrate strong returns in the face of a challenging exit environment.

"If you talk to certain VCs, they still feel like there are two to three years of fallout that will occur, wherein a lot more funds will go under," said Cooley's Marc Recht. "There's also a thinning of the...

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