Orange County Register

Venture capital hit a wall in the first quarter according to two separate reports, as I reported here.

Michael Schoenfeld, a partner in the Los Angeles office of Ernst & Young LLP, gives some perspective on the fact that venture

Michael Schoenfeld

investments in young, high-growth companies was the lowest in more than 10 years.

Here are his thoughts:

In general, uncertainty about the economy seems to have caught up with the venture capital world this quarter.

Venture capital dollars were down nationally by 50%. Health sciences, in particular, biopharma and medical devices, were the bright spot because they were down the least at -34% year over year (-22% quarter over quarter).

Not surprisingly, eight of the top 10 deals this quarter are in biopharma and med devices sectors. That’s because the development cycle for drugs is multi-year, so the biopharma products or med devices in the pipeline now have been in development for years and may have several years before they go to market. This makes the sector less sensitive to the economic cycle.

Orange County is running contrary to the national trend by being up 17% over Q4. That’s due to the very healthy medical devices environment here.

There was a $27M investment in the nuclear waste disposal firm Tri Alpha Energy, and $26M in IT investment. There is a lot to be happy about in Orange County.  An improved exit environment may be around the corner after this week’s two successful IPOs which will bode well for future VC investment.

Other investing stories…

• Medical device expert joins O.C. investor group
• O.C. company acquires pay-at-the-pump technology
• Q1 venture investment lowest in more than 10 years
• 4 O.C. companies rake in investment dollars
• 4 O.C. companies rake in investment dollars
• So. Cal businesses sell for less in Q1-corrected
• Private equity deals nosedive 68% in first quarter
• Venture-backed firms can’t find buyers or go public
• O.C. eye surgery firm raises $22 million
• 2 O.C. firms involved in business buyout

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