Analysis of return on Venture Capital: outstanding performance in biopharmaceutical field

Source: Xinkangjie 2015-9-14 in 2011-2015, the total internal rate of return of venture capital in the field of biopharmaceuticals has reached an amazing 69.9%, while in the same period, the IT / software field with high investment return rate is 45% , the overall health care sector (including biopharmaceuticals, various medical information technology industries, equipment, medical technology, health care services) has a yield of 50.5% No wonder in recent years, the field of biopharmaceutical industry has been the craze of venture capital Figure 1: the investment and financing activities in the field of Biopharmaceutics are very popular, and the high yield of completed transactions in this field (these earnings come from activities such as M & A or public stock trading after IPO) greatly promotes the investment and financing activities: the internal rate of return of completed transactions breaks through 100%, almost twice that of it / software, 2 The internal rate of return of unfinished transactions in these areas is almost the same Figure 2 It should be noted that since 2000-2010, the transaction completion speed in biopharmaceutical and it / software industries is roughly the same During the period of 2001-2010, nearly 80% of the transactions of the two industries were completed respectively However, in recent years (2011-2015), transactions in the IT / software sector have been completed by 18% The completion rate in the field of Biopharmaceutics is almost twice that of it / software, reaching 33%, during which 216 transactions were completed and exited This is an eye-catching phenomenon, reflecting the further tightening of holding period information in the field of biopharmaceuticals (which is good for capital turnover and IRR estimation) Figure 3 The investment and financing data of it / software in the database of Cambridge associates from 2001 to 2015 shows that some new data also highlights the hot investment and financing activities in the field of it / software technology The number of transactions in the IT / software sector in the last four years accounted for 38% (3775 / 9963) of the total number of transactions in the past 15 years, compared with only 22% (647 / 3006) in the biopharmaceutical sector From the above data, we can see that in the past few years, the speed of the establishment of emerging companies in the field of it / software is very fast, while the pace of the establishment of emerging companies in the field of biopharmaceutical is relatively stable Finally, it is worth noting that the long-term risk capital internal rate of return has been improved in the field of biopharmaceutics and it / software Looking back on the previous analysis, the total internal rate of return in the field of Biopharmaceutics was 8-13% in 2001-2010, and it / software was 3.5-4.5% According to the data of 15 years (2001-2015), the return on investment in two areas has increased: biopharmaceutical area increased to 16.3%, it / software area increased to 17.5% The dramatic improvement in return on investment in it / software largely depends on some activities at the beginning of this century, such as Facebook's IPO in 2012 and Twitter's IPO in 2013 Due to the overall data used in the analysis over the past 15 years, the large-scale investment and financing events of some companies have a considerable impact on the statistical data, but the good news is that the return on investment has been increasing.