Long-term perspective on venture capital investments in early stage life-science projects related to health care

Abstract

Scholars and policymakers agree that early-stage venture capital is the most important element of innovation pipeline in the health care industry. However, securing the financing at the very beginning of innovation pathway in health care is challenging and relies on an in-depth understanding of investment strategies implemented by venture capitalists. In turn, this requires us to take a broader look at global trends in early-stage venture capital funding of health care oriented life-science projects. Referred to the above, this article aims to provide the outlook for early-stage venture capital investment in Europe and provide its benchmarking performance analysis. Using data on early-stage venture investments in health care-related life-science projects, we present its long-term dynamics and analyse current trends. Additionally, we check whether investment decisions are motivated by the short-term return opportunities or they are made as a part of long-term strategy. We find that Europe, with uneven and volatile financings, is still lagging behind the investment levels of the U.S. Our findings also support the cautionary behaviour of investors and their awareness towards the highly volatile nature of short-term returns.