*Our initial list includes primarily life science VCs but we encourage our collaborators (you) to add tech and other sectors
As institutional/serial entrepreneurs (PureTech is a venture creation firm, not a venture capital firm), we actively interact with the venture capital community. As a member of this ecosystem, we wanted to address an elephant in our collective room and get the conversation started on a resource for entrepreneurs.
A challenge entrepreneurs face in today’s environment is figuring out which VCs are actively investing versus those that are fundraising and/or not actively investing. In order to protect their reputation and ability to fundraise, venture capital firms can sometimes be evasive about their ability to actively invest. As entrepreneurs, we can try to pick up on code words or phrases that might indicate a lack of capital (a topic for another blog post). One thing we want to avoid is pitching (or worse, jumping through diligence hoops) for a venture firm that actually is not in a position to make an investment.
The term “dry powder” is often used to describe money available for both new and follow-on investments. However, for entrepreneurs seeking out a new firm, the important variable is whether the firm has the ability to invest in their company. Simply put, we would like to know which VCs are actively seeking to make investments in new companies, i.e. companies they have not previously made an investment in. Let’s call it “Relevant Powder.”
One way to figure this out is to look at when firms have last raised a fund and when they have made investments in new firms (via Thomson One or a similar database). We can assume that firms that have either just raised a fund recently and/or have recently invested in a new company are likely to have relevant powder remaining. On the other hand, we can guess, in the absence of raising a new fund recently or investing in new funding rounds, that those firms have no/limited relevant powder. Thus, these two data points can be very helpful. Our own lists of VCs that have recently raised funds, based in large part on this list from Jay Caplan’s blog, and made recent investments (based on a search on Thomson) as well as similar efforts that look at recent investments begin to provide part of the picture.
We think this data needs to be supplemented by a peer review process, by asking people in the community. The folks at the Coelyn Group got a start on this second approach. They surveyed a group of life science executives about the funding capacity of VC’s, and then surveyed the VC firms themselves to confirm/deny the results. “Actively” seeking investments was the operating criteria. Of course, “actively” is not as specific a term as we would like, and they do not provide additional information on who they interviewed to get the data, but at least it’s a start. When a member of our team tweeted about the Coelyn list in October, an active discussion was started, which inspired us to get a more comprehensive resource together for the entrepreneurial and venture community.
We believe that a crowdsourced approach may be the best way to tackle this problem. To this end, we have created a first pass at combining the existing data available into a living document. If we got something wrong, then please correct it by participating in the project. Here is the Actively Investing VC Spreadsheet, a live and working document for tracking the ability of a given firm to make investments in new companies (i.e., companies they haven’t previously invested in). We have seeded the list initially with Life Science investors but would like the crowd to expand the project to tech as well. Firms are categorized as “Active” if data points (last fund raised and recent investments in outside companies) plus word-on-the-street consistently support that. They are categorized as “Some activity” if there is some mixed data, and as “Limited/No Activity” if all data points support that.
So, take a look. If you think there are inconsistencies, use this form and let us know what they are and why (and if possible tell us who you are, as anonymity can sometimes be used to disguise animosity or bolster one’s own firm!) In the interest of transparency, the feedback will be available in its raw form here and we will revise the list as we get feedback. We hope you find it useful, until someone figures out how to accurately measure cash available for new investments on a firm-by-firm basis, and publish it in a public and transparent way.
Actively Investing VC Spreadsheet
Actively Investing VC Update Form
- PureTech Ventures team, with analysis by Marco Mena