VC Firms Differ on Investing Question at CED Conference
It’s a classic question in the venture capital industry. When weighing which companies to fund, should investors favor good management teams or strong technologies and products?
A panel of venture capitalists was split on that question at the Council for Entrepreneurial Development’s Life Science Conference in Raleigh.
Ron Meeusen of Cultivian Sandbox Ventures, a Chicago firm that invests in food and agriculture companies, said he “learned the hard way” that good management is more critical than good technology. He initially thought the opposite until experience changed his mind, he said.
For Andrew ElBardissi of Deerfield Management, a New York healthcare investment firm, “it absolutely has to be a compelling technology” that carries the day, he said. Management can be changed as necessary to optimize good technology, he explained.
Jorge Ramirez of H.I.G. BioHealth Partners, a global equity investment company, said he leaned toward favoring technology, and when it’s necessary to make a management change, “we’re not bashful.”
The question was one of several posed by conference co-chair Fred Eshelman, founder of PPD and now head of Wilmington-based Eshelman Ventures, who moderated the session What Are Investors Thinking?
Asked why now is a good time to invest in life science companies, Meeusen said “it’s a buyer’s market right now” in the food and agriculture industry. Cultivian has invested in 23 food and agriculture companies over the last 10 years and has lost only one deal to another VC firm’s term sheet, he said.
“There are hundreds of deals for every investment,” he said. “There is far too little capital and far too many interesting deals.”
Technology and innovation in the food and agriculture sector are advancing as rapidly as they are in the health care industry, Meeusen said, and there are clear opportunities for companies that can address the industry’s problems including concerns about pesticides, genetically modified organisms and overuse of antibiotics.