New Enterprise Associates is one of the heavyweights in the world of venture capital and, lucky for me, they're right in my backyard here in Maryland.
I had a wide-ranging interview today with David M. Mott, NEA partner and former head of MedImmune, the biopharma success story based in Montgomery County, Md.
Mott and NEA invest billions far afield from Maryland, hunting for promising companies across the country and around the world. Lately, he and NEA have been doing deals in India and China, getting involved in services and infrastructure business in those developing countries, such as outpatient treatment centers for oncology and diabetes, Mott said.
Back home in the U.S., Mott observed that Maryland needs more big company success stories such as MedImmune and Human Genome Sciences, where top management and entrepreneurial thinkers from such organizations spin out and start their own businesses.
We've seen some of this effect in Baltimore with the success of Advertising.com, and the spinoff of talent that have led to some new businesses, most notably Millennial Media.
In Montgomery County, this type of "virtuous cycle" has started taking root, according to Mott. Baltimore, not so much -- yet. But Mott touched upon something that I tangentially covered, coincidentally, in my latest story this weekend about startups and business accelerators.You need entrepreneurs and trained leadership talent -- those who have the "social capital" to convince weary investors of investing in them -- to roll up their sleeves and embark on new startup projects.
What Mott and others at NEA look at when they invest are the quality of management teams. They like to cultivate entrepreneurs and even new technologies, according to Mott.
What may not be as well known is that NEA funds its own virtual incubators, where talented brains work on new medical devices in-house at NEA, leading sometimes to funding and new companies.
"Over half of our investments are internally generated by entrepreneurs in conceptual virtual incubators," Mott said. "We back them to come up with ideas."
NEA has had six medical device companies spin out into their own businesses in the last few years, Mott said. NEA also has launched a seed fund to make investments ranging from $50,000 to $500,000, according to VentureWire.
Mott couldn't talk publicly about the seed fund, but it looks like the kind of move that NEA is making to compete in the angel and "super-angel" end of the investment pool, where there's a lot of activity at the moment.
Startups are also going from conception to high-flying much more quickly, so NEA and other VCs apparently see some necessity in interacting with some of these young companies just as they're forming.
Wait too long as a VC and suddenly, before you know it, startup valuations are through the roof.
I asked Mott the cheap nickel-and-dime question that every tech journalist is asking today: are we in the midst of another tech bubble?
He said he mostly didn't think so. Valuations are wild in a few specific niches, such as social media, but others, such as biopharma and healthcare (his specialty area), are fairly normal, he said.
"These businesses, unlike back in 1999, have some significant revenues," Mott said. "They're becoming big businesses in very short periods of time...and with relatively little capital in a very short period of time, you can build a deep business."
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