Interesting recent article by Professor Josh Lerner on venture capital investing, including a reference to advanced materials (“The Narrowing Ambitions of Venture Capital,” September 6, 2012, Technology Review). Lerner presents a seemingly pessimistic view of the current venture capital world noting sub-themes of the limited scope of investment objectives, too many boom-and-bust cycles, and “mercurial” public markets. (side note: The comments posted to date are generally negative.)
For advanced materials, Lerner writes about explaining the concentration of venture capital into certain sectors, “One answer is that venture funds have done much better in categories where the innovation cycle is short, such as media and software, than in areas like advanced materials and biotechnology, where the time frame for success is longer than the eight-to-10-year life of the typical fund.”
Lerner concludes: “…the venture capital model is no panacea for innovation. The boom-and-bust cycle, the mercurial effects of public markets, and the narrowing of its objectives have made it something far less substantial.”
Hopefully, needed investments in advanced materials, nanotechnology, cleantech, medical devices, health, and the like will be healthy and not be allowed to be sacrificed in the name of a better social life on the internet while physically stagnant in front of a computer screen.
Lerner also has a new book, “The Architecture of Innovation: The Economics of Creative Organizations.”