Where a biotech start-up should look for investors

Dear Karen: I’m looking for venture capital funding for a biotech firm. Any suggestions?

Answer: Don’t waste your time approaching generic investment firms. “There are venture capital funding groups devoted specifically to life sciences endeavors, and such funding groups are a good starting point for biotech start-ups seeking investment dollars,” said Eva Jack, managing director of venture capital firm MedImmune Ventures.

And be persistent. U.S. venture capital investment fell by nearly half last year compared with 2008, according to the MoneyTree Report, a study from the National Venture Capital Assn. and PricewaterhouseCoopers. Investments in the biotechnology sector from venture capital firms fell by about 25% during the same time period, though biotech investments during the first quarter of 2010 were up strongly from a year earlier.

Research the market before launching a start-up

Dear Karen: Why do so many small businesses fail?

Answer: Start-up costs for new businesses have fallen so low that individuals can start businesses without getting the education, industry training or capital needed to succeed. Companies that grow fulfill unmet needs in the marketplace, price their goods or services right and develop highly targeted customer profiles.

“Successful entrepreneurs are maniacally focused on finding and delivering solutions to very specific business problems,” said Burton Goldfield, chief executive of TriNet Group Inc., a human resources outsourcing service. “First identify a need in any given market,” he said, “and then figure out how to address that need.”

Small-business questions? E-mail Karen at smallbiz@latimes.com