Baird Capital’s Nicole Walker Discusses Trends Impacting VC Investment in Health Care
For venture-capital investors, the Midwest still has great untapped potential, according to Nicole Walker, who joined Baird Capital’s venture capital team in Chicago three years ago. “This region has the talent and resources to build companies in sectors such as medical devices, tools and diagnostics,” she says. “Even the emerging health-care services sector is strong in the Midwest. This is a rich area for investment.”
Baird Capital invests across multiple stages of company formation, from seed investment through growth-stage investment. “Our portfolio is mixed, and we tend to be active investors, who like working with our entrepreneurial teams,” explains Walker, who currently sits on the board of directors at five health-care portfolio companies. “Our total investment in a company ranges from $10 million to $15 million over the life of a deal.”
Walker sees three major trends impacting venture-capital investment in the health-care sector in the Midwest:
- Accessing capital ─ While there is more activity among seed and angel investors who help fund early-stage companies in the Midwest, Walker has started to see some contraction in the amount of capital coming into the entrepreneurial ecosystem from these investors. “Entrepreneurs must rely on their own financial resources or pools of capital generated by seed and angel investors in order to develop their start-up companies to the point where they are reasonable candidates for venture-capital investors, such as Baird Capital,” she explains. “Our firm sees a lot of good ideas. However, a number of those opportunities are too early for us and still need to be vetted and de-risked.”
- Retaining talent ─ With its network of top-ranked universities, scientific research corridors and advanced manufacturing, the Midwest enjoys a strong pool of talent. Retaining that talent is a continuing struggle. “We still suffer a little from our talent bleeding out to the coasts,” Walker reports. “Three different types of talent are needed to help grow start-ups through their entire life cycle, from seed stage to an initial investment by a venture-capital firm to a revenue-generating commercial company. The challenge is to recruit and retain talent from the Midwest or the coasts to help build out these companies and the entrepreneurial ecosystem.”
- Creating syndicates ─ The third challenge to venture investors is being able to build strong investment syndicates across a number of sectors. “Over the years, there’s been a shift in venture capital,” Walker observes. “Some firms have narrowed their focus to one or two sectors and others have chosen to stop investing. It’s becoming more challenging to create the syndicates needed to build a strong base of capital to help drive some of these companies forward.”
For the past two years, Walker has served as a panelist at the Michigan Growth Capital Symposium, which she views as critically important to the entrepreneurial landscape in the Midwest. “The symposium brings all the stakeholders to the table, including investors such as myself who are members of an institutional firm,” she says. “It provides us with the ability to connect and reconnect face-to-face with co-investment funds, such as Arboretum Ventures, Beringea and Venture Investors.”
In addition, Walker notes, Baird Capital benefits from the opportunity to take an early peek at emerging entrepreneurial talent during the two-day event. This pool includes not only entrepreneurs who are starting new ventures but also serial entrepreneurs with established companies who already have raised some capital and are looking for follow-on investments. “To be able to engage with all those stakeholders is a 24-hour period is amazing,” she says.
About the Michigan Growth Capital Symposium (MGCS)
MGCS is the original university-based venture fair, which was first held in 1979. This nationally attended two-day event provides an opportunity for investors to connect with up-and-coming Midwest businesses and learn about emerging technologies. The Symposium offers the opportunity to build relationships with an unparalleled business network of distinguished private equity industry leaders, leading university research faculty, and entrepreneurial business professionals. MGCS is presented by the Center for Venture Capital & Private Equity Finance at the University of Michigan Ross School of Business with support from the Michigan Venture Capital Association.