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Venture Capital

Current Trends and Issues

The VC industry is in a constant state of flux as a result of bear and bull markets, government legislation, business trends, the emergence of competing funding sources, changes in VC firm organizational structure, and many other factors. Additionally, some investment sectors remain hot, while others (such as clean tech) have their moments in the sun before the next “big thing” comes along. One hot sector in VC is funding for artificial intelligence (AI). Funding to AI companies topped $1 billion every quarter in 2017, according to PwC. Total annual funding increased 28 percent from 2016 to 2017 to a total of $5 billion across 444 deals. Venture capital firms are also funding startups that are developing blockchain technology, which is a distributed ledger database that uses advanced cryptography to maintain a continuously-growing list of financial records that cannot be altered. Finally, the rare disease and orphan drug startups sector remains strong. (Orphan drugs are pharmaceutical products that are used to treat rare diseases.) PitchBook reports that “VCs and pharma giants are pushing resources into early-stage [rare disease/orphan drug] opportunities because, as is the case in quite a few other industries, a near-monopoly in a niche space is better than fierce competition in a larger market.” These are only a few of the trends and developments that will shape the future of the VC industry.

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