Alan Frazier says VC model is broken

Alan Frazier is the latest to join the parade of folks noting that the venture capital model is broken. But Frazier's opinion really matters since his Seattle firm has backed more than 100 companies, manages $1.8 billion and is partly responsible for Seattle upstarts such as Trubion and Calistoga. The former Immunex executive and active biotech investor for the past 17 years tells Xconomy today in an interview:

"Yes. It’s broken, or at least severely compromised. The upside doesn’t justify the downside. In the old days, VCs could make eight or 10 times their money when things went well. Now, by the time you can take something public, it requires a lot more capital."

Frazier also tells reporter Luke Timmerman that Seattle's biotech industy is stronger than it was five years ago, though he does admit that the life science sector here continues to suffer from "bad luck" as major companies such as Corus Pharma, Icos and Immunex get taken out by bigger players.

About John Cook

John Cook is co-founder and executive editor of TechFlash. He has been covering the technology beat for nearly a decade, writing about startups, entrepreneurs and venture capital, most recently serving as a reporter/blogger at the Seattle Post-Intelligencer.

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