By Tyler Chin , AMNews staff. June 12, 2000. A major reason for that jump is that there weren't many Internet health investment opportunities in 1998, he said. The torrent of venture capital continued through the end of the first quarter of 2000, but the pace has slowed down since then as turmoil and skepticism about Internet companies' valuations and business plans hit the stock market, Hanlon said. Without adequate capital, these companies may fail or be forced to merge with other companies, which could have a major impact on physicians buying services from them.
Venture capitalists make their money by selling their shares when a company goes public.
Nonetheless, Hanlon expects the level of venture capital investment in health care to surpass last year's. Venture capitalists have plenty of capital on hand, but instead of funding Internet start-ups that have no revenue or plans to earn profits anytime soon, as was the case last year, they now will be more selective and will invest bigger sums in the companies they had invested in previously as well as those that have an operating history and can show that they can make money, Hanlon said. Entrepreneurs failing to meet that criteria will revert to tapping families, friends and credit cards to fund their businesses, he added. Back to top. Back to top.