NY Times says: most gains are made by early investors. They're talking about venture capital firms here, but what they say is true for early investors in small biotechs too:

Quote:

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MONDAY, MARCH 14, 2016

START-UP INVESTORS ARE NOT WAITING FOR GROWTH Investors may be throwing money at mature start-ups like Uber and Airbnb at soaring valuations, but the venture capitalists who can pick a winner early on are the ones who come out on top, Katie Benner and Michael J. de la Merced report in The New York Times.

CB Insights, a research firm, created a list of the top 20 venture capitalists worldwide and three-quarters of them are investors who put money into early rounds of financing.

The list includes Peter Fenton of Benchmark, who invested in Twitter when it had only 25 employees; and Jim Goetz at Sequoia Capital, who invested in WhatsApp before Facebook acquired it.

Early-stage investments have accounted for the lion's share of gains made in the venture industry since 1994, according to Cambridge Associates, a research firm that studied the financial reports of dozens of venture firms.

But the value of early investment has been obscured in recent years by nontraditional start-up investors piling into private technology companies when they are already proven growth stories.

Rebecca Lynn, a managing director and co-founder at Canvas Ventures who is on the CB Insights list, said early-stage investments pay off more because the investors get more of an ownership stake and are more a part of the team. "Later-stage investing is more like a stock bet," she said. "You're along for the ride."

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NYTimes.com/DealBook