According to PWC’s recent quarterly MoneyTree report, no new medical device companies achieved Series A fundings in New England in either Q2 or Q3 2013. Zilch, zip, zero, nothin’, no, nada.
I’ve been tracking first-time venture financing of medical device companies in Nw England since 2005. You’ll find the link to my latest list of these companies at the bottom of this post. I wish I had a better update to offer.
What’s causing this New England drought?
Is it a lack of VC’s with active life science funds?
Ernst and Young’s newly published “Pulse of the Industry Report” notes that in medtech,
…financing options for smaller, emerging companies have slowly eroded. Venture capital investment was down 21% in 2012-13 to its lowest level in more than a decade, while the total value of IPOs was cut in half from the previous year and was down more than 80% from pre-crisis levels. The venture capital that is flowing into medtech is increasingly skewed toward later rounds.
In May, PWC attributed the decreased number of healthcare venture funds raised to the capital intensity of life science companies.
But wait a minute. According to a recent Boston Business Journal article, “Local med device companies buck the national trend toward less VC money.” In other words, VC’s do have money – but perhaps not for Series A investing. (Want more data? Check out my list of VC’s with money here.)
Is the New England drought caused by a paucity of exit opportunities?
The Wall Street Journal said last month that:
So far this year, 27 venture-backed biopharmaceutical companies have gone public, compared to just one medical device company, according to industry tracker Dow Jones VentureSource.
It’s no secret that our best and brightest are also starting internet and tech companies. Just try to find medical device news on the Boston Globe’s Innovation Economy blog. ”Medical Device” isn’t even an industry category on Jay Neely’s extensive BostonStartupsGuide.com. Graduate-founded medical device startups like Rhythmia, Lantos, and Claros are the exception, not the rule.
We have an amazing history of great medical device entrepreneurs in New England. Without medical device entrepreneurs, healthcare venture capitalists have nowhere to invest, and established device companies have nothing to acquire.
As I’ve written before, it’s a great time to start a medical device company. The economic and clinical problems of chronic disease demand it. Venture investors need new investment opportunities. Large device companies need new engines for growth.
And I can’t handle another quarter with no additions to my list.
- VC Funding Drying Up for Medical Device Startups (Part 1) (mattromey.wordpress.com)
- VC OrbiMed Pulls in $735 Million Biotech, Medical Device Fund (biospace.com)
- Local med device companies buck the national trend toward less VC money (bizjournals.com)
- Abingworth Bioventures Fund Passes Target, Now at GBP205.5M