New England Medical Device Series A Syndication

It’s been about a year since I published a list of newly venture-funded New England medical device companies, so it’s time for an update (see below). The Series A rate continues to trend at two-per-quarter, despite the purported decrease in the number of active VC’s.

Last year I noted the surprising proportion of diagnostic technologies in the startup list. Over the last four quarters, only one of eight newly-funded startups is developing a diagnostic. That’s more in line with expectations.

This year I’m taking the opportunity to respond to a question from a colleague: Should I syndicate my Series A round or raise funds from a single venture investor?

Before looking at the data, my gut answer was that syndication is not what matters. When I looked at the last three years of Series A rounds, the data matched my gut feeling: about 40% of Series A are syndicated (two or more institutional investors) and the rest raised money from a single VC firm.

Why syndicate your Series A? Syndication can increase the amount of funds that can be raised in the Series A. Syndication can increase the amount of funds that can be available over the lifetime of the company, as each venture firm has its own reserve for future investments. Syndicates might have enough reserve to do an internal Series B, thus avoiding the distraction of outside fundraising. Syndication can bring in additional board members who can add value to the company.

Why not syndicate your Series A? Syndication might require you to sell more shares, diluting your ownership at a low price. Syndication may bring a bigger board, which may be harder to manage.

My advice to entrepreneurs is to find really great VC’s who complement your skill sets and will help make your company more successful. You will be working closely with your VCs for the life of your company, so spend the effort to get this right. Reference check your potential investors, like you would for any key hire. If you close your Series A deal with the right VC’s, syndication will work itself out.

Here’s the updated list of Massachusetts medical device companies receiving Series A venture investments for the last seven years:

Quarter Number Companies
2012Q1 2 Solace Therapeutics, Alcyone Lifesciences
2011Q4 2 EndoEvolution, Convergent Dental
2011Q3 2 Beacon Endoscopic, Inc, Precision Biopsy
2011Q2 2 MoMelan Technologies, , PolyRemedy
2011Q1 1  SoundCure
2010Q4 1  NinePoint Medical
2010Q3 5  Lantos Technologies, Bio2 Technologies, Advanced Dx (FKA Eyetel Imaging), Affinimark Technologies, DiagnosisONE
2010Q2 3  SynapDx, MedMinder Systems, Foundation Medicine
2010Q1 1  Isis Biopolymer
2009Q4 2  On-Q-ity, CorNova
2009Q3 3  CardioRobotics (now MedRobotics), Augmenix, Daktari Diagnostics
2009Q2 3  CardiAQ Valve Technologies (now in CA), DC Devices, Taris Biomedical
2009Q1 0  None
2008Q4 3  Seventh Sense Biosystems, Semprus Biosciences, Lumicell Diagnostics
2008Q3 1  Cambridge Endo
2008Q2 1  Consitution Medical
2008Q1 3  I-Therapeutix (Ocular Therapeutix), Allegro Diagnostics, Vortex Medical
2007Q4 0  None
2007Q3 4  Cardiosolutions, Still River Systems, iWalk, WMR Biomedical(Arsenal Medical)
2007Q2 2  Fluidnet, Innovative Metabolics (now Setpoint Medical)
2007Q1 7  SmoothShapes/Eleme, Serica, Hypermed, Soteira, IlluminOss Medical, Claros Diagnostics, Neuroptix
2006Q4 4  Biobehavioral Diagnostics, Cambridge Devices (now Sierra Molecular in CA), Gelesis, T2 Biosystems
2006Q3 3  Tremont Medical(Interlace), Living Microsystems (now in CA), Histogenics
2006Q2 1  Aurora Imaging
2006Q1 0  None
2005Q4 4  Spirus Medical, Rhythmia Medical, Tomophase Corp, Avedro
2005Q3 1  Exogenesis
2005Q2 1  WaveRx
2005Q1 0  None

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