Healthcare Venture Capital Fundraising List 2011 Q4

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My list of ‘healthcare VC’s with money to invest’ has become increasingly popular, and today I’m very happy to say that I’ve reached an important milestone: three years of data.

In total, my list now includes about 250 VC fund raising announcements from January 2009 to February 2012. Considering that VC’s typically make their new investments within three years of the fund’s raise, I suspect that the list includes the vast majority of healthcare VC’s that are actively making new investments in startups today.

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Lean Medical Device Startup: Independent Directors

Great independent board members add tremendous value to a startup. I want to share two recent blog posts on the subject that I found really helpful. Enjoy.

First Mike Travis answers the question Why Startups Need Outside Directors.

Second, Elad Gil explains How To Choose A Board Member.

Update 4 Mar 2012:  Bruce Booth of Atlas Venture just wrote a great post on “High-Performing Boards in Early Stage Biotech.”  Well worth reading.

Update 28 May 2012:  local entrepreneur and angel Ty Danco posted “Everything You Wanted to Know About Boards: Touring the Blogoverse” an awesome compilation of the best advice on startup boards. Definitely check it out.

Everything You Never Wanted To Know About The Medical Device Excise Tax

As the January 1st 2013 start-date approaches, the medical device excise tax is back in the news. Here’s the latest:

On Jan 25th Minn Representative Eric Paulsen and 225 cosponsors introduced H.R. 436: Protect Medical Innovation Act of 2011, which aims to repeal the tax. Despite congressional support, Minnesota Public Radio states that the bill is unlikely to make it through the Democrat-controlled US Senate.

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New England Medical Device Entrepreneurs and Exits

Bijan Salehizadeh of NaviMed Capital recently presented more statistics on the great returns that VC investors have realized in the life science industry over the past decade.  Life Science investing has outperformed IT over the past 10 years.  Really.

You might be surprised to learn that quite of few of those successful investments were New England medical device startups.

In the last half-dozen years, there have been more successful exits than you may think. While a handful have exited in the hundreds of millions, success for many was defined as a solid return on a less-than-$20M total investment.

Somehow these exits have managed to stay under the radar screen. Until now.

Who are these New England medical device startups? Who are the entrepreneurs who led their companies to success?

Read on.

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Lean Medical Device Startup: Test Driven Development

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Lean manufacturing, now common in the medical device industry, originated in the automotive industry. Companies that truly embrace lean practices dramatically reduce costs and inventory levels while improving product product quality.

Stage-gate and requirements-driven product development, pervasive due to FDA’s QSR, has roots in PRTM’s PACE process and Robert Cooper’s Winning at New Products. A well-designed product development process shortens new product development timelines and improves the likelihood of product success.

Medical device companies reap tremendous benefits from borrowing the best practices of other industries. Unfortunately, most of us spend our whole careers in medical devices with limited knowledge of other industry practices. Meanwhile, as Marc Andreesen wrote last summer, “Software is eating the world.”

It’s not just the dramatic decline in the costs of memory, processing and communications that is fueling the software revolution. Key to software success is a radically new approach to product development best summarized in Eric Ries’ fantastic book, The Lean Startup and Kent Beck’s classic Extreme Programming Explained.

While I don’t expect scalpels to be replaced with software anytime soon, we in medical devices can learn a lot from Lean Startup software practices. Today’s topic: test-driven development (TDD).

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Healthcare Venture Capital Fundraising List 2011 Q3

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For medical device startups, raising venture capital is a challenge that seems to keep getting harder. For healthcare VC’s, raising money from limited partners is just as challenging. Despite the reality that some VC’s are exiting the healthcare investment business, the good news for entrepreneurs is that there are still many healthcare VC’s raising new funds, even in today’s less-than-stellar economic environment.

Who are these VC’s? For almost 3 years I’ve been tracking the fundraising activity of venture funds that focus on healthcare, and generalist firms that make some healthcare investments. My goal is to create a reasonably comprehensive and current resource for life science entrepreneurs, and make it available here.

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Manufacturing Matters

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Look around the parking lots of medical device companies, and you’ll find that most engineers drive Japanese cars. Even those who drive something else acknowledge the manufacturing prowess of Toyota, Honda, Nissan, Subaru and Mazda. When it comes to cars, we all know that manufacturing matters. Look inside the buildings of medical device companies though, and it’s often a different story. Most product development engineers have little understanding of the discipline of medical device manufacturing, other than a required familiarity with good manufacturing practices. It’s the rare medical device product developer who understands single-piece flow, 7 wastes, line-balancing, cell-based manufacturing, theory of constraints, poka-yoke, kanban design, kaizen events, six sigma, zero defects and the many other buzzwords/elements of lean manufacturing. It’s a real problem.

The best development engineers know that manufacturing matters, and engineers who “get” manufacturing create significantly better product designs and significantly more value. No great medical device designs make it to the end customer without being manufactured. I could even argue that medical device product development is all about manufacturing. Here’s what I mean.

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Why You Should Join a Medical Device Startup

Start Me UpI recently co-founded a medical device startup, and I’m loving every minute.

Two years ago, as COO of Candela (one of Massachusetts’ largest medical device companies), I had one of best jobs in the industry. When we merged with Syneron, I was in a great position to move to a senior role at another big company. Instead, I was determined to join a startup. I know lots of big company execs who can’t envision joining a startup, and lots of big company engineers who feel the same way. The medical device industry doesn’t have the same sexy startup culture as the software industry, where two or three coders can get together and start the next cloud-based phone service, social network, mobile photo-sharing app , or cloud-based note-taking tool. In Massachusetts, only a handful of new medical device startups get VC funded each year (see prior post).

Yet I was determined to go early-stage. Very early stage. Not only is a startup absolutely the right path for me, it’s probably the right path for you. I can’t believe that everyone doesn’t want to work in a startup. Here’s why.

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WSGR View on Medical Device Corporate Strategic Investments

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Wilson Sonsini Goodrich & Rosati is one of the top life science law firms on the left coast, with a strong focus on start-ups. Their “Life Sciences Report” is required reading for start-up medical device execs. This quarter’s report includes a great article on Negotiating Corporate Strategic Investments. Well worth reading.  Check it out here.