Sientra’s “Stand-By” Series C Shows How To Eliminate Late-Stage Risk

24 May 2012

Breast-implant start-up Sientra recently raised a $65 million Series C round at a time when venture capital for medtech is scarce, particularly for mid-stage companies pushing toward important milestones. Using a new kind of “stand-by” financing, it was ready to hit the ground running upon the recent FDA approval of its breast implants.

In this era of economic uncertainty, more and more venture capitalists are looking to minimize the risk of investing. This climate of caution is driving early-stage investors to invest in later-stage companies where the travel time to regulatory approval and commercialization is shortened by years. But even investing in late-stage companies with big ticket clinical and regulatory costs comes with risk ( well, in most cases anyway. The investors in Sientra Inc.’s $65 million Series C round managed to all but eliminate the risks associated with investing in a company awaiting approval from the Food and Drug Administration.

Abingworth Management Inc. led the financing, and all of the company’s inside investors returned, including Clarus Ventures and OrbiMed Advisors....

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