Device Start-Ups Reap More Corporate Venture

Uncertainty over gaining FDA regulatory approval and reimbursement, as well as the rising competition among private companies for funding has hit the device industry hard. Device VCs are echoing that sentiment – based on START-UP’s 2012 life science VC survey (see [A#2012900170] and Also see "Device VCs Choose Flight, And Fight, In Face Of Challenges" - Medtech Insight, 13 September, 2012.), almost two-thirds of the venture capitalists that primarily focus on medical device investing say they are feeling “negative” about the current state of the device VC sector. Investors aren’t seeing returns, and compounding the effects are the pressures VCs are under to answer back to their limited partners in order to secure more capital. (See Also see "VC Collapse Still Hasn’t Hit Bottom; Firms Seek Safety Of Late-Stage Deals" - Medtech Insight, 26 November, 2012..) Based on a review of data from Elsevier’s Strategic Transactions, device venture funding (excluding pure debt deals and financings by public companies) showed a 14% drop in funding in 2012 to $2.3 billion from 2011’s $2.7 billion. Within those numbers, however, we see an increasingly stable supplier of capital to medical device companies: corporate VCs.