Venture capital firms have largely abandoned early stage deals.
Note this horrifying figure from the latest PricewaterhouseCoopers MoneyTree Report that found that in the first quarter of the year, only 7 companies saw first-time venture capital investments for a grand total of $23 million, compared to 61 first-time deals in the same period in 2012.
So that must mean corporate investors like Medtronic have the opportunity to swoop in and invest in promising early stage firms, correct?
Well, not really says Chad Cornell, vice president of corporate development at Medtronic, who was a speaker at the annual IBF MedTech Investing Conference in Minneapolis Wednesday.
"All else being equal, we'd rather not invest early," Cornell told the audience. "For us it's a double-edged sword. If we do get in early, we want good partners."
And why is that? That's because early stage deals typically require more investments at a later date, something that goes against the investment philosophy of Medtronic. They prefer venture capitalists to take on that additional risk of getting portfolio companies the extra capital they need, Cornell implied.
"We are not necessarily looking to do follow-on investments, [but] if it's a later stage deal we'll fund everything," he said.
-- By Arundhati Parmar, Senior Editor, MD+DI