David Morgenthaler: 10 People Who Changed the Medtech Industry

Outside the medical device world, David Morgenthaler is known as a man who saw the future of computing and invested in two men who would go on to revolutionize the computer industry. Morgenthaler’s legitimacy as a venture capitalist was confirmed with his backing of Apple founders Steve Jobs and Steve Wozniak. But the Cleveland native also played a critical role in establishing the legitimacy of venture capital for the medtech industry.

In 1977, Morgenthaler became a founding director of the National Venture Capital Association (NVCA). As NVCA president, he testified before Congress regarding the capital gains tax rollback provision of the Revenue Act of 1978 and lobbied in 1979 for revisions to the Employee Retirement Income Security Act of 1974, which permitted institutional pension funds to invest as limited partners in private equity offerings. These two policy changes paved the way for a venture capital boom and the expansion of the biotech field in the early 1980s.  

In 1968, Morgenthaler built his own venture capital firm, Morgenthaler Ventures, that for more than 40 years has invested in more than 300  information technology and life sciences companies. Today, Morgenthaler Ventures' life sciences division focuses on early-stage investments, providing a badly needed lifeline for start-ups. 

Before venture capital, the only way to fund new technology was with private equity from people like the Rockefellers and J. Pierpont Morgan. Morgenthaler cemented venture capital funding as the main prospect for medical device start-ups.

Venture capital funding for the medtech industry peaked in the years between the dot-com boom and the recession. Until 2008, venture capital was the primary source of funding for medical device innovation. With the volatile global economy, the passage of the Affordable Care Act (ACA), and increasing regulatory uncertainty, venture capitalists' love affair with the medical device industry has cooled. The business of investment is shifting again. Entrepreneurs may need to court alternative sources of capital, such as from angel investors, crowdfunding, and private equity.