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Some Overseas Funds Willing to Invest in U.S. Medtech Firms
U.S. medtech companies are having a tough time raising capital from U.S. venture capitalists. But foreign funds might provide some relief.
September 26, 2013
8 Min Read
Even Hercules, who triumphed over his 12 Labors, would likely fail if he were tasked with raising money for a medtech firm these days.
The funding environment is bleak, and one venture capitalist at the recently-concluded annual conference of AdvaMed in Washington, D.C., declared that it was the least capital in the marketplace that he had seen in his career. That came from Ryan Drant, partner at NEA, where he has been since 1996.
Still, all hope is not lost. Representatives of some overseas funds were also present at AdvaMed, and they talked about their interest in investing in U.S. medical device firms.
This London-based venture capital firm has a focus on medical technology and while most of its investment is in European firms, 25% of its committed capital is for U.S.-based companies, explained Aris Constantinides, investment director at NBGI Ventures.
The company typically invests €1 million to €10 million per company and has invested in three U.S. firms. They are: Advanced Cardiac Therapeutics that is developing an irrigated cardiac catheter ablation system; Estech, which has developed products for minimally invasive cardiac surgery and Reverse Medical, which is developing endovascular devices for peripheral and neurovascular applications. Of the three, only Estech is a later stage company while the other two are in the pre-prototype stage.
Vivo is based in China and the U.S. and has more than $1 billion in capital under management, said Chen Yu, managing partner. It invests primarily in late stage companies, and its strategy is to foster partnerships between U.S. and Chinese life science firms.
About 50% of the company's portfolio is based in the U.S., with the rest in China. A review of its U.S. portfolio shows that the company's primary investment target is the pharmaceutical industry or biopharma, still, it has invested in some medtech firms.
They are Air panders, a patient controlled breast-tissue expander used in reconstructive surgery; Minerva Surgical developing a new endometrial ablation system; SentreHeart, a firm developing suture delivery and tissue closure device; Synapse BioMedical, a neuromodulation company.
Other European medtech investment firms include Wellington Partners Venture Capital and HTGF in Germany, although that company requires the company receiving funds to have offices in Germany even though the founders may be foreigners.
Still, while European investors may be more open to earlier stage companies that U.S. venture capitalists, AdvaMed panelists cautioned against having an impression that it is easy to get capital in Europe. In fact, U.S. entpreneurs may have to answer why they can't raise capital at home.
"I don't want to give the impression that you fly into Paris, eat a croissant ...(and get the cash," said Constantinides of NBGI Ventures. "You wob't hear a blanket "no" to early stage, but still have to have an outstanding story.
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