Some Signs That the MedTech VC Slump Is EndingSome Signs That the MedTech VC Slump Is Ending

There is no doubt that medtech venture capital investing has been down since the Great Recession. But a few are now raising the possibility that it is ending--or at least starting to end.The mildly optimistic include Mir Imran, a medical device pioneer and venture capitalist who is CEO of San Jose, CA-based InCube Labs. Imran recently told Wall Street Journal blogger Timothy Hay that 2014 may be the year that the trend begins to turn around. Imran says that limited partners in venture funds have been trying to pull VCs back from early-stage U.S.-based medical device companies for years. But they may be looking to switch gears after experiencing disappointing returns investing in Asia and India. "They are beginning to think other places are not as good," Imran says, "and that the U.S. economy is on the rise."There is also hopeful news from a blogger calling himself "Stephan Ghost," who writes for Ghost Productions, a medical animation studio. In a post dated February 9, "Ghost" says:

The VC situation, though, remains pretty gloomy for now, even for the most optimistic medtech startups.In 2013, dollar amount numbers for medical technology were off almost 43% from the high water mark of 2007, according to the MoneyTree Report that Thomson Reuters compiles for PriceWaterhouseCoopers and the National Venture Capital Association. The number of deals declined as well, but only by slightly over 22%. So not only are the numbers of deals down, but the average deal size is down as well. Mike Carusi, an investor with Advanced Technology Ventures, tells Hay at WSJ: "There are just not as many device investors as there used to be. Firms either can't raise a new fund, or they move into other areas like health IT, or they only do later-stage deals."Carusi continued, "It's not always about whether the VC wants to invest in devices or not. The money is just not there from limited partners. The amount that my firm's LPs want to put into healthcare has gone down dramatically." The totals on the biotechnology side are down as well, but those declines are only about half those in the medical devices and equipment space.