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Regional Funding Trends

FINANCE

Levels of investment in the life sciences vary greatly geographically. However, the investment outlook bodes well for regions that can create and sustain a healthy investing environment. The strongest U.S. regions in medical technology venture investment have traditionally included Northern California, Boston, and Southern California. In recent years, areas such as Seattle, Minneapolis, North Carolina's Research Triangle Park, and parts of the Midwest have shown considerable promise in their quests to become investment hubs for medical technology companies.

For example, healthcare companies in the Midwest reported a total of $742 million in investment during the first half of 2007, according to data from BioEnterprise (Cleveland). Of this, biopharma companies garnered $462 million, medical device companies garnered $148 million, and the remaining $132 million went to companies specializing in healthcare information technologies and services.

"The original challenge faced by Midwest companies was to gain the attention of the East and West Coast investment firms," says Robert A. Baxter, vice president of BioEnterprise. "It is still a challenge, but the numbers show great progress. The $792 million raised in 2006 was 25% higher than 2005, and the first-half total of $742 million almost equals all of 2006."

Likewise, cities such as Austin, TX—which may not be the first to spring to mind when listing hubs of medical technology investment—are seeing medical device investment levels rise. From 2001 through the first half of 2007, the Austin-San Marcos region saw more than $150 million in medical device venture investment, placing the region within the top-20 U.S. metropolitan statistical areas in terms of investment in medical device and diagnostics companies, according to data from Thomson Financial for the PriceWaterhouseCoopers-National Venture Capital Association MoneyTree Report.

"Nationwide the venture capital focus is on biotech, followed by medical devices and equipment, according to PricewaterhouseCoopers," says John Hoopingarner, executive vice president of Emergent Technologies (Austin, TX). "But Texas is more focused on medical devices and equipment."

"All three primary areas—diagnostics, devices, and therapeutics—are getting funding; however, we have found more medical device opportunities in this region," says Matt Crawford, managing director of PTV Sciences (Austin, TX). PTV Sciences—which looks to invest in companies across the United States where Texas resources can be leveraged to create disruptive technology and compelling investment opportunities—has recently invested in Austin-based Apollo Endosurgery and LDR Spine.

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