The Lure of Late-Stage Device Investing
This article was originally published in Start Up
In 2006, the number of late-stage private equity deals in the medical device sector is up significantly from 2005. At the IN3 East medtech conference in October, a lively panel of venture capital investors from Galen Partners, 3i, Matignon Technologies and OrbiMed Advisors discussed why this is so, and the risks, benefits and models for late-stage investing.
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The year 2006 may best be remembered for the handful of high-profile companies that struggled, but for all of the challenges that a few medical device companies faced individually, it's hard not to see 2006 as anything other than a robust year for the industry as a whole. It was also a year of impressive rebounds for many other device companies that had faced tough times.
A $10.9 billion bid by a consortium of private equity investors to buy Biomet raises questions about whether this is the first of many such deals or an outlier.
To date, 2006 has seen a marked uptick in large financings by late-stage device start-ups. Average amounts raised in Series C and later deals has climbed steadily to over $22 million from just under $15 million in 2003, and an unprecedented ten device firms have raised $30 million or more in single deals so far this year.