Medtech Investing 2009: What's Changed?
This article was originally published in Start Up
The medical device industry is undergoing a crisis of funding, but not of confidence, according to a panel of investors convened at Windhover's recent medtech conference, In3 West,. The conference panel sought to explore how the medical device investment community is operating in these troubled times, how they will invest going forward, and how they will support their companies if things don't improve. We were especially curious to know if the funding challenges that start-ups face are really due to the overall dire economy, or if that dark cloud merely masks changing fundamentals in the medical device industry that are making it more difficult for companies to find funding, gain FDA approval, and enjoy a healthy exit. Our panel weighs in on the matter.
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At Elsevier Business Intelligence's February IN3 West conference, a panel of leading device venture investors, who remain committed to and are actively doing deals in medtech, discussed how the recent recession has affected device investing and how much, if at all, that world has changed as a result.
A year and a half after the September 2008 collapse of Lehman Brothers and the official start of the economic recession, a panel of venture capitalists and other financiers in the medical device industry came together at the IN3 meeting in Boston. We asked them if they've had to change the way they look at deals. What is the trade-off between expensive, de-risked later stage deals and the kinds of returns that can be achieved by backing a winning company from start to finish? Where would they place their bets: cost-effective technologies for tried-and-true markets or novel products for unmet clinical needs, the "evolutionary vs. revolutionary" debate? And what can one do about tired syndicates? Our panel lets us in on the kinds of discussions they've been having around the table at weekly partners' meetings.
Device deals--albeit fewer--are still getting done in the current environment, and many investors remain bullish on devices. A panel of venture investors--both VC and corporate--who are still active dealmakers, discuss what they want to see today in start-up companies, and whether the device investment model has changed both for now and the future.