In Europe, Contrarian VC Wellington Partners Favors Medical Devices
This article was originally published in Start Up
In September, Wellington Partners announced that it closed on €70 million ($91 million) in new venture capital, the first commitment for a fund devoted to life science investing. The target size of Wellington Partners IV Life Science Fund is €120 million, a significant increase over its previous fund devoted to the life sciences, which raised €78 million. Five years ago, this event wouldn’t even have been news, but in a world where venture capital funds are generally contracting, and specifically with regard to life sciences, Wellington offers medical device start-ups a bright spot of hope.
You may also be interested in...
Even as the rest of the global economy seems somewhat on a path to recovery, medtech-focused VCs, in the US at least, are experiencing a time of significant uncertainty and attrition: fewer dollars available for new investments, a trend away from early-stage deals, and fewer and smaller venture firms overseeing smaller new funds. For European medtech investors, there has been little of the gloom and uncertainty that the US venture capital community has experienced over the past several years, if only because there was no pre-bust bubble from which to fall.
Industry expects the European Commission to propose more oversight of notified-body reviews by member countries. But the Commission appears to have resisted calls to establish a direct government approval process for devices.
The entire venture capital industry is facing difficult times. But few are taking as hard a hit as medical device investors. In our survey of 100 institutional and corporate VCs, 65% of the venture capitalists who said they invest primarily in medical device companies say they’re feeling “negative” about “the current state and future of VC.” Only 17% say they feel positive, with the remainder feeling neutral. Not surprising, device VCs’ worries center around limited partners and the FDA. Limited partners are demanding strong returns before re-upping with new funds, and the FDA, while improving, is holding a firm line in issuing new approvals. Device VCs keep looking for innovative technologies and waiting for opportunities to improve.