More than a decade ago, venture capitalists identified neurostimulation as a fertile new field for investment, but efforts to date have produced more disappointments than results. The losing streak appears to be over: the FDA recently cleared Neuronetics to begin selling its NeuroStar TMS system for treatment-resistant depression. Meanwhile, Northstar Neuroscience has received FDA approval for the second study of its Renova cortical stimulation device for treating major depressive disorder.

Frazier Healthcare Ventures has never been one to faddishly follow the flow of money in or out of medical device investing, maintaining its commitment to invest in this space. Indeed, the firm recently shifted its focus to concentrate on more early-stage medical device deals, a strategy that appears to be paying off.

With device company investors worried about exit strategies, companies and their financiers are looking for creative ways to get deals done. Limited exit opportunities are making financiers anxious, driving them to put more money into fewer start-ups, which target devices aimed at larger markets. Some entrepreneurs are forming incubators to focus on niche products in which they develop new technologies, then sell them without building companies around them.

Agilent was spun out of Hewlett-Packard in November 1999 to encourage some of its business units to shift toward higher-growth products that, as a part of a smaller company, could make a more significant contribution to earnings growth. The name evokes agility and efficiency, but over the past decade HP--in part a victim of its own success--had become somewhat complacent. To stimulate entrepreneurship, Agilent knows it has to change the culture it inherited. Moreover, its existing health-care businesses have not been performing well due to market conditions that are not expected to improve in the near term. The health care portion of the company now expects only minimal growth for the year, well below the double digit growth Agilent wants from its businesses. It therefore intends to step up development and introduction of new products, to decrease emphasis on the hospital-based market and grow its businesses in developing countries, and move into interactive health services and e-health. But that brings with it new challenges in marketing and partnering which were not its strong suit as part of HP.