Venture Capitalists Eye Medical Device Industry

July 24, 2015

Private medical device companies had a huge second quarter in terms of funding from investors, taking in more than $800 million. That figure represents an increase of about 70 percent over the first quarter of the year, according to a report from PricewaterhouseCoopers and the National Venture Capital Association.

For the two quarters, medical device companies have taken in about $1.29 billion — slightly ahead of the halfway mark of 2014, when the total stood at $1.26 billion, according to the PwC/NVCA MoneyTree report based on data from Thomson Reuters. During the second quarter of 2014, medtech companies reeled in $667.2 million in funding.

Across the board, private companies are seeing a rise in funding from VC firms. “Driven by a strengthening fundraising environment, the venture ecosystem deployed more capital to the innovation economy in the second quarter than any period in the last 15 years.  While this uptick can be partly attributed to non-traditional investors joining funding rounds, venture continues to lead the way in deploying capital to the most promising new technologies and companies,” says Bobby Franklin, president and CEO of NVCA, in a prepared statement. 

Among devicemakers, Calhoun Vision, a Pasadena, Calif.-based company that is developing a light adjustable intraocular lens, led the pack. In June, the company announced it had raised nearly $69 million in financing — $52 million in new financing, and an additional $17 million in debt conversion. The company plans to use the proceeds to advance its lens which is in Phase III trials.

The next largest financing went to San Jose, Calif.-based Outset Medical, which reeled in $51 million, according to the company.

Outset markets a simplified dialysis machine that it hopes to bring into patients’ homes. The FDA recently approved an IDE application for a trial in this setting.

Overall, second quarter investments in the life sciences sector — biotechnology and medical devices combined — accounted for approximately $3.1 billion going into 201 deals, a 41 percent increase in dollars, but flat in terms of deals, versus the first quarter of the year.
— Elizabeth Hollis