Financing Strategies for an Overheated Device Market
This article was originally published in Start Up
At In3 West, a medical device conference held in Las Vegas recently, Windhover Information convened a panel of venture investors to ask them what's in store for device companies seeking investments in the near future, and to address one nagging question: whether or not the heady funding levels of 2007 are sustainable, or even desirable. Certainly exits have become more challenging; consolidation has removed certain would-be acquirers and the IPO market has become more demanding; no company will get out there without at least $30 to $40 million in revenues, several on the panel felt. Others were feeling the pressure of having to carry portfolio companies for even longer periods of time; more complex technologies, lag times at the FDA, and the need to get companies not only to the commercial stage but to a revenue ramp were pushing up the number of years to an exit and total investment dollars. Many were optimistic that early stage deals, exits by acquisition and other unusual phenomena would continue to happen; but selectivity was the theme of the day.
You may also be interested in...
A look at recent exits challenges the widely held view that device investments have lower return potential than biotech investments. However, a close inspection of the risk/return profile reveals that device investors are taking on more risk than ever.
Mergers and acquisitions, once the tried-and-true method of exits for device investors, are now being dominated by Big Pharma. But can this appetite benefit device investors?
A Reprint--see the article of the same name in In Vivo, May 2008.