Fundraising Declines For Minnesota Medical Startups

Digital health companies see strong gains.

Fundraising Declines For Minnesota Medical Startups
Investments in Minnesota medical startups were down 7.9 percent during 2016, according to a new report from the Golden Valley-based Medical Alley Association, a trade group for medical companies in the state.
Medical Alley’s “2016 Investment Report” found that 98 Minnesota medical companies raised $420.3 million in new financing last year, a drop from the $456.3 million raised in 2015. Last year’s total is also lower than the $435.5 million raised in 2014.
The annual report from the association is one barometer of the health of the Minnesota medical economy. The money raised during 2015 set the high water mark for financing since Medical Alley began tracking the statistics in 2009. Medical Alley’s investment report tracks development capital raised from all sources including angel investors, venture capital and debt financing.

But the just-reported numbers are likely to change because Medical Alley researchers continue to revise the report when they discover deals that they previously overlooked.
A year ago, for example, the group reported that Minnesota medical companies had raised $434.9 million for 2015. The revised number of $456.3 million for 2015 is now more than $21 million higher than the initial Medical Alley report. That makes it difficult to accurately compare year-over-year data.
Still, the Medical Alley report gives a clear sense of the larger market trends for attracting financing for medical companies. The biggest growth is in the digital health category which raised $127.3 million last year, an increase of 81 percent compared to 2015.
But a single deal stood out in for digital health companies: Minneapolis-based Bright Health, a digitally focused health insurance provider, raised $80 million in venture capital. That one deal accounted for almost one-fifth of all Minnesota medical investments for the entire year.

Medical device companies remain the largest industry category in Minnesota, with a reported $252.2 million raised during 2016. Pharmaceutical, biotechnology and companies not included in other categories raised a combined $40.6 million. 
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