Investments In MN Medical Startups Falter
Are investments in Minnesota medical startups cooling off?
St. Louis Park-based LifeScience Alley reports that 23 Minnesota life science companies raised $41 million in capital for the first quarter of 2015. That’s down sharply from the $75.4 million raised during the first quarter of 2014, reflecting a 46 percent drop from a year ago.
The 2014 fundraising numbers will be tough to match. Last year, Minnesota life science companies raised a total of $430.4 million, the strongest year since LifeScience Alley began tracking the statistics in 2009.
Since the organization began surveying the fundraising climate, the slowest year was 2010 when Minnesota medical companies raised a total of $213.1 million.
Cheryl Matter, vice president of intelligence and research for LifeScience Alley, could not pinpoint any specific reason for the first-quarter funding falloff this year, but suggested that the market could simply be taking a breather following a large number of deals in the third and fourth quarters of last year.
Two companies stood out from the pack by raising more than $10 million each. Eden Prairie-based Sunshine Heart, which makes an implantable device to treat heart disease, raised $10.3 million, largely through a debt filing.
Minnetonka-based Osprey Medical Inc. raised $13 million through a private placement. Osprey Medical is developing technology to reduce the amount of dye injected during heart procedures that would protect a patient’s kidneys.
Combined, the two companies accounted for more than half of the money raised by Minnesota life sciences companies during the first quarter.
The median deal size for the first quarter of 2015 was $0.41 million, up from $0.29 million a year ago.
The LifeScience Alley survey includes companies in the medical device, pharmaceutical, biotechnology, diagnostic and health information technology sectors. Medical device companies remain dominant players in the local medical economy: Device companies attracted 87 percent of all the funds in the first quarter of 2015.
LifeScience Alley compiles its data from a variety of sources including industry reports, filings with the U.S. Securities and Exchange Commission, data from the Minnesota Angel Investment Tax Credit program, company press releases and media coverage.