Medical Startups Raise $300 Million So Far in 2014

Medical Startups Raise $300 Million So Far in 2014

LifeScience Alley sees a strong year for Minnesota startups

New numbers from St. Louis Park-based LifeScience Alley show that Minnesota medical startup companies are on pace to set a record for fundraising in 2014.
LifeScience Alley, a trade association for medical and life science companies, reported last week that 18 companies raised a total of $113.6 million during the third quarter. Through the end of September, a total of 79 Minnesota medical companies have raised $300 million. That puts the fundraising pace 28 percent higher for the first three quarters of 2014, compared to the same period for 2013. LifeScience Alley’s revised statistics for 2013 found a total of $332 million raised, which was the best showing since the association began tracking the data in 2009.

During the third quarter, five companies raised $10 million or more; 12 of the 18 companies that landed financing raised more than $1 million.
“Across the board we’re seeing a number of larger investments,” said Cheryl Matter, Director of Intelligence & Research for LifeScience Alley.
Third-quarter deals of note include:

  • Plymouth-based Rotation Medical, a medical device company developing a treatment for rotator cuff disease, raised $27.2 million in Series B financing.
  • Roseville-based Rebiotix Inc., which is developing a new type of drug to treat gastrointestinal diseases, raised $25 million in its second round of financing.
  • Minnetonka-based Zyga Technology Inc., a med-tech company focused on lower spine conditions, announced its completion of a $10 million financing round in September.
  • Mendota Heights-based Healthsense Inc., a health technology company focused on senior care, announced in August that it closed on $10 million in financing.

The $113.6 million raised during the third quarter this year is down slightly from the approximately $121.1 million raised during the third quarter of 2013, a decline of 6.2 percent. But in the big picture compared to last year’s fundraising totals, Matter noted: “Overall we’re ahead.”
LifeScience Alley does not simply count venture capital fundraising as some other studies do, but also includes angel investments and other seed-stage financing. Matter noted that in the case of Rebiotix, for example, the $25 million came from several angel investors—not venture capital.
While there have been reports of declining funding for med-tech companies, Matter says that LifeScience Alley’s numbers show that Minnesota med-tech companies have raised $215.7 million so far in 2014—the best showing for med-tech during the first three quarters of any year since LifeScience Alley began tracking the statistics.