MN Medical Startups Are Attracting More Money

MN Medical Startups Are Attracting More Money

Industry group LifeScience Alley tallies $60 million raised in the first quarter, a 25 percent increase.

Minnesota medical startups raised about $60 million in funding during the first quarter of 2014, an uptick of 25 percent compared to last year's first quarter, according to St. Louis Park-based trade group LifeScience Alley.

The tally from LifeScience Alley’s research:

• 13 medical device companies raised $43 million, or 72 percent of the total

• Five health information technology companies raised $12 million, or 20 percent

• Two pharmaceutical/biotech companies raised $5 million, or 8 percent

The median deal size was $1 million, a notable increase from the median of $500,000 a year ago. The numbers suggest that companies drew larger, later-stage investments during the first quarter.

Two larger deals accounted for more than half of the money raised during the first quarter. Roseville-based Tendyne Holdings Inc., which is developing a mitral valve replacement device, raised $25 million in Series C financing. In another notable deal, Minneapolis-based Gravie raised $10.5 million in financing.

While medical device companies remain the dominant player, LifeScience Alley’s analysis points to “rapid growth” for health IT companies in Minnesota.

In an eyebrow-raising health IT deal announced early in the second quarter, Minneapolis-based Ability Network Inc. announced landing a $550 million “strategic investment” from Boston-based Summit Partners. But Ability Network, founded in 2000 as VisionShare Inc., is not considered a startup at this point.

Industry watchers have been encouraged by the increase in money flowing to medical companies. LifeScience Alley tallied a total of $341 million raised by local medical companies throughout 2013, a robust 81 percent increase over the $188 million raised during 2012.

LifeScience Alley compiles its numbers through a variety of sources including filings with the U.S. Securities and Exchange Commission (SEC), various reports on venture capital financing, company press releases, and other sources. The group’s statistics are meant to be inclusive, counting public offerings, venture capital, and corporate and angel investors.

“Minnesota’s life science community continues to show resilience in the face of a challenging environment,” Dale Wahlstrom, president and CEO of LifeScience Alley, said in a statement. “The first-quarter numbers demonstrate the fundamental strengths of Minnesota’s cluster.” (In March, LifeScience Alley announced that Wahlstrom will retire on May 1 and be replaced by Shaye Mandle.)

In another local deal, Minneapolis-based RedBrick Health Corporation disclosed in a Monday SEC filing that it raised $7.5 million in its latest financing round. Red Brick, a health technology company that works to “reinvigorate” company health and wellness programs, is looking to raise a total of $18 million.