A New Chapter for Device VCs?
Article preview reprinted from Start-Up - March, 2009
The current economic crisis is hard on everyone, including investors and start-ups. But the news isn't all bad for medical device VCs. Those with capital will find the prices to be right in today's depressed economy.
Article preview reprinted from Start-Up - March, 2009
A New Chapter for Device VCs?
On the flip side, those venture firms without new funds or sufficient reserve capital will get penalized by declining valuations and punitive terms offered up by some new investors in their companies. Medical device companies, meanwhile, face tougher scrutiny from investors. During all this, both VCs and start-ups must answer new questions being posed by regulatory bodies, public investors, corporate acquirers, and potential customers.
Perhaps Charles Dickens knew a thing or two about venture capital. His oft-quoted opening line to "A Tale of Two Cities" aptly describes the current landscape for venture capitalists investing in medical devices. For those venture capitalists with capital to invest, these will be the best of times as dire economic news drags down valuations. But for those venture capitalists who need to raise capital, this could be the absolute worst of times, a time when some firms undoubtedly will shut off the lights, take down the web site, and simply disappear.
How can such a dichotomy exist? Simply put, cash, which was once king, got a promotion. In today's dire market, cash, quite simply is life. Those companies with enough capital to ride through this downturn will survive. Those without enough capital will either whither and die or undergo a crucible to survive. The same might be said for venture capital firms, some of which could see their current holdings squeezed by new investors imposing onerous and punitive terms on existing investors in exchange for fresh cash.
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Companies mentioned in this article:
Biogen Idec Inc.
CircuLite Inc.
CoAxia Inc.
Coherex Medical Inc.
CoreValve Inc.
Cyberkinetics Neurotechnology Systems Inc.
Edwards Lifesciences Corp.
Emphasys Medical Inc.
Innovative Spinal Technologies Inc.
IntraPace Inc.
Lutonix Inc.
Medtronic Inc.
Ablation Frontiers Inc.
Northstar Neuroscience Inc.
St. Jude Medical Inc.
Ventor Technologies Ltd.
Xtent Inc.
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