Article preview reprinted from IN VIVO - September/October, 2009
The global recession that struck last September drove many device investors into hiding. This left a barren financial landscape for device companies to subsist on. But some are finding the funds they need, and they're sharing their survival stories. Read more...
Device Companies Look Far and Wide for New Capital
Article preview reprinted from IN VIVO - September/October, 2009
** Toss any old valuations and terms out the window; valuations, investor preference, and capital spending plans are all being rewritten.
** Outside investors are taking months, not weeks, to perform due diligence; they're digging deeper and taking their time doing it.
** VCs love company. They're more likely to step up when there's enough capital around the table to carry the company to commercialization and beyond.
Device companies need to expand their search for investors: pharmaceutical companies are kicking the tires of device companies and investors from the Middle East and Asia could provide significant capital.
The world didn't end for medical device investors and their companies last September, but it clearly changed. Company executives raising capital at the time felt a palpable shift in the tenor of the talks. Venture capitalists who had once promised capital and support in the warm summer months of 2008 turned decidedly cooler as the fall temperatures—and the global economic meltdown—settled in.
Venture cycles historically ebb and flow like the ocean tides, producing a gentle rise and fall of investor interest and capital commitments. But last September hit like a tidal wave, blowing apart any sense of stability. Device companies that were on the road raising capital were most vulnerable. Their cash reserves were almost on empty and the promise of pricing and terms that might reward their years of work was gone.
Toss any old valuations and terms out the window; valuations, investor preference, and capital spending plans are all being rewritten.
Outside investors are taking months, not weeks, to perform due diligence; they're digging deeper and taking their time doing it.
VCs love company. They're more likely to step up when there's enough capital around the table to carry the company to commercialization and beyond.
Device companies need to expand their search for investors: pharmaceutical companies are kicking the tires of device companies and investors from the Middle East and Asia could provide significant capital.
- Tom Salemi
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Companies mentioned in this article:
Pathway Medical Technologies Inc.
Transcend Medical Inc.
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