BioStar Could Light Path For Device Investors

Article preview from Start-Up - May, 2011

BioStar Ventures, founded by physicians who are leaders in the interventional cardiology field, is demonstrating how medical device investors might benefit with close ties to clinical and corporate worlds.

BioStar Could Light Path For Device Investors

Article preview from Start-Up - May, 2011

For an innovative bunch, medical device venture capitalists have trouble reinventing themselves. If current conditions continue, they'll need to, and BioStar Ventures could be a firm to emulate, especially if new models require VCs and their funds to be smaller, faster, and better connected.

Based in Petoskey, MI, BioStar was founded in 2002 by physicians who are also leaders in the interventional cardiology field, a specialty known to have an appetite for new technologies. To complement its own knowledge of what doctors need, BioStar has added insight into the shopping lists of medical device companies, which represents more or less the only way investors in a start-up can find an exit these days. It's not unique for a venture firm to draw upon the inside knowledge of doctors and corporate partners, and investors are leaning on advice from those sectors earlier and earlier to gauge a project's value before too much capital has been invested. But BioStar is one of the very few to pull the lines of communication inside, all under one roof, and its exit record suggests the practice is paying off as the tiny firm lays the groundwork to raise a third fund.

Over the past seven years, BioStar has raised two funds of $28 and $40 million, and built a strategy around investing in start-ups with what the firm considers to be clearer paths to acquisition. Despite BioStar's small size, its exits have been impressive. Seven of the 14 portfolio companies in the first fund have been acquired.

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No publication reviews leading edge companies and technology better than START-UP. Each issue of START-UP profiles the most important new product companies, identifies the hottest technology areas, reviews funds flowing into private companies and investment trends, and reports on university tech transfer licensing. Industries covered: pharmaceuticals, biotechnology, medical equipment & devices, and in vitro diagnostics.

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