Article preview from Start-Up - February, 2012
Big venture capital investments … scratch that … really big venture capital investments catch our attention these days. After all, venture capital firms are slowly beginning to fade away, and the pool of venture capital is said to be drying up with it.
Article preview from Start-Up - February, 2012
So we tend to sit up and take notice when a company like personalized knee implant manufacturer ConforMIS Inc. raises $89 million as it did last month.ConforMIS, in raising the fund, actually turned to institutional investors rather than just VCs for the money it needs to launch its new total knee implant. The company hopes those investors will be willing to participate in an IPO sometime in the near future.
ConforMIS’ round stands out because it is the largest round of this still young year. But an analysis of significant capital raises of the past five years demonstrates there’s been no shortage of larger rounds totaling $50 million or more, even with the supposed shortage of venture capital. In 2011, seven medical device companies raised rounds of $50 million or more, totaling $566 million. The deal tally ties the high total of 2009, but the seven deals in 2011 brought in more than $100 million more than the seven in 2009, according to Elsevier’s Strategic Transactions. Sizable investments continued to go to companies with clinical-stage or commercial stage products.
The larger sums in 2011 were boosted by the ongoing investor interest in cardiovascular and metabolic disease companies, two areas that require extensive and expensive clinical testing (and rich returns on exits). Over the past five years companies in the two sectors respectively have raised $619 million and $349 million in $50 million-plus deals. Musculoskeletal companies – like ConforMIS, which actually raised a $50 million round in 2009 – have brought in $268 million in financings.
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