Device Investors Showing Some Spine

Article preview from Start-Up - February, 2013

This clearly isn’t the go-go period of spine in the mid 2000s, but venture capitalists can’t ignore the enormous opportunities for companies able to treat low back pain. Elsevier’s Strategic Transactions shows that just in the last year, 26 spine or low back pain companies received private funding. To be sure, many were small rounds, some were funded with debt, and some were insider rounds trying to keep companies moving forward, but venture investors showed excitement by investing in large rounds for a select number of start-ups.

Device Investors Showing Some Spine

Article preview from Start-Up - February, 2013

This clearly isn’t the go-go period of spine in the mid 2000s, but venture capitalists can’t ignore the enormous opportunities for companies able to treat low back pain. But they can keep a lid on any irrational exuberance.

• Spine start-ups might have had their pick of investors years ago when new implants and technologies looked to offer relief for back pain sufferers.
• But economics came into the equation as payors in certain categories of spinal fusion began balking at the prices they had to pay without first having clear-cut clinical evidence of success.
• Still, chronic low back pain continues to constitute an enormous patient population – at least 12 million patients – that needs more treatment options between the extremes of conservative care and spinal fusion.
• New findings about the interaction of muscles, nerves, and the skeletal system are driving new minimally invasive treatments that might someday satisfy payors’ demands for inexpensive but effective treatments.

The age of spine – roughly 2003 to 2007 – was a heady time for venture investors and spine entrepreneurs. Everyone involved knew the sector was getting too much attention from investors, but in their investment mind’s eyes the other 300 or so spine start-ups would be the ones to pay the price. As things turned out, when the reality cops came to bust up the party few escaped unscathed. The first pressure came from insurers who began requiring more clinical proof that spine devices could improve care without overinflating costs. Then, the recession drained the capital pool causing several high profile start-ups to simply run out of funds.

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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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