Venture capital: Deal flow jumps during 4th quarter of 2012

January 18, 2013 by MassDevice staff

The number of venture capital deals in the medical device sector grew during the 4th quarter of 2012, but a drop in total dollars may leave the industry under-funded, according to CB Insights.

Venture Capital

Investors returned to the medical device industry during the final quarter last year, despite negative headwinds, according to new data released by CB Insights, a venture capital and angel investment database.

Companies in the medical device space closed 68 deals during the final 3 months of 2012, up 41% from the previous quarter about 3% from the same period in 2011, making Q4 the most active quarter of 2012.

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But the total value of VC investment took a heavy blow, down nearly 18% compared with the same period in the previous year. Medical device companies raised $553.5 million during the 3-months ended Dec. 31, 2012, compared with $671.9 million raised during Q4 2011.

Anand Sanwal, CEO & Co-founder of CB Insights, told that deal quantity in a particular quarter is typically a better measure of the health of the investment market than the total dollar amount.

"I think [2012] ended well for medtech, relative to other sectors in healthcare," Sanwal told us. "There's some concern about exit events, but seeing an uptick in Q4 is a good thing."

The increase in the final frame of the year represents some rare good news for medical device startups.

Last month, a survey of more than 600 venture capitalists and CEOs, conducted by the National Venture Capital Assn. and Dow Jones VentureSource, showed that 53% of respondents expected lower VC investment in medtech. Nearly half predicted that the medtech space will be underfunded during the coming year.