Healthcare-related startups in search of cash have more to be happy about these days as venture capital deals jumped 33 percent during the third quarter, compared to the prior quarter, according to a report by New York-based research firm CB Insights.
The report noted 184 Q3 healthcare deals, the highest number since the third quarter of 2009.
The total dollar amount of those deals didn’t jump as much, but still rose 7 percent to about $1.8 billion, compared with the second quarter. The implication is that venture investing in healthcare is headed in the right direction, but still not as strong as most in the industry would like it to be.
“The numbers mirror the uptick that we’ve been seeing in the market,” said Michael Goldberg, managing director of Cleveland and Israel-based Bridge Investment Fund.
“We are starting to see more M&A activity, so you can see the exits,” Goldberg added. “They may not be back to where they were before the downturn, but you can at least see the path to exits.”
Medical devices continue to be the most attractive industry segment, accounting for 42 percent of the deals and 36 percent of the dollars in the quarter. Pharmaceuticals came in second in both categories, with 20 percent of the deals and 23 percent of the dollars.
California and Massachusetts held on to their top-dog status, with a combined 45 percent of all deals, though that number declined from 56 percent the prior quarter. In terms of cities, California was king, home to seven of the top 10 ranked by investment dollars. San Francisco led the way at $106 million, followed by San Diego and Seattle.
The quarter’s largest health deals went to Irving, Texas-based Reata Pharmaceuticals ($78 million), Santa Clara, Calif.-based biopharm firm Relypsa Inc. ($70 million) and Santa Rosa, Calif.-based device firm TriVascular Inc. ($60 million).