Medtech investment hits 6-year high in Minnesota

January 15, 2015 By Scott Wooldridge

Investment in Minnesota’s thriving medtech scene hit a 6-year high in 2014 and the state saw a significant jump in pharma/biotech investments, according to LifeScience Alley’s annual report.

The group’s "2014 Annual Report on Minnesota Life Science Investments" found that investment in Minnesota life science companies reached a new high of $430 million in 2014, up 23.2% over 2013 investments of $349 million.

Some of the companies with the biggest investments were Holaira, which makes devices to treat pulmonary disease ($42 million); Inspire Medical Systems, which manufactures an implantable device to treat sleep apnea ($40 million); and Monteris Medical, a developer of laser systems for neurosurgery ($30 million).

Cheryl Matter, director of intelligence & research at LifeScience Alley, told MassDevice.com that the numbers partly reflect the improving economy and partly the continued strength of the North Star State’s various life science industries.

“We have a robust industry here, lots of talent, infrastructure; it’s strong really across the board," Matter told us. "Our numbers are probably a reflection of our ability to capitalize on that."

Matter noted that 1 of the most surprising findings of the report is that 2014’s 4th quarter, typically the slowest quarter of the year, was actually stronger than Q3 of last year. In fact, the median size of investments set new highs in both the 3rd and 4th quarters of 2014.

"We were really surprised to see that," Matter said. "T
here were no clear answers as to why, other than 2014 was just a really good year."

Apart from the surging medtech scene, health information technology also had a strong year in terms of both value and volume, with invested dollars nearing 2011’s record-setting year. There were 21 HIT companies with investment deals in 2014, breaking the previous high of 19 in 2013.

But the sector that enjoyed the biggest spike was pharma/biotech, which saw a 10-fold increase over 2013. The increase was driven part by 2 large deals: Leafline Labs ($12 million) and Rebiotix ($25 million).

But the growth wasn’t dependent on those deals alone, Matter said.

"Even if you took out those 2, the total amount raised within this sector it would still be the highest that we have recorded for the last 6 years, and the highest number of companies," she explained.

Angel investors put down approximately $25 million in pharma & biotech last year, Matter noted.

"We’re starting to see that there is a shift to alternative financing sources, so that there is a focus on angel investors, versus more traditional sources like venture capital," she said. "They’re turning over every stone and finding money in a lot of different places."

Matter said that 2015 looks promising for the medtech industry and investors in Minnesota.

"The climate within lifesciences looks really good. We have a number of promising companies raising significant amounts of funds," she said. "For Minnesota particularly, we’re seeing more money coming in and we’re starting to see diversification of our industry. We’re seeing lot of our traditional medical device companies starting to integrate with surrounding technologies. It’s really a positive outlook for the industry."

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