Investors spent less money on fewer deals in the medical device sector during the third quarter and so far this year, bucking the overall growth trend for venture capital-backed firms, according to a new report.
Venture capital investment fell -19.7% to $772.7 million during the three months ended Sept. 30, with deal volume down -20.3% to 51 deals during the quarter, according to the MoneyTree report from PricewaterhouseCoopers and CB Insight.
Year-to-date, VCs put $2.32 billion into 172 deals, down -11.4% and -16.1%, respectively, compared with the first three quarters of 2017, according to the report.
Medtech’s performance went against the grain for the overall U.S. VC-backed sector, which saw total dollars invested rise 17% to $27.5 billion.
Globally the total VC spend rose 2% to $53.1 billion across 3,408 deals, but early-stage investment declined in all regions, according to the report.
“This quarter approached quarterly funding records, with $27.5B invested in VC-backed startups and 55 mega-rounds,” PwC’s Tom Ciccolella said in prepared remarks. “On the other hand, VC-backed deal volume is down to a level unseen since Q4 of 2012. As early-stage startups wonder if there are adequate funds available, the overall deal volume (1,229) still reflects a healthy startup ecosystem.”
“The unicorn birth rate picked up in Q3’18 with 16 US startups and 13 Asian companies seeing valuations rise above $1 billion dollars. Mega-rounds (those over $100M) also reached record levels in the US as money rushed into mid- and later-stage companies,” added CB Insights co-founder & CEO Anand Sanwal. “The casualty of this rush has been the seed stage, which saw a global decline. The migration out of seed won’t be felt now, but it will have impacts on the venture ecosystem in the coming years.”