Medical device industry venture capital investment dropped 20% in dollars in Q1, with 10% fewer deals reported compared with Q4 2012, according to a new funding report.
The medtech industry’s losses paralleled a larger negative trend in the value and number of investments during Q1 2013. Dramatic drops in lifesciences funding were slightly tempered by increases in software and media, but VC investment overall dropped 12% in terms of dollars and 15% in quantity, according to the latest "MoneyTree" report from PricewaterhouseCoopers and the National Venture Capital Assn.
Biotechnology funding was 2nd only to software in the amount of money invested, but that sector nonetheless reported a 33% drop in dollars across 30% fewer deals compared to the previous quarter, the analysts said. The stark declines were something of a surprise, they added.
"Lower investment levels in the 1st quarter were driven by a number of factors, none of which were unexpected," NVCA research chief John Taylor said in prepared remarks. "The venture industry has been raising less capital than it has been investing now for several years, and ultimately this dynamic flows through and manifests itself in lower investment levels overall."
"Additionally, we are seeing less money going into traditionally capital-intensive sectors such as clean tech and life sciences, especially in 1st-time deals," Taylor added. "Lastly, the majority of deals are being done in the capital-efficient IT sector where rounds’ amounts are lower."
Those larger trends are likely to continue until fundraising picks up, Taylor noted.
The latest report adds to a roller coaster of sorts for medtech investment. Life sciences investments in Q3 2012 hit the lowest levels since 2004, with a 37% drop in dollars spent since the previous quarter, but rebounded 41% from that level in Q4.
