October 25th, 2007
Device market finds value in privacy
Medical devices are complex. Their regulatory environment is complex. You want to explain that complexity to mom-and-pop investors?
Unless your goal in life is to schmooze Maria Bartiromo or Neal Cavuto, the answer is probably no. Fortunately there’s an alternative.
Venture capitalists are now working with hedge funds to deliver previously-unheard amounts of capital to profitable device makers.
- Globus Medical, which specializes in spinal work and claims to be the fastest growing orthopedics outfit ever, got $110 million in capital last August to keep growing.
- CardioNet, which makes outpatient heart telemetry gear, drew a similar deal in March, then filed to go public in August.
VentureOne says medical device makers are on pace to draw $3.75 billion in venture capital this year. Some 12% of all venture capital is now going to medical device companies, up from 10% last year.
All this is possible thanks to new links between VC funds and hedge funds. Where once deals were restricted to the amount of capital in a VC portfolio, now the sky is the limit.
It’s starting to look a bit like the last decade’s Internet boom. Can the market absorb all this money without a lot of bad deals getting done? Is it fair that so many of the biggest gains in the market are now going to private hands?
Or should we just say, as they used to in New Orleans, Laissez Les Bon Temps Roulez. Let the good times roll.
Dana Blankenhorn has been a business journalist since 1978, and has covered technology since 1982. He launched the Interactive Age Daily, the first daily coverage of the Internet to launch with a magazine, in September 1994. See his full profile and disclosure of his industry affiliations.
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