Medical device venture capital investment may have bottomed out in 2013. After years of declines, if venture financing in the sector stays on track through yearend it would total about $2.5 billion, up from $2.1 billion in 2013, according to PricewaterhouseCoopers and the National Venture Capital Association data.
In 2014, medical devices might improve upon their tiny fraction of venture investment, likely driven by big-dollar deals for high-profile health wearables companies. In 2013, only 7% of the $30 billion in healthcare venture capital went to medical device companies, according to data from Silicon Valley Bank.
In this respect, and many others, Google ($GOOG) may be leading the way. More than one-third of the financing from Google Ventures in 2014 went to healthcare companies. This year witnessed a dramatic diversification of the firm's interests which were confined largely to consumer companies in 2013. Google Ventures invested more than $100 million in Flatiron Health, which collects and analyzes data on cancer patients for doctors and hospitals. It's the firm's second largest investment after ride-sharing app Uber.
Google X, the company's massive R&D arm, has also gone after med tech in a big way this year with projects including a glucose monitoring contact lens effort that's partnered with Novartis ($NVS) and a disease-detecting swarm of nanotech robots.
At least 25 med tech companies filed IPOs last year and many of them got out--some were even greeted with huge valuations, one-day returns and/or sizable offering amounts. That's got to be encouraging to med tech investing VCs, who typically must rely on a handful of medical device giants, whose ranks are ever-shrinking as they merge with one another, to buy their startups. A continued, viable IPO option will help to encourage the innovation that venture capital is committed to supporting.