Google goes after med tech, along with other VCs

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.

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