OrbiMed kicks off $735M VC fund with device and Dx companies in mind

OrbiMed is rolling out a $735 million venture capital fund that could give a major shot in the arm to medical device and diagnostics startups in an era in which investors are increasingly difficult to come by.

The fund--OrbiMed's fifth--will target, in part, medical device and diagnostics companies in both North America and Europe, as well as biopharmaceutical and healthcare IT. OrbiMed added it will invest in about 30 portfolio companies in doses ranging from $10 million to $50 million for companies in all stages of development. This latest fund, it said, is backed by major endowments, foundations, sovereign wealth funds and financial institutions from around the world.

Jonathan Silverstein, an OrbiMed partner, told FierceMedicalDevices his firm would pursue early, mid- and late-stage medical device investment opportunities with equal measure.

"We view ourselves as stage-agnostic and we always have been," Silverstein said. "We have a fresh fund and we have noted that a lot of the healthcare investors have gotten out of medical devices. But we have interest in being contrarian ... We have done really well in all stages of medical devices and we think that when there is a lack of capital in a sector that is the time when you want to be deploying full speed ahead."

Carl Gordon, another OrbiMed partner, said that OrbiMed will pursue selective diagnostics investments, as before.

"We have invested selectively in the diagnostics space and we will continue to invest there on a selective basis," Gordon said. "This is a little bit of a tough space, but we have excellent companies in our portfolio and we are seeing some sort of a wake-up in the IPO community in the diagnostics space." Two examples he noted: Foundation Medicine ($FMI) and Veracyte ($VCYT) both recently launched successful IPOs (and there are others in the pipeline).

OrbiMed has long invested in medical device and diagnostics companies including laser surgery tool company OmniGuide and arrhythmia mapping-device company Acutus Medical. Prenatal diagnostics company Natera and Glaukos, developer of a tiny implant to treat glaucoma, are two other OrbiMed portfolio companies, and both are also 2013 Fierce 15 winners.

OrbiMed isn't the only VC firm gearing up for new med tech investment. Versant disclosed it is raising a new $250 million fund that will pinpoint devices, diagnostics and other life sciences investments. Third Rock, Atlas and Frazier Healthcare have also launched life science-focused funds this year worth over $1 billion.

Venture investment in med tech companies has remained sluggish after years of decline. In the 2013 third quarter, VC deals grew 12% in terms of dollars, but the number of deals dropped 8%. All of the top investments landed with later-stage companies, according to data compiled by PricewaterhouseCoopers and the National Venture Capital Association, based on Thomson Reuters data.

- read the release
- here's FierceBiotech's take

Special Report: 2013 Fierce 15 - Glaukos - Natera