Sony sinks $10M into Israeli medical device incubator

Rainbow Medical founder Yossi Gross

As Sony ($SNE) works to build its presence in the medical device world, the Japanese giant is investing $10 million in Rainbow Medical, an Israeli incubator with portfolio companies that make stents, stimulators and other devices.

Israel's Globes reports that Sony took a hard look at a few medical device companies in the country but opted against acquisitions, instead putting its money with Rainbow. Sony joins the likes of Medtronic ($MDT) and Abbott Laboratories ($ABT) in backing the Israeli firm, which raised $50 million last year.

Rainbow, founded by inventor and entrepreneur Yossi Gross, has 12 portfolio companies, and the outfit does business a bit differently from other financiers: Rainbow licenses its own intellectual property to the firms it seeds, allowing it to maintain majority holding and steer each company's development.

So far, the method has been a success. This year alone, portfolio company Enopace Medical scored a $5 million investment with option to acquire from Italy's Sorin, and Vascular Dynamics, another Rainbow company, hauled in $10 million. Since Rainbow's founding in 2007, 8 of its companies have reached the clinical trial phase, and one has won a CE mark, the company said.

For Sony, getting involved with Rainbow gives it a line on the burgeoning medical device world of Israel, providing the struggling company with an ear to the ground for future acquisitions.

Last month, Sony kicked off its long-delayed medical device joint venture with Olympus ($OCPNY), in which it holds a 51% stake. The pair plans to sell endoscopes and imaging technologies around the world, marrying their R&D operations and optics manufacturing capacities.

The jury's still out on just how much success Sony and Olympus will find in the medical device market, as neither company has exactly been hitting home runs with their flagship consumer electronics businesses lately. However, by keeping an eye on Rainbow's companies, Sony may be looking to diversify its med tech offerings, possibly giving the newfangled Sony Olympus Medical Solutions a wider base.

- read the Globes story

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