Top medical device VC investments of 2012

After the tepid medical device venture capital investment numbers for 2012, Sherrill Neff is looking forward, not back.

Neff, co-founder of Quaker Partners, a Philadelphia-based venture capital firm, acknowledges the sobering reality that venture capital investment in the sector dropped by double digits in both dollar value and the number of deals in 2012, despite a fourth-quarter surge. But Neff argues that the PricewaterhouseCoopers/National Venture Capital Association/MoneyTree report comes as investors turn a corner--in attitude, at least--and are becoming cautiously hopeful heading into 2013.

"We are seeing a little bit more optimism broadly among investors, particularly [among] those of us still standing with funds to invest, in part because the pace of innovation has not slowed," Ness, an NVCA board member, told FierceMedicalDevices. "There is a general sentiment among those of us that do have funds to invest that the opportunity is as good as we have seen in a long time."

Neff admits that there are some painful trends, with a continued shift toward less venture money flowing into early-stage deals. Investors, he said, are focusing instead on later-stage companies that are much closer to commercialization or even already there--and a safer bet as a result. And that's a major problem for startups because investors keep shying away overall.

"There is still a little bit of concern on our part and on the part of the NVCA that the flow of new dollars into first-round deals and early-stage deals is continuing to decline," Neff said.

But let's go back to that "cautious optimism" again, shall we?

Neff sees investors starting to overcome their apprehension after many painful years. That, he said, is because of a perception that "maybe tables are beginning to turn on the regulatory side, and that the FDA both on the drug and device sides is starting to be more open to working with entrepreneurial and innovative companies in ways that make sense for those companies."

Also, there is this: Neff notes that companies are able to attract "significant funds" to help fuel their commercial launches once they've made it through the FDA regulatory process. And it's not as if startups are being ignored entirely. New companies fielded by CEOs with proven track records are still drawing early-stage funding, he said, despite the overall decline.

With all of that said, the top 10 medical device industry venture investments for 2012 still hit some impressive levels. And investors devoted noteworthy amounts of cash to a wide range of technology, in areas including knee replacement, insulin delivery, breast implants, stent grafts, mitral valve repair and organ preservation.

The top 10 medical device venture investments of 2012 follow below, as compiled from the MoneyTree report. Later this week, we'll present the top 10 investments in the diagnostics/diagnostic equipment space. -- Mark Hollmer (email | Twitter)

Who: TransMedics

What: Maker of an organ-preservation device

Investors: Flagship Ventures, Hercules Technology Growth Capital, Kleiner Perkins Caufield & Byers and an undisclosed investor

How much: $36.2 million

Who: Mitralign

What: Developer of catheter-based mitral valve repair system

Investors: AAC Capital Partners Holding BV, Forbion Capital Partners, Giza Venture Capital, Johnson & Johnson Development Corporation, Medtronic ($MDT), Oakwood Medical Investors, Orchestra Medical Ventures, Oxford Bioscience Partners, Palisade Capital Management, Saints Ventures and Triathlon Medical Ventures

How much: $36.9 million

Who: CardiAQ Valve Technologies

What: Developing a replacement mitral valve

Investors: Advent Venture Partners, OrbiMed Advisors, Versant Ventures and an undisclosed investor.

How much: $37.3 million

Who: Arstasis

What: Maker of a femoral artery access surgical tool

Investors: Ascent Biomedical Ventures, an undisclosed investor

How much: $37.8 million

Who: Apollo Endosurgery

What: Makes a flexible endoscope to enable incision-less surgery

Investors: CIC Partners, H.I.G. Capital, Novo A/S, PTV Sciences, an undisclosed investor.

How much: $47.6 million


Who: Tandem Diabetes Care

What: Maker of a touch-screen insulin pump

Investors: Delphi Ventures, Domain Associates, HLM Venture Partners, TPG Growth and undisclosed investors

How much: $55.2 million

Who: TriVascular

What: Maker of a stent graft system to treat abdominal aortic aneurysms

Investors: Delphi Ventures, Kaiser Permanente Ventures, Kearny Venture Partners, MPM Capital, New Enterprise Associates, Pinnacle Ventures and undisclosed investors.

How much: $60 million

Who: Sientra

What: Maker of breast and facial implants, body contouring and tissue expanders.

Investors: Abingworth Management, Clarus Ventures, OrbiMed Advisors and an undisclosed investor.

How much: $65 million

Who: Valeritas

What: Maker of a disposable insulin-delivery device

Investors: Advanced Technology Ventures, Tullis Health Investors and an undisclosed investor.

How much: $75.6 million

Who: ConforMIS

What: Maker of a total knee replacement system

Investors: AGC Equity Partners, Axel Johnson, government funds in Asia and the United Arab Emirates, U.S. and international private equity funds.

How much: $89 million


Top medical device VC investments of 2012

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