Corporate VC is Heating Up In Medtech: Trends for 2014

23 Jan

By Maximilian Klietmann, VP of Marketing, LSN

Max 2

As we enter 2014, LSN has compiled some insight into three of the hottest subsectors being targeted by investors in the medical technology space. As new technologies emerge, the healthcare sector is undergoing profound shifts that spell change for entrepreneurs, investors, and patients alike. LSN has identified three critical trends in the marketplace that we are likely to see unfold over the coming months. These are increased corporate venture activity in the medical device space, a massive increase in the funding of digital health solutions, and continued interest in mobile-enabled implantable devices.

Corporate Venture Capital Activity:

Medical technology continues to gain an increasing amount of attention from corporate venture capital. However, unlike the biotech therapeutics space, where corporate venture activity is largely being generated by big pharma venture arms, medical technology is getting attention from a broad range of corporate entities. Most interestingly, many consumer electronics corporate venture firms are getting into what could become a major profit driver down the road. Google’s recently announced glucose-monitoring contact lens is only the most recent instance of electronics players moving deeper into the healthcare space.¹ Wearable biosensor companies received over $140 million in the last twelve months², (heavily from corporate entities), and are another example of an increasing health focus by a number of household electronics companies. The good news here is that there will likely continue to be an influx of capital for early stage biotech companies to take advantage of. The key for fundraising companies will be identifying relevant corporate entities that constitute a fit.

Funding for Digital health

Digital health encompasses the intersection between medical technology and information technology. This includes healthcare IT solutions such as electronic health records, big data analytics, and cloud-enabled devices. This subsector is responsible for a disproportionate amount of the growth that has taken place in the medical technology space in the last year: Investment has doubled in 2013 to almost $2 billion in annual investments relative to 2011 levels. More interestingly, there is an increasing focus on early stage players in this piece of the market: Series A deals constituted 51% of financings in 2013, relative to only 39% in 2012². Due to the “multi-industry crossover” represented by digital health, this subsector stands to profit from the aforementioned corporate venture interest, not to mention other investor categories seeking to join in the trend.

Mobile-Enabled Active Implantable Devices

Active electronic implants enabled with mobile technologies will continue to gain momentum within the device space. The FDA issued preliminary guidelines on this subject in the second half of 2013 in anticipation of increasing focus in this area.³ A number of devices in this category – such as diabetic and cardiac monitoring systems with wireless capabilities – are already being successfully used in patients. These can compile extensive patient data, which can be helpful not only for treatment personalization, but a number of other tasks, such as complex trial data capture.

Early stage medical technology companies should watch these trends and seek opportunities to capitalize on them. Moreover, the influx of new investors into the healthcare space via these technologies constitutes a shift that savvy entrepreneurs should be aware of. Keep your eyes peeled as LSN continues to follow these investor trends as they evolve over the coming year.

  1. http://www.medicalnewstoday.com/articles/271389.php
  2. http://www.slideshare.net/RockHealth/digital-health-funding-2013-year-in-review-by-rockhealth
  3. http://www.fda.gov/MedicalDevices/DeviceRegulationandGuidance/GuidanceDocuments/ucm077210.htm

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