In our January 4th blog post we discussed the results of two studies indicating venture capitalists were regaining confidence in various industries and are expected to invest more in 2011 but with some hesitation surrounding medical device companies. Data released on Friday by PricewaterhouseCoopers and the National Venture Capital Association (NVCA) in their quarterly MoneyTree Report does not contradict those findings, indicating that venture capitalists invested $21.8 billion in 3,277 deals in 2010, an increase of 19% in dollars and 12% in deals over 2009. According to the NVCA press release, this rise in venture capital investments is the first time since 2007 that the annual investment level has increased over the prior year’s level.
However, investments in the medical device industry fell 9% in 2010 (with the largest single quarter drop of 31% in Q4 versus Q4 2009). The medical device industry ended the year as the fourth largest investment sector with $2.3 billion into 324 deals. According to the report, that’s slightly more deals than in 2009, when medical devices ranked third among all industries.
Prior posts have discussed diligence issues for medical device companies as well as the uncertainty inherent in the revamped FDA section 510(k) approvals process, which may be impacting current investor confidence.