Health-care companies in Northeast Ohio garnered the lion’s share of investor dollars last year, according to the 2008 Venture Capital Report for the so-called Cleveland Plus region, made up of Akron, Canton, Cleveland and Youngstown.
Health care services, medical information systems, biopharmaceuticals, medical devices and equipment, and other health care companies received more than 60 percent of the $259 million in investment capital raised by the region’s companies in 2008, according to the report being written by Ohio’s Venture Capital Advisory Task Force.
That was down from nearly three-quarters of $318 million in venture investments made in the region’s health care companies in 2007, according to that year’s venture capital report. The task force, which includes development organizations JumpStart Inc., BioEnterprise and NorTech, plans to release a printed version of its report in mid-February.
“Health care continues to be Cleveland’s flagship sector,” said Baiju Shah, president and chief executive of BioEnterprise, the region’s health care company and investment developer, in a written statement.
Twenty-six health care startups raise more than $158 million in 2008, according to the report. PartsSource LLC, the fast-growing supplier of replacement parts for hospital imaging and biomedical equipment in Aurora, landed the biggest investment last year — $50 million. The PartsSource investment came from a group of investment firms led by Polaris Venture Partners in Waltham, Mass., that included Primus Capital in Mayfield Heights.
“PartsSource is an impressive organization at the intersection of technology, Internet and health care, and we’re thrilled to be partners with them,” said Jason Trevisan of Polaris in a written statement.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
Other notable health care investments last year include ViewRay Inc., the Oakwood company developing image-guided radiation therapy technology, which raised $25 million; IntElect Medical Inc. in Cleveland, developer of brain-stimulating therapies and devices, which raised $13.5 million; and AxioMed Spine Corp. in Garfield Heights, spinal implant developer, which raised $10 million.
Ohio hosts the offices of 27 health care venture capital firms. That makes Ohio one of the top five states for health care investors, Shah said. “The success of regional health care startups continues to attract regional and national investors,” he said.
Regional companies in the “clean technology” category raised nearly double the amount of investment capital in 2008 as they did in 2007, according to the report. These companies are mostly in the advanced materials and advanced energy sectors. Notable investments included Energy Focus for $10 million, reXorce Thermionics for $5 million and Arisdyne Systems for $5.3 million.
Fourteen information technology companies  raised nearly $27 million last year, including TOA Technologies, which raised $13 million; SageQuest LLC, $3.7 million; and Axentis, $3.6 million.
