Midwestern healthcare startups collectively raised a little more capital in the first half of 2010 than they did in the same period last year.
The slight uptick, to $412 million from $403 million, can be attributed in part to increased seed and angel activity, according to (pdf) a statement from Cleveland-based nonprofit BioEnterprise, which tracks the data. The $412 million was spread over 75 deals, making the average deal amount about $5.5 million
Biopharmaceutical companies attracted 70 percent of the dollars ($289 million), with the rest going to device companies ($96 million) and software and service companies ($26 million).
When Investment Rhymes with Canada
Canada has a proud history of achievement in the areas of science and technology, and the field of biomanufacturing and life sciences is no exception.
While any sort of fundraising increase is certainly welcome news in a jobs-starved economy, the dollars were way down from the prerecession, halcyon days of 2007 when Midwestern healthcare startups banked $742 million in 64 deals.
The smaller per-deal amounts reflect the growing trend of downsizing in the venture industry. Ten-year venture capital returns have fallen in recent years as the once-lucrative IPO market has slowed and technology startups no longer need as much capital as they once did to get rolling. That’s led to much debate in recent years about the venture model being “broken,” as many notable VC firms ratchet down the size of their funds and angel investors become increasingly important sources of funding for young firms.
Still, drug and device startups nearly always need lots of cash to fund the expensive clinical trials that are necessary to gain regulatory approval to get their products on the market. So as long as venture firms raise cash from their limited partners, they’re unlikely to run out of startups in search of a boost.
By state, Illinois led in investments received, with $123 million. Much of that came from two bid deals — $43 million to Chicago-based Neurotherapeutics Pharma and $40 million to Schaumburg-based Sagent Pharmaceuticals. The investment in Neurotherapeutics was (pdf) the largest that any Midwestern health company received in the first half of the year.
Fundraising by Ohio and Minnesota companies dropped precipitously compared to the first half of last year. Ohio startups pulled in $47 million, a drop of 46 percent, while Minnesota companies suffered a 64 percent decline to $43 million.
