Medtech venture capitalist: Many late-stage deals are “crap”

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Mike Carusi, general partner at California venture capital company Advanced Technology Ventures, is a firm believer that you can strike gold by investing in early stage companies.

He is a contrarian given that most medical technology venture capitalists would rather shun them. Conventional thinking deems it too risky to invest in younger healthcare companies who will have to navigate a thorny regulatory environment that will delay a VC’s return on investment.

To Carusi, however, the risk is well worth it.

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“Many of these late-stage deals are crap,” he told an audience gathered at the Medtech Investing Conference in Minneapolis on Wednesday.

His confidence stems from the fact that he believes that Advanced Technology Ventures’ philosophy of investing in younger companies helped it see pay day in two major deals.

The first is Ardian. The Mountain View, California company that had developed a renal denervation system to treat uncontrolled hypertension was bought by medical device titan Medtronic for a whopping $800 million in late 2010.

The second is GI Dynamics, an obesity and diabetes treatment company based in Lexington, Massachusetts. The firm needed to raise capital in a difficult environment and ended up doing so by going public on the Australian Securities Exchange in September 2011. The IPO brought the money that needed to be raised — A$80 million (in today’s rates that’s $80.5 million)

Carusi contended that investors focused on late-stage companies are missing out on these deals.

 “The reason they are late-stage companies is because no one was interested in them,” he declared to audience laughter.

[Photo Credit: t0zz]

 

 

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Arundhati Parmar

By Arundhati Parmar

Arundhati Parmar is the Medical Devices Reporter at MedCity News. She has covered medical technology since 2008 and specialized in business journalism since 2001. Parmar has three degrees from three continents - a Bachelor of Arts in English from Jadavpur University, Kolkata, India; a Masters in English Literature from the University of Sydney, Australia and a Masters in Journalism from Northwestern University in Chicago. She has sworn never to enter a classroom again.
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