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.
“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]