Updated 1:14 p.m.
CLEVELAND, Ohio — Midwest health care start-ups attracted $780 million in investments in 2009, according to the BioEnterprise Midwest Health Care Venture Investment Report.
While the number of companies winning investments last year — 156 — was about the same as in 2008, the dollar volume of the investments dropped 26 percent from the prior year.
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“This was a difficult year for emerging health care ventures in the Midwest and nationally,” said Baiju R. Shah, president and chief executive of BioEnterprise, the biomedical venture developer in Northeast Ohio, in a written statement. “The global recession combined with the industry uncertainties related to U.S. health care reform dampened investment.”
Across the board, U.S. venture investments declined in 2009 to $17.7 billion — the lowest level in more than a decade, according to the National Venture Capital Association and PricewaterhouseCoopers. While biotechnology investing fell 19 percent to $3.5 billion last year, the sector attracted more investment dollars than any other. Medical device sector investments fell 27 percent to $2.5 billion.
Venture capitalists are “cautiously optimistic” that they will see gradual increases in investments and exits this year, but they also are realistic, acknowledging  that their asset class will continue to shrink over the next five years, according to a survey of National Venture Capital Association members.
Reflecting the national trend, Midwestern biopharmaceutical companies attracted the biggest chunk of investments in the region last year — $378 million, or 48 percent of investor health care dollars, followed by medical device companies, which won $264 million, or 34 percent, according to BioEnterprise. Health care software and service companies brought home $139 million, or 18 percent.
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As is often the case, Minnesota led Midwest health care investing with the most dollars raised — $199 million by 23 companies — followed by Ohio, with $105.4 million invested in 40 companies. Michigan was No. 3, raising $102.2 million for 14 companies, said BioEnterprise, which reports quarterly and annually on investments in health care start-ups in 10 Midwestern states and Western Pennsylvania.
The biggest deals of the year in Minnesota were: Aritech Inc., developer of interventional cardiovascular devices in Plymouth, which raised $30 million in March, and Entellus Medical, developer of devices to treat sinus problems in Maple Grove, which raised $30 million in November. CoAxia, the Maple Grove company developing blood flow-restoring therapies for stroke victims, raised $21.5 million in June.
In Ohio, the biggest deals were: Akebia Therapeutics, the Cincinnati developer of small-molecule drugs for anemia and vascular disorders, which raised $16 million in July, followed by Franklin & Seidelmann, the subspecialty teleradiology firm in Beachwood, which raised $12.5 million in August. In April, Laboratory Partners Inc., the medical and lab service provider in Cincinnati, raised $8 million.
As for Midwestern cities, Minneapolis led with all of the $199 million raised in Minnesota last year, followed by Cincinnati with $121.2 million and Detroit/Ann Arbor, Mich., with $68.8 million. Cleveland, a perennial leader, was fourth with $66.3 million.
