Smile, healthcare entrepreneurs.
Health startups in search of cash have more to be happy about because healthcare venture capital deals jumped 33 percent in the third quarter compared to the prior quarter, according to a new report from New York-based research firm CB Insights. The report noted 184 healthcare deals in the third quarter, the highest amount since the third quarter of 2009.
The total dollar amount of those deals didn’t jump as much, but still rose 7 percent to about $1.8 billion, compared with the second quarter. The implication is that venture investing in healthcare is headed in the right direction, but it’s still not as strong as most in the industry would like it to be.
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“The numbers mirror the uptick that we’ve been seeing in the market,” said Michael Goldberg, managing director with Cleveland and Israel-based Bridge Investment Fund.
“We are starting to see more M&A activity, so you can see the exits,” Goldberg added. “They may not be back to where they were before the downturn, but you can at least see the path to exits.”
Medical devices continue to be the most attractive industry segment for investors, with 42 percent of the deals and 36 percent of the dollars in the quarter. Pharmaceuticals came in second in both categories, with 20 percent of the deals and 23 percent of the dollars.
California and Massachusetts remain the states that win the most health venture deals, with a combined 45 percent of all deals, though that number declined from 56 percent in the prior quarter. In terms of cities, those in California were king with seven of the top 10 deals, when ranked by investment dollars in the quarter. San Francisco led the way at $106 million, followed by San Diego and Seattle, Washington.
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The quarter’s largest health deals went to Irving, Texas-based Reata Pharmaceuticals ($78 million), Santa Clara, California-based biopharmaceutical firm Relypsa Inc. ($70 million) and Santa Rose, California-based device firm TriVascular ($60 million).