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VCs won’t invest in medical device firms? New $100 million fund defies that logic

Seems like everywhere you go, medical device firms fret that venture capitalists eager to seek a quick return on investment are eschewing investments in the industry because of regulatory uncertainty and the burden of the healthcare reform law. But one VC firm in Minneapolis seems unfazed by all the negativity. SightLine Partners, which exclusively funds […]

Seems like everywhere you go, medical device firms fret that venture capitalists eager to seek a quick return on investment are eschewing investments in the industry because of regulatory uncertainty and the burden of the healthcare reform law.

But one VC firm in Minneapolis seems unfazed by all the negativity.

SightLine Partners, which exclusively funds medical device companies, is trying to  raise a new $100 million  fund, according to a recent regulatory filing.

In a phone interview, managing partner Buzz Benson countered the sentiment that venture capitalists aren’t going to invest in medical device firms because of regulatory and other hurdles.

“It’s not been the case for us” he said. “We are very positive on what we’ve been doing.”

Benson added that while this is the second healthcare fund for SightLine, it is the seventh fund that he has raised, including those raised through Piper Jaffray Ventures, which he founded in 1992.

Benson declined to provide details on the status of the $100 million SightLine Healthcare Opportunity Fund II , and said that his lawyers have advised against it.

SightLine currently has five companies in its portfolio, according to its website. They are Anulex, which recently resolved a 2011 warning letter  from the U.S. Food and Drug Administration; CVRx; Broncus Technologies; LipoScience and Verax Biomedical. The venture capital firm has likely benefited from some notable exits of past portfolio companies that include atrial fibrillation treatment firm Atritech, which Boston Scientific acquired for $100 million up front with milestone payments of another $275 million; enlarged prostate treatment firm Urologix, which went public in 1996; and female urinary incontinence treatment firm Solarant Medical, which was acquired by American Medical Systems, now part of Endo  in 2006.

However, one SightLine portfolio company listed as exited and sold on its website, actually was liquidated, with a part of the intellectual property sold for an undisclosed sum. Acorn Cardiovascular had raised upwards of $100 million but could never win approval for its heart device.

 

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