Each year, Wilson Sonsini, Goodrich, and Rosati Medical Device Conference, brings together industry CEOs, venture capitalists, industry strategists, investment bankers, market analysts and other professions to understand the challenges and opportunities facing the medtech industry. The conference this year, focused on gaining insights and a deeper understanding of the challenges facing the Medtech start-ups and the strategies that can be effective in responding to these challenges.
The opening panel was moderated by Marty Waters, Partner at WSGR and focused on where the medtech investment is happening. Despite over $2.8 billion invested in medtech venture deals in 2011, clearly the major common agreement among panelists was that medtech funding is significantly down. Mike Carusi, General Partner with Advanced Technology Ventures explained, “we have investors too” and they are not investing significantly in medtech funds. When they do invest, Carusi elaborated, they look for opportunities addressing a drug market and his advice was that entrepreneurs figure out ways in leveraging the ecosystem. Yuval Binur, Managing Parnter at Orchestra Medical Ventures, advised that entrepreneurs focus not only on unmet clinical areas but also focus on unmet strategic needs. As VCs, he elaborated, “we need to fund strategic partners who can help with commercialization” and he advised that entrepreneurs pay attention to and build relationships with strategic partners. Using anecdotes, analogies, and terminology from Hollywood, John Friedman, Managing Partner & Founder with Easton Capital, said, “we need to go back to the future”, and if VCs see many companies being funded in the same area, they need to move away from it. Voicing a slightly different opinion from Binur, Friedman said, VCs should invest in companies that focus on fundamentally unmet needs or are developing standard of care at 10-20% of the cost. He said VCs are moving away from early stage and are looking at deals which are capital efficient. Strategically, it is much more important to dominate the region locally, which is also easier and more effective, said Friedman. Opining on emergence of wireless technology, he advised that in more of a serviceable model, the leaner the IP, more protectable it is.
Bill Harrington, Managing Partner with Osage University Partners, agreed, the age of incrementalism and me-too’s is gone. Basic, hypothesis based research is happening in Universities and their fund focuses on capturing that. They have an increasing database of university partners with access to participating companies. Harrington added, that while device companies mostly have one formidable asset, with pharma companies, there is more of a possibility to do licensing deals or license assets. There is greater interest in late stage deals because with market traction, there is some indication if it is strategically advantageous and how it is doing, said Harrington. A lot of companies highly underestimate the risks and costs of commercialization. Speaking on emergence of wireless technology, Harrington said that outside the medical field, technology is rapidly moving ahead but they still lack intelligent ways to use the data and there are opportunities in that area. Dirk Kersten, Partner with Gilde Healthcare Partners, said, they are looking at companies with reasonably good products serving real market needs. With wireless technology, there are huge opportunities in home health care, to provide better care, cheaper and for longer duration, said Kersten.
The blogs that follow will focus on other discussions.