Next year could be a fundraising drought for promising medical device start-ups in Minnesota.

Venture capitalists are feeling less confident about making investments in 2012, with 58 percent of them predicting fewer investments in biopharmaceutical and medical device businesses, according to a national survey from the National Venture Capital Association.

"Despite the fact that venture capitalists and entrepreneurs are well-positioned to thrive, externalities are keeping optimism at bay," said Mark Heesen, the association's president. Issues impacting the industry include economic instability in the United States and abroad, along with public policy issues, he added.

In Minnesota, the problem has been exacerbated, because the majority of venture capital investments in the state go toward medical device companies. Last year, venture capital investments hit its lowest level in 15 years of record keeping.

The association has been active in trying to change how the nation's Food and Drug Administration approves medical devices to sell on the market. Investors said they are reluctant to invest in new medical device start-ups in recent years because it's unclear how much time and money it will take to get a device approved. But consumer advocates say there needs to be a more thorough approval process to ensure the devices are safe to use.

"The landscape for medical devices is almost worse than bleak," said Todd Leonard, executive director of the Minnesota Angel Network said at the LifeScience Alley Conference earlier this month. "Traditional venture capitalists have really left the space."

Part of the problem is there are more CEOs that want to raise money in 2012 than there are investors able to give that amount of money.

At the LifeScience Alley Conference panel, angel investor Mike Swenson noted that one-third of audience members raised their hands when he asked how many were seeking capital. Swenson said he believed he was the one of three people to raise up their hands as investors.

"That sums it up," Swenson said. "There is no capital."

Venture capitalists expect more money to go toward Internet technology businesses geared toward consumers, healthcare and businesses in 2012, according to the National Venture Capital Association survey.

"With nearly three-quarters of VCs predicting limited partners will commit the same amount or less to the industry and about the same proportion of CEOs expecting to raise money, financings could get tighter with some companies left to survive on their own," said Jessica Canning, global research director for Dow Jones VentureSource.

Investors and CEOs: What are your strategies for allocating or raising money in 2012?