It's a tough road ahead for Minnesota's medical device start-ups, whose lifeblood is fueled by investment money from venture capital firms.
With government regulators becoming more strict, skittish investors are fretting about the lengthening amount of time it is taking to bring new inventions to the market.
They are betting on more mature start-ups, which is making it making it more difficult for early-stage firms to raise capital.
Four executives from venture capital firms discussed the challenges facing their industry in a Thursday roundtable discussion organized by the Collaborative, an organization that links entrepreneurs with investors. The exclusive event was a preview to the annual Minnesota Venture & Finance Conference this fall.
Panelist Joy Lindsay is president of StarTec Investments, which invests in early-stage tech companies. Michael Gorman is managing director at Split Rock Partners, a venture firm that invests in health care, software and Internet service companies. Ed Spencer Jr. is chairman of Affinity Capital Management, a venture capital firm that invests in health care companies. And Buzz Benson is managing director with SightLine Partners, which puts money in later-stage medical device firms.
Dan Carr, CEO of the Collaborative: We're coming back from the deepest recession in decades. Are there some longer-term challenges for venture capital and capital formation in this country?
Gorman: Until we're at the spot where dollars raised either exceed or are matched by dollars invested, we're still depleting the capital pool that's going into innovative companies. The industry has not yet completed the contraction, but I think the pace and that matching is getting closer.
From a more local basis, there are a number of experienced investors who are raising additional capital. Those of us who have gone through the money-raising process expect them to be successful because we know that the dollars are being concentrated in the hands of experienced investors.
