Boston Scientific Corp. is betting more than $100 million on a small California company with a product that’s not yet legal to sell in the United States.

But its decision to acquire the company, announced last week, is not a blind bet.

Two years ago, Boston Scientific made a venture investment in Veniti and its Vici venous stent, and started distributing the device in Europe, where it has been approved for sale. Based on what Boston Scientific’s peripheral interventions team in Maple Grove learned from that experience, Boston is opting to snap up Veniti sooner rather than later.

“We’re betting with Veniti that it’ll be FDA approved,” Boston Scientific CEO Mike Mahoney said in an interview, referring to the Vici stent. “It’s not a 100 percent guarantee, but we are betting that it will, based on what we know about the company.”

In the past five years Boston Scientific has quietly ramped up its venture-fund activity and today holds about $400 million in investments in a portfolio of 35 small med-tech companies that it hopes to acquire outright one day. Boston has been on an acquisition spree in the past year, and among the planned or completed deals were five involving venture investments, including Veniti.

Entities from big med-tech companies to insurers to health care providers have waded into the venture investing game in recent years. It’s partly a reaction to a pullback by traditional venture funds on early-stage med-tech investing, industry insiders say, that has forced startups to tap nontraditional sources of funding.

But larger med-tech manufacturers have long used early-stage investments in young companies to get to know the capabilities of new technologies and the management teams that hope to roll them out.

“It is not a new phenomenon for companies, in our sector in particular, to make investments in companies and down the road acquire them,” said Karen Park­hill, chief financial officer for Minnesota-run Medtronic, in an interview. “We make minority investments and we have a small team that does that. Sometimes they turn into acquisitions, and sometimes they don’t.”

Medtronic has about $500 million worth of minority stake investments in roughly 40 companies today. Several years ago Medtronic announced two acquisitions that totaled more than half a billion dollars on the same day, acquiring Peak Surgical and Salient Surgical Technologies and their advanced energy surgical technologies. Medtronic had made minority investments in both companies previously.

Washington-based med-tech trade group AdvaMed released a report last year that listed several reasons why larger med-tech companies may be more willing to make early seed investments.

A big factor is the declining investment in med-tech by traditional venture-capital (VC) firms. The cost of bringing a new device to market has gone up in the past decade, but the profit margin on the eventual payout for early VC investors has declined, the report says.

The Series A initial round of funding in particular has become difficult to fill with traditional venture capital. Just 10 percent of the traditional VC investments in med-tech went to Series A rounds in 2016, down from 19 percent a decade earlier, according to the report, written jointly by AdvaMed and Deloitte Consulting.

Changes in the underlying med-tech market are driving the decline. VC firms need returns of 20 to 30 percent to keep attracting new investors, but investments in early-stage med-tech companies like those that dot Minnesota have become more expensive and less profitable for VCs in the past decade.

In contrast, large corporate acquirers like Boston Scientific or Medtronic have a lower cost of capital — often in the high single digits — and can afford to be patient, the report says.

“It also speaks to how large companies are balancing internal and external R&D priorities and activities,” said Patrick Brennan, associate vice president with AdvaMed’s Accel division for smaller companies. “Doing more of these earlier-stage, smaller bets helps them keep a finger on the pulse of new technologies in their space and look for the real winners.”

Other entities with a stake in new medical technology that makes it to market are also stepping in where VCs are leaving off.

Minnesota health care providers like Mayo Clinic and Fairview Health Services have been doing venture funding or co-development projects with health care tech companies serving their particular interests. Optum Ventures, owned by Minnetonka’s UnitedHealth Group, and BlueCross BlueShield Venture Partners, run from Chicago, make similar investments.

“Drug companies are doing more of this, even payers and providers are,” said Shaye Mandle, CEO of Minnesota health tech trade group the Medical Alley Association. “Most of the traditional health care sectors are either making corporate-development investments or they have venture arms that are making investments in earlier-stage companies.”

The smaller companies accepting the investments have to manage the risk of alienating future acquirers by aligning with their competitors. But the deals offer resources they wouldn’t have otherwise, like a large company’s expertise in clinical trials and reimbursement strategies, and a solid understanding of what milestones they need to hit to be successful.

“It creates an access point for really good feedback for what the market looks like,” Mandle said. “If Boston Scientific is an investor in your company and they’re on your board, you’re getting lots of feedback.”

The feedback travels both ways. Potential acquirers can get a sense of when to do the deal, which can be an important consideration if the deal is timed around FDA approval, because the price to acquire a company tends to rise once the FDA greenlights a product.

Boston Scientific’s Mahoney said the company usually gets a seat on the board of companies it invests in, which offers an inside view of how a new technology could complement Boston’s internal R&D — or not.

“Sometimes we back out, and sometimes the companies don’t work out. But hopefully, if they do, we will continue to invest,” Mahoney said. While Boston Scientific doesn’t publicize its win rate on venture investments, “We clearly have a good hit rate and track record. Otherwise we would stop it.”