Minnesota venture funding average in third quarter, on pace for good 2014

Entrepreneurs continue to raise more venture capital money in Minnesota than they did in 2013.

Young companies in the state attracted $60 million in venture funding in the third quarter, according to the MoneyTree Report by the National Venture Capital Association and PricewaterhouseCoopers (PwC), using data from Thomson Reuters. That brings the 2014 total to $248.7 million, compared with $151 million over the same time period in 2013.

Medical device deals continue to attract the largest share of investment in Minnesota, with Plymouth-based surgical instruments firm Rotation Medical raising $21.7 million in the quarter and the industry raising $147 million through the first nine months of 2014.

But tech start-ups have also been raising money, attracting $50 million over the same period according to the PwC data, which does not include all investment deals in the state.

"Minnesota has this historical strong presence with medical devices, and we continue to see that in the deals, but we also see a trend of software," said Mark Scholtes, a partner for PwC in Minneapolis. "There is a clear trend in recent years that software is getting more of the deal flow."

Conservis Corp., a farm management software firm in Minneapolis, raised $10 million in the third quarter; home monitoring and controls start-up Spark Labs, now based in San Francisco, raised $4.8 million; Sport Ngin, a firm that makes sports management software, raised $4 million; and MedNet Solutions, a Minnetonka medical software start-up, raised $4 million.

TechdotMN's running tally of deals shows that 17 more tech companies in the state attracted investment in the third quarter, including $1.9 million for IVDesk and $1 million for Adventium Labs.

Overall, the third quarter was roughly average for the past four years, said Scholtes, and much better than 2013.

"If we're really even near the average for the fourth quarter, Minnesota would be in a good spot to have a $300 million year, and that hasn't happened here since 2009," Scholtes said.

Nationally, venture capitalists are mostly chasing software investment, which offers quicker returns than medical devices. Software firms attracted $3.7 billion in the quarter, down from the previous three months in part because Uber closed a $1.2 billion round in June, skewing the overall numbers.

National medical device venture funding was $586 billion, down compared to the previous quarter, but up 13 percent compared to a year ago. So far U.S. medical device companies have attracted $1.9 billion in venture in 2014, compared to $1.6 billion by the same time a year ago.