Venture Investors is one of the Midwest’s premier MedTech venture capital firms, investing in seed-to growth-stage MedTech ventures with a particular interest in university-licensed technologies. Scott Button, Managing Director of Venture Investors, spoke to mHUB about investing in MedTech. He discusses what industry trends will inform healthcare investing over the next 5 – 10 years as well as what MedTech venture capital looks like specifically in the Midwest.
In terms of MedTech venture capital, what kinds of technologies has Venture Investors been focused on, and how is that changing based on market trends?
Venture Investors (VI) has focused on investing in breakthrough technologies in the Midwest, with an emphasis on university-licensed technologies. We continue to see strong innovation in thematic areas where VI has had success, such as energy-based surgical tools, ophthalmology, and biopharma.
Aside from geographic trends, we remain highly interested in medical devices and believe regulatory changes like the Breakthrough Device Designation and MCIT coverage proposal will make these opportunities even more attractive. In addition, we have noticed a substantial increase in digital health startups in the region, a relatively new area of investing for us (VI has been around since the ’80s).
What are the biggest trends you predict in healthcare innovation and healthcare investing over the next 5-10 years?
What are some of the trends you are currently seeing, specifically in the Midwest, regarding healthcare innovation and healthcare investing?
There has been a lot of movement surrounding healthcare innovation and investment in the Midwest, specifically Minnesota and Chicago. In Minnesota, digital health as a whole is growing and funding within digital health has increased. There are strong industry commercialization efforts, but still a huge dearth of capital.
We are even more bullish on opportunities arising from universities. Increasing sophistication of tech transfer offices, increasing start-up activities at Midwestern universities, availability of university funds to de-risk technologies prior to VC financing, etc., are creating a robust pipeline of investment opportunities.
How do Midwest healthcare innovation and healthcare investing differ from the rest of the country?
From my perspective, there are a lot of concepts, both positive and negative, that make Midwest healthcare innovation and investing different than the rest of the United States. The Midwest has had a lot of successes and there are great opportunities for investing, but it’s still relatively hidden behind their Midwestern humility. That humility can go hand in hand with the fear of failure and risk tasking.
The innovation industry in the Midwest has a strong presence across the country, the quality of life is higher and startup costs are lower. We’ve been encouraged by growing support for venture funds and early-stage startups in the region.
What impact have you observed from COVID-19 on healthcare and medical device investing?
In general, we did notice that MedTech investing did suffer a bit and didn’t seem to accelerate the way that digital health and pharma did. Long term, we remain optimistic about device-based innovation.
With our portfolio, we are witnessing recovery and continuing strategic interest. For example, Elucent Medical returned to pre-COVID sales in November of 2020.
Applications are now closed for the MedTech cohort of the mHUB Accelerator. The program will commence in Chicago in Q4 2021. MedTech is the second vertical accelerator cohort of six that will launch over the next three and a half years and be supported by mHUB’s $15M Product Impact Fund I.
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