• Buzz Benson, managing director of Sightline Ventures (Minneapolis), said capital formation of all sorts, particularly at the level necessary to reach a point of exit for venture investors, “has become tougher, requiring companies to stay private longer.” He cited problems such as dealing with the regulations imposed by Sarbanes-Oxley legislation, Manhattan District Attorney Robert Morgenthau’s prosecutorial advocacy and restrictions placed on market analysts as having impacted capital formation.
Noting that many “extremely good” med-tech market analysts have left the business, he lamented: “They were advocates for IPOs of new companies. We don’t have much of that any more.”
• Josh Baltzell, a principal with Split Rock Partners (Eden Prairie, Minnesota), said, “More and more, we’re seeing companies put a little bit of investment dollars into a start-up. They’re going to be able to ride along and see how the company is doing and how the leadership team is doing.”
He also noted a trend toward “more pharma companies taking an interest in device companies – more on the diagnostics side, which fits which their core activities.” He said such interest “is more so in talking, not yet in doing deals.”
As for innovation, he observed: “You don’t see radical thinking at the big companies; that’s the role start-ups play.”
• Martin Emerson, CEO of American Medical Systems (Minnetonka, Minnesota), said he sees a growing interest in partnership opportunities involving combination products.”
And, while acknowledging the market dominance of the biggest players, he said: “No one has cornered the market on innovation, so there’s still opportunity for small companies.”
–Jim Stommen, Executive Editor