Venture investment in medical device and biotechnology companies dipped year-over-year in the first quarter, while firms ploughed more capital into IT services, according to preliminary quarterly data from Thomson Financial (publisher of PE Week). The quarterly MoneyTree Survey by PricewaterhouseCoopers, National Venture Capital Association and Thomson Financial is due to come out within the next few weeks.
Investment in biotech startups totaled $1.3 billion in the first quarter, down from $2.5 billion in the same period a year ago. Makers of medical devices raised $776 million in the first quarter, compared to $1.39 billion in the same quarter a year ago.
The number of drug and med tech developers that raised funding also shrank, from 340 in the first quarter of 2007 to 197 in the first quarter of this year.
The decrease in investments comes as the pace of public market exits in the sector has slowed to a virtual crawl, impacted by the turbulence in broader markets and weak performance of pharmaceutical stocks. Four life science-related companies carried out IPOs in the first quarter— IPC Inc. (Nasdaq: IPCM), MAKO Surgical Corp. (Nasdaq: MAKO), Bioheart Inc. (Nasdaq: BHRT) and CardioNet Inc. (Nasdaq: BEAT)—raising a combined $221 million in public market proceeds. In the same period a year ago, eight companies went public raising $699 million.
While life sciences slipped, investment in IT services was up, with 73 companies in the sector raising funding in Q1, up from 62 a year ago. Altogether, IT companies raised $662 million in Q1, up from $495 million a year ago. —Joanna Glasner