Medical Devices: Trends in Early Stage VC Deal Flow

Medical devices are an increasingly important subsector within the life science VC market. With the exception of 2016, every year since 2010 has seen an increase in the number of deals. (See chart below. The data is courtesy of PitchBook.) 

Extrapolating the YTD data for 2016 (which is as of Sept 13, representing 257 days), we should expect 543 deals valued at $1.79 billion by the end of the year. That represents a decrease of 27% and 5% in the number of deals and capital invested, respectively, from the previous year.

This slight downturn in 2016 is in keeping with the trend in overall life science VC deal flow. (See chart below.)

Extrapolating the YTD data for 2016 (which is as of Sept 9, representing 253 days), we should expect 654 deals valued at $6.65 billion by the end of the year. That represents a decrease of 32% and 7% in the number of deals and capital invested, respectively, from the previous year.

The drop in the number of deals is far greater than the decrease in invested capital, meaning that individual medical device and life science early stage financings by VCs in 2016 were substantially larger than those in 2015.