Norwich Ventures Sticking to Early-Stage Medical Device Deals Amid Late-Stage Trend

6/18/09

On the landscape of medical devices investing, much of the venture capital herd is running for later-stage deals nowadays. Norwich Ventures, on the other hand, is holding tight to its strategy of investing in early-stage medical device companies and preferably creating startups from scratch. In fact, there are several other uncommon traits of the Waltham, MA-based firm that I thought could be appealing to medtech entrepreneurs.

For one thing, the small firm is unlike many of its venture peers that pressure portfolio companies to seek a sale or some other exit within five years of accepting venture dollars. Aaron Sandoski, a founder and managing director of Norwich, tells me that his firm can be more flexible about how long its companies take to be acquired or complete an IPO because it has a limited partner base of wealthy families that understand the industry. (Typically, the five-year-ish exit horizon strategy is tied to how long venture firms tell their own investors, such as pension funds and endowments, it will take for them to get returns.)

Norwich, formally launched in early 2005, is not as well known as the larger and more established venture firms that invest in medical devices. But market forces are pulling more and more big-named venture firms from the early-stage investment game, as those firms place what they think are better bets on existing portfolio companies or businesses with products either close to or already on the market. Those more mature device firms, by the way, are in some cases asking for more venture money because the public markets are largely closed to them and the chances of being acquired at an attractive price are less than in years past. These factors may raise the profile of firms like Norwich among entrepreneurs looking for cash to kick-start a company.

“Most venture firms are gravitating away from early-stage financing,” Sandoski says. “We had a core belief that innovation and great returns are linked and driven by that early stage of the business.”

Norwich, which makes investments from its first $50 million fund, is run by an interesting group of medical devices veterans. A founder of the firm is Marlin Miller, the former long-time CEO of … Next Page »

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