Q2 medtech investment strong in Minnesota

Investment in Minnesota medical technology companies was strong again in the 2nd quarter, Minneapolis-based trade group LifeScience Alley said this week, with mHealth drawing particular attention.

Total investment in the North Star State’s medtech sector was $116.4 million for the quarter, the 2nd-highest Q2 total the last 6 years. In all, 39 Minnesota medical device companies raised money, with seed and early-stage investments on the rise, according to the report.

The biggest news of the report, officials said, was strong investment in digital health companies, which hit the $36.3 million mark, a 239% increase over last year. One of the largest deals of the quarter was the $14.8 million raised by Global Kinetics, a Minneapolis-based company that makes watch-like devices to track a person’s movements. Providers use the data to diagnose and treat movement disorders.

“We’re seeing roughly a 3-fold increase,” research & intelligence director Cheryl Matter told MassDevice.com. “Over the past couple years there have been a consistent number of companies raising money in that space. In the past there had been some fluctuation. But in the last few years we’ve seen a lot of consistent growth.”

As mHealth evolves, Matter noted, it’s more difficult to differentiate between digital health  and medical device companies.

“It’s getting a lot harder, and there are multiple definitions,” Matter said, adding that the industry and regulators are still working on defining the term. Even traditional medtech products such as pacemakers are starting to transmit digital data, blurring the line between industries, she noted.

“There’s a lot of convergence, and for us that’s a great thing,” she said.

The LifeScience Alley report also found a good mix of different-sized companies finding investments in the quarter. In medical device manufacturers, for example, $42.4 million was raised, spread across 17 companies.

“I think what you’re seeing is a healthy market; companies across multiple stages [drawing investments],” Matter said.

The report also noted several large deals, including fi5e that were in the $10-million-plus category. In addition to Global Kinetics, Neochord raised $12.6 million; digital health platforms Novu and Gravie; and MN Medical Solutions – 1 of 2 medical marijuana providers recently licensed under Minnesota’s new medical marijuana laws.

Matter said it’s probably too early to tell big how medical marijuana companies will become in Minnesota. Unlike other states that have legalized marijuana to varying degrees, Minnesota has taken a relatively conservative approach, with medical marijuana legal only in pill or oil form.

“Minnesota’s approach to medical marijuana is probably the most restrictive, compared to other states,” she said. “Clearly there’s some interest – it’s becoming part of the healthcare ecosystem.”

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