Medical Alley

Minnesota's Medical Alley Reports $2B in Exits, $731M Raised in HealthTech Sector in 2018

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Minnesota’s Medical Alley reports strong and consistent growth in 2018, according to a recent investment report from Medical Alley Association.

In 2018, healthtech companies in Medical Alley raised $731M, a slight decrease from the $759M raised in 2017. This represents the second consecutive year Medical Alley companies have raised over $700M of funding. This included large investments in digital health, with nineteen companies raising $320M. This was followed by $260M raised by forty-eight companies in the medical device space. $144M was also raised by eighteen biotech companies in Medical Alley. 

In total, nineteen healthtech companies raised over $10M. Top raises included $200M from health insurance company Bright Health, $70M from Bind, also a health insurance company, and $58M by Relievant Medsystems, a company developing solutions for chronic back pain.

Medical Alley additionally experienced significant exits with a declared total value of $2B. This included the acquisition of ABILITY Network, a company providing solutions to reduce costs for healthcare providers and payers, by cloud company Inovalon. Inspire Medical, a company developing sleep apnea treatments, had an IPO on the New York Stock Exchange, raising $108M. Biomedical company NxThera was sold to Boston Scientific for $400M. And microbiome company Rebiotix was acquired by the Swiss based Ferring Pharmaceuticals.

Despite these acquisitions, many of these companies have remained in Medical Alley. ABILITY Network has expanded within Minnesota through the hiring of new employees. Francis Medical, a spinout of NxThera after its acquisition, was also kept in Minnesota.

For more detailed investment reports on healthtech in Minnesota, head to the Medical Alley Association website.


About Medical Alley Association

Founded in 1984, the Medical Alley Association supports and advances the global leadership of Medical Alley’s healthcare industry, and its connectivity around the world. MAA delivers the collective influence, intelligence and interactions that support Medical Alley.

Press Release: Medical Alley Leaders Build Economic Roadmap to Ensure Minnesota's Competitiveness

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Medical Alley Association, led by its Board of Directors and executives from all sectors of the Medical Alley healthcare community, convened two working groups to lead the development of a 10-year strategy plan for Minnesota to realize the vision of Medical Alley being recognized as the global epicenter of health innovation and care. Specifically, the two Working Groups focused on Minnesota Competitiveness and Early Stage Ecosystem.

“Minnesota’s place of leadership in the great history of healthcare advancement is secure. The goal of our Board and community is to ensure that Medical Alley continues to lead the transformation of healthcare around the world,” said Shaye Mandle, President & CEO, Medical Alley Association. “We’re excited to lay this foundation for the public and private sectors to work together to deliver the next generation of solutions and opportunities that define health innovation and care.Mandle said.

The Medical Alley Working Groups have delivered a plan with specific recommendations and actions to address Minnesota’s competitive status, lead the development of the ideal early-stage ecosystem that can capitalize on the evolving health marketplace and position the state for a sustainable leadership position.

Minnesota has a rich tradition of growing transformational healthcare companies and the talent to keep them innovating. Competing globally requires our elected officials to enact policies that encourage investment and growth, attract new talent, and properly prepares our workforce for the jobs this growth will create,” said Jeff Mirviss, Senior VP and President, Peripheral Interventions for Boston Scientific, and Co-Chair of the Minnesota State Competitiveness Working Group.

Supporting startups and early-stage companies is critical to ensure that Minnesota remains the global epicenter of health innovation and care. This report puts forward solutions that require commitment and leadership from the public and private sectors. We look forward to working with our state’s leaders on moving these forward,” said Sheri Dodd, VP & GM, Medtronic Care Management Solutions & Non-Intensive Diabetes Therapies. Dodd also serves as the Co-Chair for the Early Stage Ecosystem Working Group.

Additional details can be found inside the plan, or by contacting the Medical Alley Association.

About the Medical Alley Association

Founded in 1984, the Medical Alley Association supports and advances the global leadership of Medical Alley’s healthcare industry, and its connectivity around the world. MAA delivers the collective influence, intelligence and interactions that support Medical Alley. www.medicalalley.org

Top Raises, Acquisitions, and Stories for Q1 in Minnesota

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2018 in Minnesota’s startup scene started off with a bang. Here are the top funding raises, acquisitions, and moves from around the region in the first quarter of 2018.

 

Top Raises

  • 26 companies in Medical Alley raised a Q1 record high $112M in capital.

  • Medical Alley experienced the largest funding in the digital health sector, with $69M raised by 6 companies.

  • Biotechnology companies also had a strong Q1 with 6 companies raising $29M. The largest raise in this sector was led by Biothera, a company developing a unique cancer immunotherapy called Imprime PGG.

  • The medical device sector experienced a $14M capital raise by 12 companies.

  • Bind Benefits, a company providing on-demand health insurance, saw the overall largest Q1 raise in Medical Alley of $60M. This funding was led by Lemli Ventures.

  • Startup Upsie closed a $1.7M round of funding. Upsie is an app that helps consumers purchase warranties for devices- like Apple Watches, laptops, and headphones- at lower prices than retailers.

  • Startup Kaleidoscope closed on a $1.3M seed round in Q1. This company designs and administers scholarships and locates and manages scholarship applicants.

  • Learn to Live- a mental health startup providing online therapy for social anxiety, depression, and more- raised $4.3M in capital in Q1.

  • phData, a data management company, secured $2.5M funding, led by Arthur Ventures.

Top acquisitions

  • Two companies in Medical Alley were acquired in Q1 for $1.2B.

  • This included ABILITY Network, an IT company that simplifies administrative and clinical aspects of healthcare.

  • Urology startup NxThera was acquired by Boston Scientific this quarter.

 

Top stories

  • The Southeast Minnesota Capital Fund made its first three investments, including funding for the Rochester-based Sonex Health and Minneapolis-based Oculogica. Sonex Health has developed the SX-One microknife to achieve minimally invasive carpal tunnel release surgery. Oculogica is creating the EyeBox device to collect and analyze eye movements to diagnose traumatic brain injuries and concussions.  

  • Rochester tech startup Spark DJ is admitted into the Techstars Music Accelerator program in Los Angeles. Spark DJ is utilizing machine learning and artificial intelligence in their mobile application to allow your phone to be a DJ.

 

References/Additional Reading

Medical Alley Association's Q1 Investment Report

Minnesota’s Top Startup Stories and Deals of Q1

Episode 79: 1 Million Cups Rochester with Stationary Astronauts and Solken Technologies

Rochester Startup Spark DJ Accepted into Techstars Music Accelerator Program

Dayton Declares Today "Medical Alley Day in Minnesota"

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Governor Dayton has proclaimed today “Medical Alley Day in Minnesota.” This designation is in recognition of the “unique contributions to health care delivery and management, medical technology innovation, and entrepreneurship” that take place within our state. Medical Alley houses the world’s densest cluster of medtech innovation and was recognized as one of only six “Places of Invention” in the Smithsonian’s American History Museum.

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Investment in Medical Alley Health Tech Hit Record Levels in 2017 According to Latest Report

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Last week, Medical Alley Association released their 2017 Investment Report, detailing total health tech investment in Medical Alley over the past year. Medical Alley Association is an organization that facilitates “an environment that enables health technology and care organizations to innovate, succeed, and influence the evolution of healthcare.”

2017 was an epic fundraising year in Medical Alley, with $735M raised by 85 health tech companies.

“The record fundraising from a global cadre of highly regarded venture capitalists, angels, and corporate investors continues to demonstrate that when the world looks for the future of healthcare, they find it in Medical Alley,” said Frank Jaskulke, VP of Member Services at Medical Alley Association.

Here are the top highlights from the report that you should know.

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Click here for the full Annual Investment Report.

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Press Release: Medical Device Excise Tax Suspended Thanks to Strong Leadership

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Golden Valley, MN – Medical Alley Association President & CEO Shaye Mandle issued the following statement regarding the suspension of the medical device excise tax:

"The Medical Alley Association is pleased that Congress and the President have prioritized health consumers and Minnesota’s leading health technology economy with a two-year suspension of the medical device excise tax, retroactive to January 1, 2018. We will continue to work with Congressional leaders to ensure that health consumers can have confidence in treatment options and improved outcomes through a full repeal.

We are thankful for Minnesota’s strong leadership on this issue and the continued support provided, led by Congressman Erik Paulsen and Senator Amy Klobuchar. Their tireless efforts are greatly appreciated by health consumers and innovators. We want to thank the members of our delegation who voted for this suspension, Congressmen Tom Emmer, Jason Lewis, Rick Nolan and Collin Peterson, and Senator Tina Smith.”

About the Medical Alley Association

Since 1984, the Medical Alley Association has been the front door to Medical Alley. We are the collective voice and expertise of Medical Alley; the strategy, implementation and execution vehicle of the Medical Alley Community. We deliver the collective influence, intelligence and interactions that support Medical Alley’s global leadership.

The State of the Rochester Entrepreneurial Community- 2018

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As we transition into another year, it is a prime opportunity to examine the state of the Rochester entrepreneurial community, take stock of our achievements over the past year, examine our losses, and assess the future direction of this city’s innovation sector.

2017 brought several significant ongoing programs to Rochester. February saw the launch of 1 Million Cups Rochester, a monthly educational program for entrepreneurs that takes place in 163 communities across the United States. This event gave fourteen different Rochester startups the opportunity to share their story and gain input from the community on pressing business issues. November brought Rochester’s first full Startup Weekend, a 54-hour event where teams went from idea to a working prototype over a single weekend. Rochester also participated in Global Entrepreneurship Week for the fifth time this year, attracting over five hundred attendees across eighteen different events. The week was also officially proclaimed Entrepreneurship Week in Rochester by Mayor Brede. 

This year, two Rochester tech companies, Brandhoot and Xylo Technologies, were nominated for the U.S. Chamber of Commerce’s 2017 Dream Big Small Business of the Year Awards, a significant honor for the community. In 2017 Binding Site, a global immunodiagnostic and instrumentation company, established a facility in northwest Rochester. This summer we also saw the addition of several new flights at Rochester International Airport, creating increased opportunity for business travel out of Rochester and improved connectivity to the global workforce.

In 2017 the entrepreneurial community experienced positive momentum in funding, with hopes to continue this trend in 2018. In August, Rochester Area Economic Development, Inc. (RAEDI) announced the launch of the Southeast Minnesota Capital Fund to provide equity financing for startup development. While the new fund has not yet made any investments, Rochester companies raised over $17.5M in 2017 (according to Crunchbase), which includes a $5.4M Series A funding round by Ambient Clinical Analytics, as well as additional private equity and venture capital raises. RAEDI’s startup seed capital fund, the Economic Development Fund, to date has invested in fifteen local companies, of which eighty-two percent are women or minority owned. On the state-wide level, 2017 saw a record number of investments in Minnesota’s Medical Alley with $735M raised by eighty-five companies. 

Growth in Destination Medical Center’s Discovery Square sub-district also occurred over the past year. The district now has six current projects, including the Mortenson Building, the first new construction building in Discovery Square. Groundbreaking at this site occurred in November.

This year also brought a general increased interest in entrepreneurship within Rochester and increased coverage of this community by the city’s traditional news media. We also experienced increased organization of Rochester’s innovation sector with a larger number of local organizations beginning to partner with the city’s entrepreneurial community. One example of this increased connectivity was manifested in June, when Vic Gundotra and Dave Albert, senior leaders of the Silicon Valley healthtech company AliveCor, shared their stories of risk and uncertainty in an open forum with Rochester entrepreneurs.

Our entrepreneurial sector also experienced losses in 2017. Perhaps one of the most significant was the exit of architect Adam Ferrari, a leader in the creative community who designed inspiring spaces like Collider Coworking, Grand Rounds Brew Pub, Forager Brewing, Cube, and Café Steam where people could connect, learn, and build businesses. This year also saw the acquisition of Rochester startup Able, a tech startup that built software for farmers by farmers, which resulted in the dissolution of the startup and loss of four local tech jobs.

Although the community had setbacks this past year, 2018 offers opportunity. We look forward to potential increased international and national interest in Rochester, especially in the Discovery Square sub-district as it continues to grow. We also hope to see increased investment in Rochester-based companies and to experience continued recognition as an emerging biotech hub.

Special thanks to Jamie Sundsbak, Community Manager at Collider Coworking, and Xavier Frigola, Director of Entrepreneurship at RAEDI, for their input on the state of the Rochester entrepreneurial community.