Midwest Health Care Startups Raise $810M; Michigan Tumbles

CLEVELAND -- Investments in Michigan health care startups got lots smaller in 2011 compared to a year earlier, according to the BioEnterprise Midwest Health Care Venture Investment Report.

Just $30.8 mllion was invested in Michigan health care startups in 2011 in 16 deals, down from $76.3 million in 12 deals in 2010. Thus, the number of deals actually rose -- while the amount of the deals tumbled.

The all-time peak for Michigan in the report was $105 million in 12 deals in 2008. Back then, Michigan was fourth among Midwest states in health care startup investment. Last year, it was seventh.

Overall, 178 deals attracted $810 million in investment in the midwest in 2011. That was up from $739 million in 2010 but below the peak year of $1.05 billion in 2008.

Minnesota ($223 million), Ohio ($178 million), and Missouri ($169 million) led Midwestern states in attracting investment dollars; Minneapolis, Cleveland, and St. Louis were the leaders among Midwest regions.

"As in other regions of the country, overall health care venture activity has increased slightly but remains below historical highs," said Baiju R. Shah, president and CEO of BioEnterprise, the Cleveland-based biomedical venture developer.

By sector, the 2011 equity funding was allocated as follows: * Medical device companies:  $295 million (36 percent) * Health care IT and service companies: $259 million (32 percent) * Biopharmaceutical companies: $251 million (31 percent)

"While medical devices continues to be the Midwest's strongest sector, investors have shown an unusually high level of investment interest in Health IT opportunities.  Venture investors are drawn by both providers and payers searching for health IT applications that can improve effectiveness and efficiency of their enterprises," said Shah.  "At the same time, Midwest biotechs are suffering from the national venture industry's shift away from early-stage biotech investing."

The Midwest Health Care Venture Investment Report includes all reported numbers and regionally collected data. For complete state and region results across the Midwest, see the attached table. To view additional data about Midwest health care business activity visit www.bioenterprise.com/Reports/.

The numbers are compiled by the BioEnterprise team from Venture Wire, Private Equity Week, Wall Street Journal, Venture Source, SEC Filings, company press releases, www.biospace.com, and Midwest bioscience organizations and institutions.