No Easy Money

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Venture Capital firms look for companies that meet certain profit and loss requirements—requirements many developing medtech companies don’t meet. This lack of funding stands to impact the medical device industry as well as the community at large, considering how much health care depends on medical devices for quality care.

Despite the struggle, research firm Kalorama Information reports the medical device market will experience growth this year, albeit minimal. The firm's annual market outlook predicts 2.8% average growth for 2017 and the following five years.

Why Not Me?

The simple reason investors choose other healthcare sectors over medtech? Risk and return. Medical device companies generally have high funding and complex regulatory requirements with lower return than other industries.

"A successful medtech company 10 or even five years ago could generate a 15% rate of return," said Pedro Arboleda, managing director of Strategy at Deloitte. "Now, that same medtech company may generate only a two percent rate of return with a higher investment. As a result, the VCs involved in medtech have whittled down to those that really want to stay in the sector. "

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