Minnesota Lifescience Investments Reached Six-Year High in 2014

Lifescience investment in Minnesota bounced back with a vengence last year.

Eighty-six lifescience firms within the state collectively raised $430.4 million in 2014, representing the highest level of investment activity in the industry since 2009. Investments in Minnesota’s medical device sector reached a six year high at $322 million, a 6.3 percent increase over 2013, according to LifeScience Alley data.

“2014 was a record year for all life science investing activity and within many of the individual sectors we cover,” said Cheryl Matter, Ph.D., director of intelligence and research for LifeScience Alley. “The data and increasing trends over the last six years indicate that Minnesota’s life science industry is healthy and growing, and that investment opportunities still abound to help these companies.”

Thee findings come from LifeScience Alley’s “Minnesota Life Science Investment Activity” report series, which compiles quarterly data on a variety of investment types from various sources for early-stage and emerging companies in the medical device, pharmaceuticals and biotechnology, health information technology, and diagnostics and research tools sectors.

Total 2014 life science investing was up $81.8 million, a 23 percent increase compared with 2013 and a 71 percent increase compared with 2012. Although medical device companies attracted record high investment dollars, 2014 saw increased diversification of sectors securing investment, with significant spikes in both the number of companies receiving funds and total dollars invested within the pharmaceuticals/biotechnology and health information technology sectors. Raising $49 million, the pharmaceuticals and biotechnology sector experienced a 10-fold increase compared with 2013 investment levels ($4 million). Minnesota’s rapidly growing health information technology sector saw investment levels up 41 percent compared with 2013 at $41 million raised, continuing an increasing trend in that space.

Another trend driving investment growth is the increase in companies raising large figures. Last year, 17 companies raised $7 million or more (compared with 11 companies in 2013) and 26 companies raised $3 million or more (compared with 22 companies in 2013). The medical device sector accounted for 71 percent of the companies raising $7 million or more. In addition, 2014 also had the highest median levels of investing activity yet, with a median of $3.9 million in quarter three and $2.4 million in quarter four. For the first time during the years tracked, the fourth quarter saw higher investment levels than the historically strongest third quarter, with $119 million raised, a 17 percent increase compared with 2013.

In addition to recording high levels of life science investment activity, 2014 experienced more than $1 billion in liquidity events in the life science industry, with transactions in the health information technology sector accounting for approximately $780 million.

Based in Minneapolis, LifeScience Alley is Minnesota’s largest medical device/lifescience trade association. It was created in 2005 from a merger between Medical Alley and MNBIO, the state chapter of the national Biotechnology Industry Organization.