Triventures has already closed a $70 million Israel investment fund, and is likely to increase the amount to $100 million. The fund, managed by Michal Geva, Dr. Peter Fitzgerald, and Dr. Martin Leon, plans to invest half of the amount in the regular medical devices sector and the other half in digital medicine. Up until now, the fund has invested mainly in companies in the early stages, but will now also invest in later stage start-ups.
The list of investors in the fund includes Johnson & Johnson, Abbot Laboratories, Medtronic, and Volcano, which also invested in the previous fund, and parties such as Thoratec, which deals in resources for treating mitral insufficiency; Cardinal Heath, a leading company supplying medical equipment to hospitals; the Intermountain Health chain of hospitals; consumer electrical products company Nikon; an Indian medical equipment marketing company; and five leading Chinese medical equipment entrepreneurs.
Founded in 2009, Triventures operated as a relatively small fund ($30 million) in the medical equipment field. Thanks to the connections of the two senior cardiologists involved in it, it managed to obtain investments from large medical equipment corporations.
One exit from the company to date has made back the entire investment in the first fund: Apica, which developed a cardiac implant, and was acquired by Thoratec. Triventures invested $6 million for a 30% share in the company, and sold it for $75 million.
Referring to the new fund, Geva said today, "We have made two investments in digital health to date, and in recent years, we have built an ecosystem around this rejuvenated sector. The dynamic of this market is very different. The entrepreneurs, investors, and strategic parties aren't always the same players as in medical equipment. The pace is different, and the target audience is different."
Speaking about the medical devices sector, Geva said that the combination of investors such as multi-disciplinary distributors and hospital chain is logical due to the changes in the US health system with many decisions being transferred from doctors to procurement managers. "Among the challenges in bringing medical products from concept to market are not only regulation and health insurance indemnity but also the integrations of the product into the existing market, and the investors in the fund really help with this," she said.
We are no longer seeing $70-100 million medical device funds in Israel because the model hasn't been so successful in Israel in recent years.
Geva said, "This is one of the reasons for the combined model. Unfortunately there isn't much money available today for mainstream medical devices even though there are many opportunities. Prices are not problematic and this is true for both our exits and investments, and therefore it balances out.
In contrast in digital health, she said, the market is hotter and thus the pricing is higher.
Fitzgerald added that "the returns in the health sector have been on average very stable and good over the past 20 years but the market is more enthusiastic about new industries. There might only be one Uber but medical devices have the ability to renew many industries. In digital health, there are business models that didn't previously exist and there are new fields to operate in the health sector. Israel is an excellent place to set up "a pilot for these products just like Waze did."
The new fund's first investment is in Eye Yon Medical, which develops innovative medical devices for the treatment of corneal edema, and is from the Val Leer Ventures incubator in Jerusalem.
Published by Globes [online], Israel business news - www.globes-online.com - on May 20, 2015
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