Nationwide, fewer medical device companies are raising fewer dollars. Those companies raised just $1.6 billion in venture capital during the first three quarters of this year, according to the MoneyTree Report, which is compiled by PricewaterhouseCoopers and the National Venture Capital Association. That's down 33% from the $2.4 billion U.S. medical device companies attracted during the same period in 2011, according to the report, which is based on data from Thomson Reuters.
Meanwhile, software companies attracted $8.2 billion in venture capital during the first three quarters of 2013. Those three quarters alone nearly match the 2012 total and easily beat annual figures from the past 10 years.
Local statistics aren't quite as dramatic, but IT companies here have been receiving a bigger piece of the venture capital pie over the past few years, according to figures compiled by JumpStart, a Cleveland nonprofit that supports high-tech startups.
Healthcare startups in Northeast Ohio typically raise more investment dollars than local IT companies, partly because of the technologies that have been coming out of the Cleveland Clinic and Case Western Reserve University since the turn of the century.
Last year, however, marked the first time in at least six years that local IT startups did more venture capital deals than their healthcare counterparts.
One big factor that makes it easier for local IT companies to raise small amounts of capital are the three startup business accelerator programs that have opened in Northeast Ohio since the start of 2012. All of them heavily favor companies based on software or services provided via the Internet.
Among them is FlashStarts, a Cleveland-based accelerator led by longtime software entrepreneur Charles Stack. Despite the dot-com bubble that burst 12 years ago and the more recent recession, there continues to be an “immense untapped opportunity” in the IT sector, Mr. Stack said via email.
Medical device companies can be good investments, but “for regular individuals with lifetimes measured in mere decades, the time frames are positively glacial,” he wrote.