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Sunday, 12 July 2015 21:38

BioStar Ventures nets $68.8 million for new VC fund

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Louis Cannon, founder and senior managing director of BioStar Ventures Louis Cannon, founder and senior managing director of BioStar Ventures COURTESY PHOTO

A Petoskey-based venture capital firm looks to invest in 10 or more medical device startups over the next five years after closing last week on its third fund.

BioStar Ventures Fund III netted $68.8 million over two years, exceeding the combined amount raised and deployed by the firm’s two prior funds. Keeping with the same focus, BioStar Ventures plans to invest Fund III in early-stage medical device companies involved in the cardiovascular and orthopedic sectors.

The funding for Fund III came from about 30 investors — including institutional investors — from Michigan, New York and California that each put in a minimum of $1 million. More than one-third of Fund III investors participated in BioStar Ventures’ prior funds, said Louis Cannon, the founder and senior managing director of BioStar Ventures.

Although a Michigan-based firm, BioStar Ventures invests in medical device innovations and startups across the nation.

“We’re agnostic,” said Cannon, the senior program director at McLaren Northern Michigan’s Cardiovascular Institute in Petoskey. “Our hearts are in the Midwest, our hearts are in Michigan. It’s where we live and it’s where our families are. We have found good companies in Michigan and would be very happy to invest here, but it has to meet our mandate.”

BioStar Ventures was able to raise the $68.8 million despite what Cannon calls a “really tough” environment for soliciting investors for a fund dedicated to medical devices. Investors of late have tended to steer toward venture funds involved in information technology and software, which are sectors that are less capital intensive and have a shorter pathway to commercialization.

“It took a special investor to understand the value that we bring and the stability that we bring to investing. It’s not just a roll of the dice for us,” he said.

Cannon noted the fund’s focus on cardiovascular innovations and proprietary technologies that can improve care, reduce costs, and “meet unmet patient needs.”

“That’s not going to go away, although it’s not really popular right now,” Cannon said.

BioStar Ventures began fundraising for Fund III in 2013. The fund invested in five companies since its first closing in June 2013, two of which have since earned U.S. Food and Drug Administration approval for innovations and are moving toward commercialization.

BioStar Ventures Fund I, launched in 2004, invested $28.8 million in 15 companies and Fund II, which had its first closing in March 2008, put $36.4 million into 15 companies.

The venture firm presently has 19 active companies in its portfolio, including Kalamazoo-based Ablative Solutions Inc., which developed an innovative catheter system to treat severe hypertension by deactivating nerves around the renal artery by injecting them with alcohol.

BioStar Ventures led a syndicate that included Michigan Accelerator Fund I in Grand Rapids and the angel network Grand Angels that invested $9.5 million in a Series B preferred stock offering by Ablative Solutions in February 2014.

Read 2918 times Last modified on Tuesday, 21 July 2015 10:09

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