KALAMAZOO – 2013 has been one of the strongest years in many for biotech and medical device companies to go public, a California venture capitalist said Tuesday at the MichBio Expo.
Mike Carusi, General Partner of Advanced Technology Partners based in Palo Alto, California. Carusi is a General Partner and Team Leader for Lightstone Ventures, founded in 2012 by ATV and Morgenthaler.
Carusi said the average valuation of those companies going public has averaged $200 million. Most of the IPOs have been biotech startups, but a few also have been manufacturers of medical devices. He said there has been an innovation gap, producing a dearth of quality companies to invest in.
“The supply of startup companies has fallen by half,”� he said. “Big pharma needs start-ups.”
That means supply-and-demand has kicked in, with big pharmaceutical companies willing to acquire biotech startups much earlier in the development process and pay a much higher price, he said.
“Innovation will drive big winners,” Carusi said. “The next few years could be the best for both biotech startups and venture capitalists that invest in these companies.”
How does that play out in Michigan, which has its Life Sciences Corridor stretching from Kalamazoo, to Grand Rapids, to Lansing, to Ann Arbor and Detroit.
Carusi said he’s seen colleagues in Boston much more willing to travel to Michigan to check out potential biotech investments than he has colleagues from California. But he said big East and West Coat venture funds want to invest $30 million to $50 million in a company that will give them a 10 times return; a profile that does not match many Michigan life sciences startups.
