I’ve been covering Minnesota venture capital for the past three years. Which means I’ve run out of words to describe how bad the state’s venture capital climate has become.
So I’ll just let the numbers speak for themselves. Four Minnesota companies received only $20.1 million in venture capital during the first three months of the year, its worst showing in at least 14 years, according to the MoneyTree report by PricewaterhouseCoopers and the National Venture Capital Association, based on data by Thomson Financial.
Sadly enough, I used the same “worst showing in 14 years” phrase to describe the state’s venture capital performance during the first quarter 2009 when four companies received $56.1 million. So obviously, things have only gotten worse.
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The only question is how worse can it get. Or have we hit bottom? First quarters are typically slow, but a 64 percent year-over-year decline is significant by any stretch of the imagination.
The most alarming numbers, however, don’t belong exclusively to Minnesota. We always knew the state was no Silicon Valley so in some ways, we really shouldn’t be surprised.
Now here’s the real bad news: The amount of venture money flowing into the country’s medical device and equipment sector fell an alarming 29 percent from the previous quarter to $519 million. This follows an already dismal 2009 when venture investment in medical devices dropped 27 percent to $2.5 billion.
Minnesota should be alarmed. More than two-thirds of the state’s share of venture money usually goes to medical device start-ups. Also, medical technology, or health care in general, was supposedly bullet proof. No matter how bad the economy, saving or improving lives would always command a premium from investors, the thinking goes. Not any more.
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Clean technology, however, was the sole bright spot for the country. Investors poured $773 million into clean tech in the first quarter, an 87 percent gain from the last three months of 2009.
Medical devices have been and probably will always be the cornerstone of Minnesota’s high-tech economy. And most signs point to an economy on the rebound. However, judging from the latest MoneyTree numbers, perhaps we should give more serious thought to building a real clean tech industry in Minnesota, home to 3M, Cargill and wind power.
Because I’m running out of adjectives to describe bad.
