Trends in early-stage investments in Boston medical technology – food, medicine, healthcare, life sciences


United States: Trends in Early-Stage Investment in Boston Medical Technology

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Duane Morris supports a proprietary platform in Boston that enables emerging life science and medical technology companies to present themselves to a diverse group of investors, from skilled anglers to large pharmaceutical companies. We also represent companies looking for finance and independent investors in this area. When assisting with the due diligence in the first eight months of 2021, certain aspects were highlighted in the diligence review.

In the seed funding round, we saw mostly SAFEs and no convertibles this year. The upper limit of these offers was the subject of negotiations. Some investors believe the cap rate is an indication of the pre-money valuation the company expects for the preferred round of funding for the next increase.

Investors show strong interest in the use of AI in remote diagnosis, an area in which many offerings are offered; However, investors are also carefully examining the source and depth of the database underlying the AI, as the amount of data is seen as key to the likely market traction for such companies.

For preferred rounds, especially those referred to as “Seed Preferred”, the ratings are carefully checked by investors prior to receipt of funds, possibly as an antidote to frothy ratings that reflect ratings on public offers and SPAC transactions. A compromise is to stagger investments in tranches with milestones in order to reduce the pressure of pricing larger offers on feared overvaluations in advance.

Boston’s market for early-stage life sciences, medical devices and ancillary services remains robust, but competition for funds is fierce and we continue to see fierce negotiations on terms given the multitude of options available to the investment community. (Readers should note that these observations are anecdotal and Boston-centered.)

Disclaimer: This warning has been prepared and posted for informational purposes only and is not offered as legal advice, nor should it be construed as such. Further information can be found in the office full disclaimer.

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