Ovum Ventures to Invest $125 Million in Minnesota Medtech

Private equity firm Ovum Ventures (Melbourne, FL) has committed to raising $125 million to invest in early- and seed-stage medtech companies in the Minnesota and surrounding areas.

The firm reached this agreement with venture capital organization Alley Ventures LLC (St. Louis Park, MN) in early October. For its part, Alley Ventures will identify investment opportunities within Minnesota’s medical device and life sciences industries and provide Ovum with the first chance at cutting deals with the emerging companies.

The agreement with Ovum represents the establishment of Alley Ventures’ first “preferred fund.” As a preferred fund, Ovum will have access to the resources and member companies of Medical Alley/MNBIO (St. Louis Park, MN), the regional nonprofit healthcare trade association that spun off for-profit Alley Ventures in 2003. Alley Ventures is looking to establish up to four more preferred funds. In addition to the medical device arena, where Ovum will be concentrating its investments, Alley Ventures is recruiting venture capital firms focused on the biosciences industry and the healthcare services and information technology industries.

In addition to recruiting investor organizations, Alley Ventures plans to raise its own seed fund of about $10 million to coinvest alongside its preferred funds.

Medical Alley’s Gerhardt: Generating deal flow.

Alley Ventures will play a key role going forward in generating sound deal flow, and helping small and emerging companies access seed-stage venture capital in Minnesota and the surrounding region,” says Don Gerhardt, president and CEO of Medical Alley/MNBIO. He credits the board members of Alley Ventures, particularly Gerald R. Mattys and James Stice, with the culmination of the deal. Mattys serves as CEO of Tactile Systems Inc. (Minneapolis), and Stice is CEO of Twin Star Medical Inc. (Minneapolis).

Ovum’s $125 million commitment will be invested specifically in companies that are developing medical devices related to cardiology, cardiac surgery, neurosurgery, neurology, orthopedics, spine, and oncology. At the time of the deal’s announcement, Ovum had raised $24 million and expected its first closing at a total of $50 million around the end of the year.

Ovum’s Mazzocchi: Strong operational background.

Ovum Ventures, with offices in Florida, Minnesota, and Germany, was established specifically to invest in emerging medical technology companies. Rudy Mazzocchi, one of Ovum’s three general partners, is cofounder and former CEO of Image-Guided Neurologics (Melbourne, FL), a neurosurgical device company that was acquired by Medtronic Inc. (Minneapolis) at the end of August. Mazzocchi, who holds more than 40 medical device patents, also cofounded Vascular Science Inc., which was acquired by St. Jude Medical (St. Paul, MN) in 1999; CytoGenesis Inc., acquired by BresaGen Ltd. (Thebarton, Australia) in 2000; and Thermonix Inc., acquired by Triton Biosystems (Chelmsford, MA) in 2002.

“Ovum has a very strong operational background,” Gerhardt says. “Rudy and his partners have a lot of experience in building companies and making sure they work.”

© 2005 Canon Communications LLC

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