Minnesota businesses attracting less venture capital

Young Minnesota companies are having a harder time raising money from investors.

So-called venture funding in Minnesota is expected to be down this year compared to 2012, according to new data from the quarterly MoneyTree survey. Investors appear to have cooled on the medical device industry, which typically gets the lion's share of venture dollars in Minnesota.

Start-up medtech firms nationwide aren't providing attractive returns for investors, said Shaye Mandle, executive vice president with LifeScience Alley, the state's medical device industry trade group.

"Over the past three years, we've seen venture capital investment in medtech drop by more than 50 percent," Mandle said. "We're starting to see a little bit of an uptick," Mandle said.

For years, Minnesota companies got more than 1 percent of total U.S. venture capital investments. But the state hasn't topped that mark since 2009.

Minnesota companies attracted about $84 million in venture capital during the third quarter, according to the MoneyTree report. Venture funding for the year is on pace to fall below the 2012 total of $250 million.

"Returns on investment in the venture arena for medical technology over the last ten years have been quite flat," said Mandle. "So, for investors looking to invest in sectors to maximize returns, medtech just hasn't been a great investment."