Minneapolis / St. Paul Business Journal -- Add NxThera Inc. to the list of Twin Cities med-tech startups that have recently landed capital from large publicly traded medical-device makers
NxThera, which is developing technology to treat enlarged prostates, announced Wednesday that it’s raised $12.6 million in venture capital. Leading the round: American Medical Systems Holdings Inc., a Minnetonka-based firm that makes devices for treating “pelvic health” problems, including incontinence and prostate conditions.
Big med-tech companies such as Medtronic Inc. have a long history of making so-called “strategic” investments in promising startups. The deals are often an indication that the big company wants to buy the startup — if all goes well.
While the trend isn’t entirely new, corporate venture-capital deals have lately become a bit of a hot topic in med-tech. That’s partly because dollars from traditional venture capitalists are harder to come by, making big companies an important source of early-stage funding. Also, the cost of developing new technologies is on the rise, so big med-tech firms can use investments in startups to access a new technology without having to take on all the risk of developing it on their own.
Other Twin Cities med-tech firms that have recently landed money from strategic investors include Cardiac Concepts and BridgePoint Medical Inc.
In its most recent round, NxThera also raised money from traditional venture-capital firms, including previous backers Arboretum Ventures, Aberdare Ventures and GDN Holdings. As part of the deal, Dr. Glen Nelson, chairman of GDN Holdings and a retired Medtronic vice chair, will join NxThera’s board.
Shoreview-based NxThera plans to use the capital to fund clinical trials. The company also is now pursuing regulatory approval to sell its technology in Europe.
NxThera’s device will help treat a condition called benign prostatic hypertrophy. Patients suffering from BPH have enlarged prostates, which causes patients to urinate more frequently or experience other urological problems. NxThera’s technology delivers a vapor to the prostate, reducing its size.