Health care VC slows in 2011

The number of deals and dollars invested by venture capitalists in Hoosier health care companies declined during the first half of the year, according to the latest data from Cleveland-based BioEnterprise.

Four companies attracted more than $10.5 million, according to BioEnterprise, which promotes the growth of life sciences companies in the Cleveland area.

Those results were down from 10 companies that attracted $18.5 million during the first half of 2010.

Indiana is part of a larger trend in which life sciences firms have increasingly found their next round of financing from a larger health care company, rather than from institutional investors.

“While the number of companies funded remains high and similar to prior years, the total dollars invested is down compared to recent years,” Baiju Shah, CEO of BioEnterprise, said in a prepared statement. “This is related to the significant increase in company M&A activity across the Midwest as growth-stage health care firms are increasingly being purchased in strategic transactions rather than pursuing additional financing.”

Across the Midwest, 86 companies have attracted $315 million in venture funding this year, compared with 75 companies that pulled in $412 million during the first half a year ago.

In Indiana, Carmel-based Dormir Inc. attracted $2 million in February to help its roll-up of sleep centers. Also, Indianapolis-based Wellfount Corp. received $6 million from Arboretum Ventures to help it install remotely controlled drug-dispensing machines in nursing homes around the country. And Fort Wayne-based BioPoly LLC secured $2.5 million to bring new orthopedic products to market.

Indiana’s numbers are somewhat low because Indianapolis-based BioCritica, which is licensing the severe sepsis drug Xigris from Eli Lilly and Co., also attracted venture capital, but the amount has not been disclosed.

To see the BioEnterprise report, go here.