This week, New Enterprise Associates – known to its friends as NEA – announced closing on a $3.3 billion venture capital fund, with roughly 10% of that total going to Medtech companies.
The new allocation follows a $3.15 billion pool raised by NEA in 2015. The proximity of fund closing and size means the firm’s broader investment strategy isn’t likely to change much. But we asked partner Justin Klein, MD, how might the $300 million or so invest in Medtech companies be deployed differently than in the prior fund.
Dr. Klein, speaking at the Medtech Conference in Minneapolis, says NEA will walk softly when pursuing new Medtech rather than put capital to work too aggressively.
“We try to be very approachable by companies in all stages,” he says. “In some ways we have this terrific advantage or opportunity in the market because of our capital base. And we try to make sure that confers benefits to the companies as much as ourselves.”
Dr. Klein agrees that managing this much capital can introduce restraints. The limited scale of a start-up might not warrant a partner’s time or NEA wouldn’t be able to invest the small bit of capital needed for what could still be an investment that generated an “excellent venture return and winning outcome for a management team.”
“We do think about opportunities where scale matters,” he continues. “Those are generally the best fit for us. We like to encourage entrepreneurs to approach us early in the process of shaping their company because we might see an opportunity where our capital base can transform their business plan or add a new dimension to it or take it another step further in a way that adds disproportionate value to what they otherwise might think of in an environment where there are more capital constraints and we weren’t part of the deal.”