Health care investment outlook slows as available cash dries up - South Florida Business Journal:

http://wild-zone.net/www.wild-zone.net/Toolkit.html
That overall pattern may be changing as capitakl sources dry up and the deleveraging of the creditmarker continues. Ed Gordon, managing director of the health care practicesat Miami-based , sees the cost of capitalp in 2009 higher than in 2008 because investorx have grown more cautious. “Thei r investments’ exit values are projectexd lower, and most private equity has pulled back becauses of the shrinkagein leverage,” he said. the cost of money goes up.
” Gordohn sees the greatest health care investment opportunities currentlty to be in medical devices and facilitgy management situations that offer safe Kathy Harris, VP of Atlanta-based ventured capital firm , is cautiousluy optimistic about health care in South Florida. “Wew are looking at specialty areas withimn the health care field that range fromremotd sensing, monitoring and diagnosis to a one-stolp shop for diabetics,” she said. Hollywood-based Renal CarePartnerx – one of Noro-Moseley’s newest investmentsz – falls into the investment model described as the directt consumer delivery of medical It performs kidney dialysisto end-stag renal patients.
This latest of nine healthg care investments was funded froma $120 milliom fund, the sixth such fund raiserd by the Atlanta Attorney Mark Fleisher, of counsel at K&L Gateas in Miami, expects a big turnovefr of companies in the health care and cites estimates that as many as 50 percengt of the startups in the various health care sectors will be out of monet in 2009. A lot of money has gone into thebiotechnology sector, and Fleisher said it has some of the aspectw of another bubble – although not anywhere to the degres of the dot-com era’s crazy valuations or the excessivre leverage of the credit bubble.
It then becomexs a question of whichj companies will continue to get funding from venturw capitalfirms – and whether or not those firms collect on their own capital calls to have the moneh to invest. William McMillen, executive directore of the , explained that when a venture capital firm raisess an investment capital fundof $100 millionj or more, all the moneyu is not collected initially – only a deposift and a commitment from investorss to meet further capital callw as necessary. Typically, institutions are the fund’s investors. As the fund finds investments, it notifies its investors that additional funds are due under theirsubscription agreements.
If an investor doesn’r meet a capital call, McMillen it is penalized and can lose a percentagwe ofits investment. If it misses three or more capitalcalls – depending on the subscriptiohn agreement – an investor could lose all of its investment. It’s already The California State Pension Fund said it will only meet 25 percentf of its outstandingcapital calls. , now in is reportedly trying to sell its interestss in venture capital investments befor e they are wiped out by missedcapital calls. “For the true healtj care startup, the only financiapl sources left are the angelinvestors – not the McMillen said.