Just four months into 2007 and Midwest healthcare startups are already reporting an impressive $324 million in total investments across 43 companies in the first quarter of the year, according to the latest report from BioEnterprise (Cleveland).

BioEnterprise's "Midwest Health Care Venture Investment Report" shows that the number of total investments in the first quarter of this year more than double's that of 1Q06, which was $127.7 million.

Baiju Shah, president of BioEnterprise, told Medical Device Daily that he believes national investors are beginning to recognize that there is a "goldmine in the Midwest", because of fewer venture firms and "great opportunities to find very interesting opportunities that are emerging here."

By sector, $230 million of the equity funding in 1Q07 went to biopharmaceutical companies, $46 million went to device companies, and $48 million went to healthcare software and service companies.

"The bump really occurred in biopharmaceutical companies this quarter, but all of the numbers came in relatively strong," Shah said.

Though device companies only showed a slight bounce in investments from $38 million in 1Q06 to $46 million in 1Q07, Shah told MDD that he "would expect on the end of the year reports that medical devices will catch up."

In the device sector, the three largest financings included in the report were BridgePoint Medical (Plymouth, Minnesota), which raised $10 million in January; Envoy Medical (Minneapolis), which raised $12.5 million in February; and Collector (Madison, Wisconsin), which raised $7 million in March.

In January BioEnterprise reported that device firms, by a small margin, were the leaders in healthcare startup funding in the Midwest during 2006 (Medical Device Daily, Jan. 24, 2007). According to that report, device firms raised $356 million in 2006, or 45% of a total of $792 million.

Biopharmaceutical companies were hot on their tails though, with $349 million raised, 44% of the total.

And healthcare software and services startup firms raised $88 million, or 11% of the total.

Overall, the $792 million raised in 2006 was a 25% increase over 2005, according to the BioEnterprise report.

Shah said the reports are beginning to sound like a broken record because each year when BioEnterprise releases its wrap up report of Midwest healthcare investment activity the numbers are higher than the previous year. He added that he wouldn't be a bit surprised to see 2007 break the 2006 record overall, not just first quarter to first quarter, and for that trend to continue.

"The first quarter of 2007 has increased the trajectory of the already record-breaking 2006 in the Midwest," Shah said. "More stunning than the total dollars doubling last year's mark is that the number of transactions nearly doubled last year's pace. That is the true bellwether for increased venture activity and the mark that demonstrates strong and continuing growth in future years."

The report aggregates venture investment in 10 Midwest states and Western Pennsylvania.

By state, Indiana led the way, according to BioEnterprise, attracting $94.5 million to four healthcare ventures in the state, followed closely by Ohio with 15 ventures raising $93.9 million.

Following these leaders were Illinois ($42.5 million), Minnesota ($39.92 million), Missouri ($16.8 million), and Wisconsin ($16.11 million). Other states with one deal reported included Kentucky ($5 million) and Michigan ($3.25 million). And Western Pennsylvania companies attracted $12.2 million in financing.

The BioEnterprise report also breaks down the investments by region, showing Cleveland in the lead with 12 companies raising $83.5 million, followed by Indianapolis attracting $79.5 million to three companies. Chicago came in third with two companies raising $42.5 million.

"Chicago had an okay quarter with one $40-million deal and the other was $2.5 million," Shah said, referring to NextWave Pharmaceuticals (Buffalo Grove, Illinois), a biotechnology therapeutics company that raised $40 million in January, and Essential Group (Gurnee, Illinois), a decision support services company that raised $2.5 million in March.

BioEnterprise is a business formation, recruitment and acceleration effort designed to support the growth of bioscience companies, providing management counsel and support services to healthcare companies.

BioEnterprise's partners are Case Western Reserve University, Cleveland Clinic, University Hospitals, and Summa Health System.

Additional technology partners include the NASA Glenn Research Center, Cleveland State University, NorTech, and Omeris.

BioEnterprise says that with these partnerships it has created, recruited and accelerated more than 50 countries in four years.