Medical device companies have always faced technological, regulatory, reimbursement and market risk, and a new risk has been recently added to this existing set of challenges: financing risk. Longer product development cycles mean sustained funding requirements, at a time when venture funds are less numerous and smaller, and syndicates have become difficult to assemble. These dynamics have sent many companies scurrying to Europe, in search of a more predictable regulatory environment and alternative sources of funding, according to a panel of European venture capitalists that spoke at the IN3 (Investment In Innovation) medical device conference sponsored by Elsevier Business Intelligence, which was held in Paris in March 2011. We queried the panelists to find out if they're optimistic or pessimistic about medtech investing for the future, what kinds of deals they find attractive now, whether medical device investments still have merits relative to pharmaceutical deals, what advantages Europe might offer to the US as a field of investment, and how companies can survive among a scarcity of funds.

Venture capitalists might cry poor, but, in fact, many leading firms have raised new funds over the past year, pooling more than $1.5 billion for medical device investments. The only question facing entrepreneurs and executives is: are they buying what you’re selling?

It's trendy to question whether the tried-and-true model of venture capital is broken. Specifically, is the economic system that relies on IPOs or acquisitions still wired to reward the risks taken by venture capitalists? But an even more worrisome concern emerged during last month's annual meeting of the National Venture Capital Association-are VCs themselves still wired to take risk?