VCs back businesses with a little junk in the trunk.
Anti-obesity companies are the flavor of the month among venture capitalists. In the past year, VCs have invested tens of millions in half a dozen companies, and The Venture Capital Journal surveyed the trend in January. Most of the firms that have been funded make devices restricting food intake or limiting absorption. "There's a realization now that obesity is a treatable disease," says Mir Imran, whose Menlo Park, Calif., firm, IntraPace, is designing a gastric pacemaker to make people feel full. "That makes it a multibillion market."
Prompting the interest: the fact that 300 million people meet the definition of obese, and in 2004, Americans spent an estimated $3.5 billion on bariatric surgery. Plus, last year, Medicare officially classified obesity as a disease.
As with all VC boomlets, this one is speculative. Most companies haven't tested their products on humans yet, and obtaining regulatory approval may mean it will be years before the products hit market.
Still, VCs are hopeful. "It's very rare that you find a market that's this big," says Bruce Robertson, an IntraPace backer, "without good solutions."