On a Saturday night, at a party, Josh Phillips’s phone lit up with a text message from one of his CEOs. We just saved a life. Attached was a photo of a blood clot, pulled from a patient’s heart because of a device his firm Catalyst Health Ventures had helped bring into the world. The patient was alive because of it.
Another company in the portfolio, Epitel, a wearable wireless EEG which monitors electrical activity in the brain, shared a testimonial that they had a woman break down in tears because a small sensor placed on her scalp had finally caught what doctors had missed for two decades. She was having seizures, and she could at last be treated for epilepsy.
These are the stories Phillips and his co-founder and co-Managing Partner Darshana Zaveri, reach for first when you ask them why they do this. Not the multiples, not the exits. The patient. Since 2008, the two of them have been writing some of the first checks into unproven medical devices and doing it in a corner of healthcare that much of the venture industry has spent the last decade backing away from.
The Early-Stage Squeeze
Medtech, or medical device innovation has traditionally been an underserved sector inside of the healthcare investment vertical. And over the last several years, it has become even more difficult for the early-stage segment. Venture funding peaked at $22.7 billion in 2021, then fell hard, bottoming near $12.9 billion in 2023, according to PitchBook, before clawing its way back to roughly $16.1 billion in 2025. But the recovery is deceptive. While dollars returned, the number of deals never did: deal count peaked at nearly 1,440 in 2021 and has declined every year since, to about 910 in 2025. More money flowing into fewer companies is the theme. And the capital that came back concentrated in larger, later-stage rounds, leaving early-stage startups and diagnostics fighting for a shrinking pool. And with exits harder to come by, more mature companies turned to late-stage “venture-growth” rounds to extend their runway while they waited for an acquisition or IPO that kept not coming — a sign of just how stretched medtech timelines had become.
Jonathan Norris, who tracks this market closely at HSBC’s Innovation Banking Division, explains the trajectory of capital flow. Investment has shifted to “Series C and later deals, many of which are $50 million plus rounds, specifically targeting pivotal trial financing and 510(k) cleared commercialization rounds. Most of these rounds are syndicated with traditional venture firms, which have moved upstream from Series A, as well as growth equity, corporate venture, hedge funds, family offices and some private equity.”
Greg Madden, a managing partner at SV Health Investors who has over 20 years of experience in health investing, articulated the shift during a MedTech World panel in Malta in 2023. “It has been very difficult, to be an early-stage medical device investor,” he told a roomful of founders and investors. “There’s been successes, but they’ve usually taken a very long period of time.”
His own firm followed the money out. “When I joined over 20 years ago, we did almost exclusively early-stage medical device investing,” he said. “About 10 years ago, we decided we were only going to do exclusively later-stage investing.” Part of the problem was competition for capital. It was hard, he said, “to compete as a device entrepreneur when biotech companies were going public with two patients of data.”
What’s notable is where he landed. With time, Madden’s firm has come back to investing at both ends, early and late, using different fund vehicles to carry a company through to an exit. His arc isn’t proof that the early stage is dead. It’s proof of how punishing it became, and that the ability to do it well is rare.
Norris notes, “a few stalwarts in venture do continue to do Series A.” And one of them is Catalyst Health Ventures, a $225 million Boston-based medtech focused VC firm. Over its 18-year investing history, Catalyst has raised three funds and boasts 14 exits, including a recent strategic acquisition by W. L. Gore & Associates of Conformal Medical, which is currently conducting its pivotal clinical trial for a device designed to reduce stroke risk in patients with atrial fibrillation.
A Lean but Experienced Team
Catalyst is a deliberately small shop founded by an unlikely pair coming from outside traditional venture capital pathways. Zaveri grew up in India and was doing drug development and research in pharma prior to moving to the US to pursue a master’s in public administration from Harvard’s Kennedy School. Phillips trained and worked as an electrical engineer before earning an MBA at Harvard and moving into investing.
Zaveri and Phillips process a striking volume of deals, with a fairly small team. They evaluate 600 to 800 companies a year and invest in only a handful — a funnel narrow enough that the judgment behind each pass matters as much as the bets they make. Zaveri elaborated, “we’ve been doing this for 18 years, so you can do the math. We just see a lot. And when you see that many companies, you start to recognize, which ones have all the elements that are important.” Phillips chimed in, “and when you are looking at deals four or five times a day, you know it when you see it.”
Backing Superstar Founders Who Can Stretch a Dollar
The first things the partners evaluate: the team and its capital efficiency. “We look for superstar founders who can wear multiple hats and do things in a cost-efficient way,” Zaveri said.
“Medical devices come in many flavors and they don’t all face the same path to market.” Some clear a lighter regulatory bar and are cheaper to get approved, but then, as she put it, “you have to spend a lot more money in commercializing those products.” Catalyst’s companies tend to go the other way, with a higher clinical regulatory standard: a premarket approval, or PMA, which generally requires a sizable controlled clinical trial. Basically, there is a step-by-step progression to receive FDA approval, “and we’re financing companies through to each step, including preclinical animal trials, and culminating in a pivotal trial.” A pivotal trial is a large, late-stage study with human participants that produces the evidence the FDA relies on to approve a device.
“We invest in early rounds, but reserve capital all the way through to exit, putting roughly a third of the total into the first check and holding the rest back so the company isn’t subject to predatory later-stage terms.” It gets expensive. A cardiac company, Zaveri noted, can take “a hundred million plus to get through the clinical trial and FDA approval; our companies average $50 million or less and that is because we specifically pick CEOs and founders who know how to be very capital efficient.”
That entrepreneurial spirit is also in the firm’s ethos. For the first ten years, she said, “it was Josh and me in the office doing every single thing, from making investments to sitting on boards, to doing tax returns for investors, to stuffing envelopes.”
Getting to “Yes” by Showing Evidence
What gives the team conviction? Zaveri provided a list of must-haves and green flags for an ideal portfolio company. First, the company must be developing a medical device and it must impact large numbers of patients and fundamentally transform patient outcomes. “We’d also like it to be a high gross margin product. We like it to be something that can go through a clinical trial, and we like to see some early evidence, whether it’s bench-top, or early clinical, or preclinical.” Phillips elaborated, “we’re looking for a certain amount of evidence. Once a company gets through the bar of, yes, we like it, yes, it fits all the other criteria we just mentioned, we need some amount of data to make us confident that this is going to work.”
Catalyst’s typical due diligence process runs anywhere from three to six months and leans on the firm’s outside network of clinicians, engineers, doctors, hospital administrators and repeat founders, that extends the domain expertise of the team. But there are exceptions. “There are some companies we have spent over a year in diligence, and others where we move really fast.”
Phillips explained, “Venova Medical is a good example of when we expedited our process.” Patients on kidney dialysis need a durable connection between an artery and a vein, called a fistula, so they can be linked to a dialysis machine for treatment. Venova’s technology creates that connection through a catheter rather than open surgery, with the goal of better outcomes and fewer follow-up procedures. “They had a strategic investor who was very interested, and they were trying to find a lead investor to price the deal, because the corporate couldn’t do that.” And one of the things that Catalyst specializes in is leading deals. And so, Phillips and Zaveri fast-tracked their diligence, which was completed in two months.
On the opposite end of the spectrum, the firm has had to take a wait and see approach with some tech. “There was a women’s health company a few years ago that we really liked called nVision,” Zaveri explained. “But it was a raw concept. It was a cavity-based device that goes into the fallopian tubes to collect ovarian cells, to diagnose ovarian cancer. And while that is a great concept, you have to show us that it can work.” Catalyst stayed in touch with the founder and company for a year and a half, provided feedback and eventually invested. In April of 2018, Boston Scientific acquired nVision for $275 million. Zaveri notes, the exit really put women’s health, which has traditionally been underserved and underinvested, on the map. “This was was the comp that many people would point to for a long time to justify investing in women’s health.”
Front-loading the Investment Risk
I wondered how the fund has found repeated success in achieving so many exits, in such a difficult sector. Phillips framed the risk with relativity.
“If you think about consumer products, or software or other types of investments, yes, they may be cheaper to develop, but they’re much harder to commercialize. And a lot of money goes into the commercialization or marketing phase. Whereas with what we do, we spend on building the body of clinical evidence that shows this product is working as intended, and is making a big impact on patients. And if we do all those things correctly, aa lot of our companies tend to get acquired prior to having to go and commercialize in a big way.”
In other words, Catalyst is comfortable taking on regulatory risk, reimbursement risk, the shape of a clinical trial — those they can define and manage. Because if the product is strategic for an existing large medtech company and is addressing a major unmet need, like cancer, heart failure, pain, there will be plenty of acquirers who will want that product and then pay for the commercialization.
What’s Next in MedTech?
When asked what she wants the world to understand about the sector, Zaveri returns to a phrase the partners like to use. The products Catalyst backs, “are not your grandfather’s devices.” They are not focused on “hips and knees” — “big, clunky things.” A fundamentally new way of thinking about medical devices has taken hold, “a new class of products that are driven by all of the innovation in technology that’s happening right now, and it’s happening very fast.”
The evidence is in where the capital is going. The loudest rounds in medtech now sit at the frontier of devices, computing and biology. Pitchbook notes in its latest Q1 2026 report on the medtech landscape that BCI, or brain-computer interface tech is on trend. Neuralink rival Merge Labs, the BCI startup co-founded by Sam Altman, raised a $252 million seed round in January 2026 with Bain Capital and OpenAI as its largest backers. And Science, a startup developing a retinal implant to restore vision to patients blinded by late-stage macular degeneration, raised a $230 million Series C in March 2026 with participation from Khosla Ventures, Lightspeed Venture Partners, Y Combinator, IQT, and Quiet Capital.
The same convergence is visible on consumers’ wrists and fingers. “You can now think of your watch as a medical device,” Zaveri said, pointing to advances in materials, form factors, AI and data. As I reported in May, Whoop has blurred the lines with its wearable band toward clinical-grade measurement, and Oura, the smart-ring maker valued at $11 billion, confidentially filed for an IPO in May 2026, with healthcare and clinical validation as its central growth strategy.
Catalyst doesn’t chase the shiniest bets, and it doesn’t invest in consumer wellness. But the same technological wave is reshaping the regulated devices it does back. Rejoni, which develops biomaterial-based treatments for women’s health to prevent scarring inside the uterine lining, or endometrium, after procedures like the removal of fibroids, or polyps, is exactly the kind of sleeker, materials-driven device Zaveri describes as the future of the field. “It is a gel that is implanted. It is completely inert, so it has no active, no biological activity. And it allows the tissue to heal over three weeks, and then the gel dissolves and leaves the body. It is a gentle way of treating an important organ in the female body.” Catalyst led the company’s $25 million Series B, joined by Ascension Health Ventures, Delos Capital, Sparta Group, Amed Ventures and Iyengar Capital Partners.
After 18 years, Catalyst’s conviction carries unusual weight in the small world of early-stage med-tech. Even with four other investors at the table, a Catalyst exit empties the room: “They’ll say, wait a minute, Catalyst walked. What’s wrong here?” The team sees this cap table influence, less as a form of power, and more of a responsibility. For the founders building the next generation of medical devices, that makes Catalyst one of the few doors still worth knocking on.
