Josh Phillips was at a party on a Saturday night when his phone buzzed with a text from one of his CEOs: We just saved a life. Attached was a photo of a blood clot pulled from a patient's heart - removed because of a device his firm, Catalyst Health Ventures, had helped finance into existence. That message, and others like it, is what Phillips and his co-Managing Partner Darshana Zaveri reach for first when you ask them why they do this work. Not the multiples. The patient.
Writing Checks Nobody Else Wants to Write
Early-stage medtech investing has been punishing for the better part of a decade. Venture funding peaked at $22.7 billion in 2021, fell to roughly $12.9 billion in 2023, and clawed back to around $16.1 billion in 2025, according to PitchBook data. But the headline recovery obscures the real problem. Deal count peaked near 1,440 in 2021 and has declined every year since, sitting around 910 in 2025. More capital flowing into fewer companies. And the dollars that came back concentrated in larger, later-stage rounds - Series C and beyond - leaving early-stage startups competing for a pool that kept shrinking.
Jonathan Norris of HSBC's Innovation Banking Division describes the shift plainly: investment has moved toward "Series C and later deals, many of which are $50 million-plus rounds, specifically targeting pivotal trial financing and 510(k) cleared commercialization rounds." Those rounds draw traditional venture firms that have moved upstream from Series A, alongside growth equity, corporate venture, hedge funds, and family offices. The math for early-stage founders got harder every year.
Greg Madden, a managing partner at SV Health Investors, put it bluntly at a MedTech World panel in Malta in 2023. His firm spent over two decades doing almost exclusively early-stage device investing before pivoting, roughly ten years ago, to later-stage work. The problem wasn't just capital - it was competition. Device entrepreneurs were trying to raise money in an environment where biotech companies were going public on two patients of data. His firm has since returned to investing at both ends, using different fund vehicles. That arc doesn't mean early-stage medtech is dead. It means doing it well is rare.
Catalyst Health Ventures is one of the rare ones. The $225 million Boston-based firm has been writing early checks into unproven medical devices since 2008 - 18 years, three funds, and 14 exits, including the recent strategic acquisition of Conformal Medical by W. L. Gore & Associates. Norris calls Catalyst one of a small number of "stalwarts" still doing Series A in this space. That distinction carries real weight in a field this narrow.
A Deliberate Process Built on Pattern Recognition
Catalyst is a small shop by design. Phillips and Zaveri came to venture from outside traditional pathways - Zaveri through drug development at Vertex Pharmaceuticals and a master's in public administration from Harvard's Kennedy School; Phillips through electrical engineering and an MBA at Harvard before moving into investing. For the first ten years, it was the two of them doing everything: making investments, sitting on boards, filing tax returns for investors, stuffing envelopes. That operational discipline shows up in how they run diligence now.
The firm evaluates 600 to 800 companies a year and invests in only a handful. That funnel is narrow enough that the judgment behind each pass matters as much as the bets they make. "When you are looking at deals four or five times a day," Phillips said, "you know it when you see it." Zaveri's version of the same thought: "When you see that many companies, you start to recognize which ones have all the elements that are important."
What are those elements? The company must be developing a device with the potential to impact large numbers of patients and fundamentally change outcomes. High gross margins help. A path through a clinical trial is preferred. And there must be early evidence - bench-top, preclinical, or early clinical - that the product can do what it claims. "We need some amount of data to make us confident that this is going to work," Phillips said. That's not a soft bar. It rules out a lot.
Due diligence typically runs three to six months and draws on an extended network of clinicians, engineers, hospital administrators, and repeat founders. But the firm can move faster when the situation calls for it. Venova Medical - developing a catheter-based method for creating dialysis access without open surgery - had a corporate investor ready to come in but needed a lead to price the round. Catalyst ran its diligence in two months and led the deal. On the opposite end, the firm spent over a year in regular contact with nVision Medical, a women's health company developing a balloon-based device for early ovarian cancer detection, before investing. The concept was compelling; the evidence wasn't there yet. When it arrived, Catalyst moved. Boston Scientific acquired nVision in April 2018 for $275 million - a transaction Zaveri notes became the reference comp that helped justify serious investment in women's health for years afterward.
Front-Loading Risk, Then Selling Before the Heavy Commercialization Spend
Here's where Catalyst's model diverges from conventional venture logic. Most early-stage investors worry about regulatory and clinical risk - the unknowns between a promising prototype and a cleared device. Catalyst leans into those risks deliberately. The firm invests in rounds that carry a company through preclinical animal trials all the way to a pivotal trial: the large, late-stage human study that generates the FDA approval evidence. It reserves capital all the way through to exit, putting roughly a third of the total into the first check and holding the rest back to protect portfolio companies from predatory later-stage terms.
That gets expensive. A cardiac device company can require more than $100 million to reach FDA approval. Catalyst's companies average under $50 million - a gap the firm closes by selecting founders who know how to be capital efficient, wearing multiple hats and stretching resources in ways that larger, better-funded teams often don't. "We look for superstar founders who can wear multiple hats and do things in a cost-efficient way," Zaveri said.
The payoff structure follows from the risk profile. Consumer products and software may be cheaper to build, but they're expensive to commercialize - marketing spend, distribution, brand awareness. Catalyst's companies build a body of clinical evidence that, if compelling, attracts acquirers before commercialization at scale ever begins. The regulatory and clinical work becomes the asset. A large strategic buyer - an established medtech company with existing distribution, a sales force, and reimbursement relationships - pays for the product and then handles commercialization itself. Fourteen exits in 18 years, in one of the hardest corners of healthcare investing, is the result.
Where the Sector Is Heading
Zaveri is clear-eyed about what has changed in the device industry itself. The products Catalyst backs, she says, "are not your grandfather's devices." The field has moved well past orthopedic hardware - hips, knees, joints. What's emerging is a new generation of devices that sit at the intersection of computing, biology, and miniaturized hardware, and it's moving fast.
The capital flows support that read. PitchBook's Q1 2026 medtech report flags brain-computer interface technology as a sector in sharp focus. Merge Labs, a BCI startup co-founded by Sam Altman and positioned as a Neuralink rival, raised a $252 million seed round in January 2026 with Bain Capital and OpenAI among its largest backers. Science, a startup building a retinal implant to restore vision in patients with late-stage macular degeneration, closed a $230 million Series C in March 2026 with participation from Khosla Ventures, Lightspeed Venture Partners, Y Combinator, IQT, and Quiet Capital. These are not incremental bets.
Catalyst's portfolio reflects the same trajectory. Epitel, one of its companies, makes a wearable wireless EEG - a small sensor placed on the scalp that monitors electrical activity in the brain. A patient had seen doctors for two decades without a diagnosis. The Epitel sensor caught what those visits missed: she was having seizures. She could finally be treated for epilepsy. That's the story the partners tell. It's also, in practical terms, a description of what the next generation of medical devices is actually capable of - catching what earlier tools couldn't, at lower cost, in settings that weren't previously possible.
After 18 years in a sector that pushed most of its peers to the later stages, Catalyst's reputation now functions as a signal in its own right. When the firm walks away from a deal, co-investors notice. "They'll say, wait a minute, Catalyst walked. What's wrong here?" Phillips and Zaveri treat that influence as a responsibility, not a lever. For founders building early-stage devices right now, in a funding environment that remains structurally hostile to their stage, that makes Catalyst one of the few early partners still worth the pitch.
