from the July 2013 issue

Sony invests $10m in Rainbow Medical

According to maket sources Sony Corporation (NYSE: SNE; TSE: 6758) has invested $10 million in Rainbow Medical Ltd. Last year, "Globes" reported that Sony wanted to expand its medical devices operations. Company representatives met Israeli medical devices companies, but decided against making any acquisitions for now, opting instead to invest in Rainbow Medical, which invests in the industry.

Sony is not the first corporation to invest in Rainbow Medical. Global medical devices giants, including Medtronic Inc. (NYSE: MDT), Abbott Laboratories Inc. (NYSE: ABT), and Italy's Sorin SpA (BIT: SRN) have invested in the company. The first investment in the company was by GlenRock Israel, headed by Leon Recanati.

Rainbow Medical, which invests in the inventions of serial entrepreneur Yossi Gross, is managed by Efi Cohen-Arazi. He said, "We are very proud to work with Sony and we are fully cooperating with it."

Sony is building its brand in the healthcare field, marketing medical imaging products, and will now try to sell its own medical devices. The strategy is being implemented with a $644 million investment in Olympus Corporation (TSE: 7733), giving Sony an 11% stake in the company. The companies have set up a joint medical devices venture, which will focus on miniature imaging systems for endoscopic procedures. Olympus will develop the endoscopes, and Sony will develop the lenses and data processing systems for the images.

Rainbow Medical specializes in complex systems, especially implants. The devices often involve electrical stimulation of the body, or replacing an organ's functions with electrical functions. All these devices target large markets where there are few solutions.

These solutions are developed through joint ventures between Rainbow Medical and the corporation which wants the particular inventions. Rainbow also develops products through its portfolio companies, in which the corporations have indirect stakes through their investments in Rainbow.

Rainbow Medical was founded in 2007, and raised $50 million in its second financing round, led by Abbott and Medtronic, in 2012. According to its business plan, it will not need additional substantial financing, but will soon be financed from revenue. "We receive queries from parties interested in investing in us, but we don't need money right now. We accept such partners only if they bring strategic value, like Sony," said Cohen-Arazi.

Reprinted from the Israel High-Tech & Investment Report July 2013

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