Baby Breaker Birth Announcements

Welcome back to Baby Breakerdom! This week's quest to uncover budding Rule Breakers finds investors trimming the fat and shopping for the best deal.

First up this week is EnteroMedics, a start-up that plans a device for fighting obesity through control of the vagus nerve, which manages the appetite. Apparently, it's catching on. VentureWire reports that the company received $45.2 million in a recent third round of funding, the largest such deal among medical device makers this year.

I'll understand if you're somewhat surprised by that. It's been a tough year for medical device stocks. Skepticism continues over the combination of Guidant and Boston Scientific (NYSE: BSX  ) , while other stocks have taken a beating:

Company

1-year return

Medtronic (NYSE: MDT  )

(9%)

Zimmer Holdings (NYSE: ZMH  )

(34%)

St.Jude Medical (NYSE: STJ  )

(28%)

Biomet (Nasdaq: BMET  )

(16%)

Source: Yahoo! Finance

So, don't look for an EnteroMedics IPO anytime soon. But, long-term, there's good reason to believe in the investing thesis for this start-up and others like it. Venture investors, after all, don't typically tilt at windmills, and they've already spent at least $140 million on neurotech funding this year. What's more, the neurotech market -- geek speak for electronics applied to elements of the central nervous system to improve health -- already worth $3 billion, is expected to grow by more than 150% by 2010, according to researcher Neurotech Reports.

Next up is ShopWiki, which has absolutely nothing to do with online encyclopedia Wikipedia. Instead, it's a shopping engine along the lines of Froogle or Shop.com, which can be useful if you're trying to get paid to drink beer. Maybe that's why 30% of people who buy online use one, according to Forrester Research (Nasdaq: FORR  ) .

Certainly the enthusiasm for such engines helps ShopWiki, which recently raised $6.2 million in venture funding. Venture investor Generation Partners provided the financing and appears to have been swayed by the technology underlying the business. Specifically, ShopWiki says it is breaking the rules by eschewing feeds from retailers, opting instead to use Web crawling and other extraction techniques to index data from 120,000 online shops, according to VentureWire. That should help keep its ratings both independent and, hopefully, relevant. It also sounds strikingly similar to Google's (Nasdaq: GOOG  ) approach in all-purpose search.

And that's all for now. See you back here next Friday, when we continue the quest to find the next ultimate growth stock.

For more Rule Breaking Foolishness:

High-tech. Biotech.Nanotech. Any tech. David Gardner and his Foolish band of analysts cover it all forMotley Fool Rule Breakers, and they've unearthed four multibagger stocks in less than two years as a result. Who are they? Try the service free for 30 days and find out.

Fool contributor Tim Beyers didn't own shares of any of the companies mentioned in this story at the time of publication. You can find out what stocks he owns by checking Tim's Fool profile. The Motley Fool has an ironclad disclosure policy.


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