New funding may boost local medical technology startups
Area startup health care businesses could be getting a boost from a recent round of investments by the state’s Third Frontier program.
In March, Third Frontier awarded $30.5 million to four Cuyahoga County-based organizations. The money will be available to help fund pre-seed and seed rounds for technology startup companies, particularly in the health care and biotechnology areas. Those are the earliest stages of funding for startup companies.
One of the investments will be the basis of a new collaboration between two local organizations. It will provide $4 million to kick off the Healthcare Collaboration Fund, an investment fund that JumpStart Inc., the Cleveland-based nonprofit business accelerator, and University Hospital Ventures, the innovation and commercialization arm of University Hospitals, are creating to make investments in Northeast Ohio technology startup companies in the biomedical and life sciences.
Each of the partners will add $2 million, creating an $8 million fund that will seek to grow its clout with co-investment partners. The fund will focus on a broad range of the biomedical and life sciences, including diagnostics, imaging, surgical instruments and equipment, implant devices, therapeutics and regenerative medicine, as well as software applications for health care.
Jerry Frantz, chief investment and services officer of JumpStart, said the idea to create a working relationship came from UH Ventures, and it kept building until they decided to create the fund.
“It really is for this region a novel approach to how … you create and support deals,” Frantz said.
David Sylan, president of UH Ventures, agreed, adding that having University Hospitals as a partner can be attractive to potential co-investors. “We bring clinical knowledge to the equation,” he said.
That means, Frantz said, that co-investors know that one of their partners is a potential user of the startup’s technology, a partner who also has a purchasing department that can help assess the marketability of the technology. And, as part of a research hospital, UH Ventures may even be able to find an in-house place for a pilot program.
“As much as we are sharing the process of putting dollars in to invest, they are also bringing in clinical specialists as subject matter experts and the perspective of the actual marketplace. And that is very attractive to entrepreneurs,” Frantz said. “If you’re piloting at University Hospitals, then you’ve got your pilot going with your funder. So it’s a very exciting model.”
This article originally appeared in Crain’s Cleveland Business on August 8, 2021