Tales of Two Medical Startup Companies.Convincing investors to fund your medical startup company The creator of this article, or someone who has substantially contributed to it, may have a conflict of interest regarding its subject matter. It may require cleanup to comply with Wikipedia's content policies, particularly neutral point of view. is never easy. Check out two rapidly growing startups and gain some insights on how it can be done successfully. While developing Proteomed Capital, LP--a venture capital partnership investing in genomic and proteomic startup companies--I came across a fascinating report that's a snapshot of what is happening on the cutting edge of physician-led health care companies. Growthink's Health Care Private Equity Funding Equity funding An investment consisting of a life insurance policy and a mutual fund. The insurance policy is paid by the collateral value of fund shares, giving the investor the advantages of insurance protection with the growth potential of a mutual fund. Report for the first quarter of 2001 is a revealing glimpse at the companies and trends that may transform medical practice in the next decade. The Growthink report shows only 6.4 percent of the private equity investment for the quarter was in the health care sector. Investments in biotechnology/pharmaceuticals outpaced medical devices and e-health companies in dollars invested. The top three locations for health care companies successful in raising private equity investments were southern California Southern California, also colloquially known as SoCal, is the southern portion of the U.S. state of California. Centered on the cities of Los Angeles and San Diego, Southern California is home to nearly 24 million people and is the nation's second most populated region, , the Northeast and New England New England, name applied to the region comprising six states of the NE United States—Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut. The region is thought to have been so named by Capt. . To get the story from the front lines, I called Ron Cohen cohen or kohen (Hebrew: “priest”) Jewish priest descended from Zadok (a descendant of Aaron), priest at the First Temple of Jerusalem. The biblical priesthood was hereditary and male. , MD, the CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Acorda Therapeutics and Stuart Weisman, MD, the CEO of ePhysician. Acorda Acorda Therapeutics of Hawthorne, N.Y. (www.acorda.com) developed a team of 16 leading research scientists working at various academic spinal cord injury Spinal Cord Injury Definition Spinal cord injury is damage to the spinal cord that causes loss of sensation and motor control. Description Approximately 10,000 new spinal cord injuries (SCIs) occur each year in the United States. laboratories and a network of academic spinal cord spinal cord, the part of the nervous system occupying the hollow interior (vertebral canal) of the series of vertebrae that form the spinal column, technically known as the vertebral column. rehabilitation rehabilitation: see physical therapy. centers to conduct clinical trials. The company's most exciting product, Fampridine-SR, is in phase II clinical trials Noun 1. phase II clinical trial - a clinical trial on more persons than in phase I; intended to evaluate the efficacy of a treatment for the condition it is intended to treat; possible side effects are monitored phase II and appears to improve neurological functions in spinal cord injury patients. Cohen says there are few shortcuts See Win Shortcuts. on the way to developing a successful medical startup company. Acorda raised $39.7 million in the first quarter of 2001 and before that an additional $25 million. Yet, Cohen has been developing this company since 1993. For the first few years, he "knocked on a heck of a lot of doors" to scrape together $2 million in angel investments over a two-year period to keep the struggling company's doors open. In one 18-month period, he gave 70 venture capital presentations that brought in no money whatsoever. "When you give your PowerPoint presentation that many times, eventually you get your story right," Cohen says. "In my experience, most biotech entrepreneurs--physicians or not--need to sell their ideas relentlessly in order to succeed." He sympathizes with colleagues practicing clinical medicine who feel like they're on "a treadmill with a Catch-22." Physicians who would like to try biotechnology need business experience. Yet, at the same time, they have trouble finding someone in business who will let them gain that experience. Cohen believes it's easier to transition from clinical practice to a large pharmaceutical company where you can gain business knowledge. Then, you can make the move to biotechnology. He has two suggestions for physicians eager to test the biotech waters: 1. Get involved in clinical trials in any way possible. That's one way to start to build the personal network of business contacts necessary to succeed in the business of health care. 2. Consult for venture capitalists that often need medical experts to help them evaluate health care startup companies. ePhysician ePhysician (www.ephysician.com) of Mountain View, Calif., attempts to link the clinical practice of medicine with digital tools. ePhysician uses a hand-held platform connected to the Internet that: * Is accessible any time. * Can connect to any pharmacy or data user. * Uses a unique encryption technology. * Is easy to use with intuitive, menu-driven interfaces. Doctors typically resist changing to a paperless practice because it requires expensive, stationary computers that are incompatible with physician's mobile workflow. Although some electronic patient charting and prescribing has occurred, many doctors refuse to embrace these new technologies. Weisman says ePhysician's handheld device makes physicians and other health care workers more efficient, And he raised $39 million to grow ePhysician into a larger, more successful organization. His move to establish ePhysician came after practicing gastroenterology gastroenterology Medical specialty dealing with digestion and the digestive system. In the 17th century Jan Baptista van Helmont conducted the first scientific studies in the field; William Beaumont published his own observations in 1833. for 12 years in Atherton, Calif. Weisman was intrigued by entrepreneurs and venture capitalists he met at Christmas parties and private school functions in the area. He says the wealthy community is full of people with ideas for new companies. It's not unusual to meet entrepreneurs who are on their fourth or fifth startup. Weisman discovered the keys to successful entrepreneurship are a really good idea in an area where you have expertise and the interpersonal skills "Interpersonal skills" refers to mental and communicative algorithms applied during social communications and interactions in order to reach certain effects or results. The term "interpersonal skills" is used often in business contexts to refer to the measure of a person's ability to convince venture capitalists that you have the ability to grow a company from scratch. Weisman thrives on working with people. "I have been surprised by how social being in business is. I am proactively reaching out to potential investors, employees, and collaborators. In medicine, my relationships with patients were more reactive. Being proactive really gets my creative juices flowing." Leaving clinical practice is not for every frustrated frus·trate tr.v. frus·trat·ed, frus·trat·ing, frus·trates 1. a. To prevent from accomplishing a purpose or fulfilling a desire; thwart: physician. Successful physician entrepreneurs like Cohen and Weisman are extroverts who enjoy reaching out to people and taking risks. They can forego a regular salary and benefits to pursue their passion and hopefully reap a larger financial reward in the future. Successful physician entrepreneurs decide what they want to do and then go do it without ever giving up. Kent Bottles, MD, is managing member of Proteomed Capital, LP 645 Madison Avenue Madison Avenue, celebrated street of Manhattan, borough of New York City. It runs from Madison Square (23d St.) to the Madison Bridge over the Harlem River (138th St.). In the 1940s and 50s, some of the major U.S. , 12th Floor, New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , N.Y 10022-1010. Health Care Private Equity Funding for First Quarter 2001 Type of Company Funding Average Deal Size Biotech/Pharmaceutical $664.9 million $13.9 million Medical Devices $334.5 million $15.2 million eHealth $291 million $7.8 million Totals $1.29 billion Type of Company Number of Companies Biotech/Pharmaceutical 48 Medical Devices 22 eHealth 37 Totals 107 Source: Growthink Location of Health Care Companies Funded by Venture Capitalists First Quarter 2001 SF Bay Area $91 (8) Southern Calif. $287 (15) Central US $125.8 (13) New England $168.5 (11) Northeast $215.2 (13) Southeast $88 (8) $ = Funding (in millions) (00) = Number of companies Source: Growthink |
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