Fund Opens Door to Larger Investments in Health Care Startups
Thursday, March 9, 2017
EAST LANSING — Early-stage investment fund Quantum Medical Concepts plans to invest larger amounts in health care startups after spinning off from its founding organization and securing an additional investment partner.
The Michigan State Medical Society spun out the two-year-old fund into a stand-alone investment company after receiving a six-figure investment from Pharmacy Services Inc., the for-profit business subsidiary of the Michigan Pharmacists Association.
Having invested $550,000 across four startups since forming in late 2014, the Lansing-based Quantum Medical Concepts sought to bring on additional partners to increase its available capital and expand its expertise, said Managing Director Ben Louagie. That was best accomplished by spinning off from the Medical Society, which remains a partner.
“We didn’t want the optics in this being a physician-only fund. This is a health care fund,” Louagie said.
The “significant amount” Pharmacy Services contributed to the fund enabled Quantum Medical Concepts to raise the maximum amount it will invest in a medical startup to $250,000 from $150,000, Louagie said. The fund makes minimum investments of $50,000.
The Pharmacy Services investment brings Quantum Medical Partners additional capital to deploy as well as access to another large network of health care professionals around the state who can help vet innovations from prospective investment targets and work with entrepreneurs to build a business around their idea. In prior investments, physicians from the 15,000-member Medical Society worked with startups to refine an innovation, contribute to the product design, and provide counsel on the commercialization process and how to reach customers.
“As we’re looking to add companies to our portfolio and work with them, the seed capital and the money is nice, but they’re finding more value in the network. Originally, it was just the physician network, but as we branch out into other aspects of health care delivery, we can leverage that even further,” Louagie said. “Now we have physicians and pharmacists that companies will have access to, both on the evaluation but also helping to improve their product or business.”
Louagie hopes to attract other players in health care, perhaps hospitals and health insurers, to become involved in the capital fund, diversify its network of experts, and help to prepare startup companies for subsequent investments by angel or venture capital investors.
Quantum Medical Concepts presently has four companies in its investment portfolio. They are:
• Advanced Amputee Solutions LLC, an Ann Arbor-based startup that developed a polymer-based pad implanted during surgery to provide a cushion against a prosthetic and reduce pain and discomfort associated with below-the-knee amputations.
• TheraB Medical Products, a company started by Michigan State University students who developed the SnugLit portable phototherapy swaddling blanket that treats newborns with jaundice.
• Brio Device LLC in Ann Arbor, which is developing a device to improve how care providers intubate patients.
• Steri Device LLC, a Lansing-based medical device company developing a sterile case for mobile devices used in operating rooms.
Louagie expects Quantum Medical Concepts to complete evaluations and close on additional investments in the near future. The fund will target two investments annually, he said, noting he has plenty of investment prospects and opportunities from which to choose.
“I’ve been pleasantly surprised with both the quantity and quality of health care companies in this space,” Louagie said. “We’ve not been challenged with deal flow.”
Wanting to support innovation the industry, Pharmacy Services was already looking to branch out and become involved in some kind of “Shark Tank-type concept” when the opportunity to invest in Quantum Medical Concepts arose, said Dianne Malburg, COO of the Michigan Pharmacists Association.
As Quantum Medical Concepts sought an additional partner, the group approached the Michigan Pharmacists Association a year ago about becoming an investor. That led Pharmacy Services to make a six-figure investment in the fund, Malburg said.
“It was really an opportunity to get involved. It made more sense to partner with them and take advantage of their trials and errors,” Malburg said. “It’s not just about what a physician can do, or about what a pharmacist can do. It’s what we can do together.
“It’s about advancing the profession. In this kind of opportunity, it’s all about innovation.”
View article via MiBiz.com here.