Dr. Brian Duncan caught the business bug as the only clinician on a team of Cleveland Clinic researchers who set out in 2004 to develop a heart-assist pump for infants with heart failure.
The Clinic wooed Duncan, a pediatric heart surgeon, and his cardiac anesthesiologist wife to Cleveland in 2001. A few years later, the National Heart, Lung and Blood Institute said it wanted to split $20 million among five teams to design pediatric heart pumps. As is the case for many technologies, the market for the pediatric devices was too small to justify commercial development.
“We were using 30-year-old technology” to keep infants alive long enough to receive heart transplants, Duncan said of extracorporeal membrane oxygenation technology, better known as ECMO. So Duncan, the primary investigator on the Clinic team, and his teammates used their $4.2 million National Institutes of Health (NIH) grant to design PediPump (pdf) — a tiny pump that can go inside or outside the heart to help the ventricles pump blood.
As administrator of the grant budget, Duncan began to think about business school. “I had never taken a business class. Not one,” Duncan said. He completed an MBA at the University of Michigan in 2008 — while doing most of the pediatric heart transplants at the Clinic. “I identified a whole new set of challenges, a whole new set of endeavors to get rolling with. It was very invigorating,” he said.
Duncan did a couple of projects with David Strand, who arrived at the Clinic in July 2007 as its chief emerging businesses officer responsible for developing new revenue streams in areas outside the institution’s core focuses of medicine and medical research. “He figured I could add value by becoming the medical director of emerging businesses,” Duncan said. Strand departed last year.
Last August, Duncan started working with Arboretum Ventures, an Ann Arbor, Michigan, venture capital firm that invests in early stage healthcare companies, as an entrepreneur in residence. In March, Duncan left the Clinic to become Ohio venture partner for Arboretum Ventures and vice president of business development for BioEnterprise, the bioscience company developer in Northeast Ohio. “In the back of my mind, I thought that being a venture investor was where I would ultimately go with my career,” said Duncan who sat down with MedCity News to talk about his dual role.
Q. So you’re both a business developer and a venture capitalist? How does that work?
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A. The two roles are incredibly complementary. At BioEnterprise, we see companies in the earliest development stages. You can help them focus on the creation of value that some day the market will find agreeable. With my clinical background, I can reality-test their medical devices and technologies for potential clinical impact and define hurdles to adoption. On the Arboretum side, some of these same companies may be investment opportunities.
BioEnterprise also gives me immediate access to this great ecosystem. The ecosystem starts with angel investors and venture developers like North Coast Angels and JumpStart, and early stage investing firms like Early Stage Partners and Arboretum. All aspects are here. And it’s an accessible community. BioEnterprise and its leader, Baiju Shah, have put a lot of the pieces together.
Q. How is your job different as venture partner for Arboretum from when you were an entrepreneur-in-residence?
A. I was strictly on the due diligence side as an entrepreneur-in-residence. Because of my background, that’s where I provide the most value. Now, I’m also figuring out how structure deals for companies. One area I hadn’t done before is overseeing companies as a director. Now, have an observer board role with Accord Biomaterials. This observation is a vital function for a venture capital firm.
Q. What do you think about Arboretum?
A. Being part of Arboretum has been wonderful for me. Jan Garfinkle, the founder, is a great investor, great operational leader. And Tim Petersen is the same. They have complementary skill sets. It’s one of the most effective partnerships I’ve ever observed.
Q. What’s it like working with Bio Enterprise?
A. Every day, I’m amazed at the level of involvement that ultimately translates into economic development for Northeast Ohio. It’s exciting stuff. It’s great for the entrepreneurs.
Q. What’s the hallmark of investing in the Midwest?
A. Entrepreneurs get a lot of attention here. They have a lot of resources to optimize their chances of success. Ohio, for one, has stepped up with the Third Frontier program. Its billions of dollars of grant money is absolutely critical to emerging biomedical companies. I don’t think companies or entrepreneurs have access to all these resources in every environment. Either it’s super competitive, like on the East or West coasts, or it doesn’t exist.
Q. How do entrepreneurs find out whether their new technologies pass the commercial “sniff test?”
A. We’ve got these incredible clinical and research powerhouses. If you wonder whether you’ve got a clinically relevant technology, talking to the folks at any of these hospitals will answer that question. These are folks who are end-users in a big way. If you can address their pain points, you probably have a broadly applicable technology.
Q. So you’re getting to know Ohio health companies that might make good investments?
A. Absolutely. There are a lot of pieces here. You jump in and get as much information as you can. Then, you jump to something else and repeat the process. You do it again and again. Eventually, it sticks. Also, there are lots of relationships to nurture in the local investment community.
