Cleveland’s newest venture fund: NDI Healthcare to focus on neurodevices

Northeast Ohio has a new healthcare-focused venture fund that’s being led by a familiar Cleveland name.

Neurotechnology incubator NDI Medical, best known for its $42 million sale of a urinary incontinence-treating product to Medtronic in 2008, has started NDI Healthcare Fund with the help of a $2 million grant from Ohio’s Third Frontier technology acceleration program.

The launch of the fund essentially represents NDI’s transformation from an incubator to a venture firm. With the state’s money plus the recent close of a round of $6 million from private investors, the fund’s size now stands at $20 million, said Geoff Thrope, NDI’s CEO and founder.

“We’re excited about the validation from the state,” Thrope said.

NDI will continue its focus of investing in neurotechnology devices, an area of strength for Northeast Ohio’s burgeoning medical technology industry. The Cleveland area — along with cities like Raleigh, North Carolina; Chicago; and Shanghai, China — was identified last year as a “region to watch” among growing neurotechnology cluster areas by trade group the Neurotechnology Industry Organization (NIO).

Broadly speaking, neurotechnology refers to the drugs, devices and other therapeutics used to improve brain and nervous system function. Neurotechnology therapies often work by sending electrical pulses from a device implanted under the skin to stimulate a patient’s nervous system. In the case of pain applications, the pulses block pain signals from reaching the brain. Neurotechnology applications are used to treat conditions such as Alzheimer’s disease, depression, obesity, stroke, epilepsy and chronic pain.

NDI’s fund already has two portfolio companies: Checkpoint Surgical is developing a disposable product used by orthopedists and ear, nose and throat surgeons to identify nerve and muscle function during surgery so they can avoid damaging either one. SPR Therapeutics is developing a nerve-stimulating device that relieves chronic pain.

The difference between the NDI of the future and the NDI of the past is that the company will now begin investing in startups it didn’t help form. Previously, NDI put its money only into companies whose technology it developed.

Thrope declined comment on how much NDI had invested in the two companies, and the identities of any of the fund’s private investors.

The fund’s investment amounts will range from a few hundred thousand for preseed companies to multimillions for more mature technologies, Thrope said.

NDI was formed in 2002.