There’s a new early stage angel fund in town, and it’s on the hunt for creative, out-of-the box ideas for improving the delivery of healthcare using fewer resources.
The Alliance Healthcare Fund focuses on helping early stage business-to-business healthcare companies bring to market ideas that improve acute care, reduce spending and challenge the status quo.
In pure dollar terms, it’s a relatively small fund, but partner Joe Mayernik said the real value comes elsewhere.
“We will not look at a deal where we’re just investing dollars,” he said. “Even though our commodity is money, our value is the expertise that we can bring to these companies.”
Mayernik founded Healthcare Waste Solutions, a company that helps hospitals and doctors’ offices manage their waste disposal. It was acquired by Stericycle Inc. (NASDAQ:SRCL) for $237 million in 2011.
He started working on the fund over the summer along with Rick Ferreira, who built medical device reprocessing company Alliance Medical Corporation in the late 1990s. That company sold to Stryker for more than half a billion dollars in 2009.
Having both made businesses out of bringing hospital C-suites novel ways to save money, they paired up and began reaching out to executives in their networks over the summer. What they realized was that there was a desire to support companies with disruptive ideas trying to penetrate the healthcare market.
“Our concept was simple: raise $6 million with 60 units,” Mayernik said. “$100,000 per unit. Everyone gets one.”
Investors came on board quickly — as did two additional partners — and by October, the team had raised its $6 million.
The network they had assembled not only feeds deals to the fund but also helps evaluate and execute them. Mayernik said that investment opportunities get sent out to a few investors in the network who are knowledgeable about the vertical in which the company fits. They give their feedback but also may eventually take a larger role in the company — hosting pilots at their facilities or providing additional, side-by-side funding.
“We want an active role,” Mayernik explained. “We look at the business and in the verticals of marketing or finance, and see where we think they need help. We’re interested in partnering to bring our level of expertise to help refine the product, give them the right introductions and then work with them when they hit the bumps in the road.”
Alliance will put an interim CEO in place to put together a business plan and handle the company’s early finances.
It’s already made its first investment in a software company that creates what it calls electronic pre-physical evaluations by gathering health data required for high school and collegiate-level athletes to be cleared to participate in sports activities.
Mayernik said the fund is actively looking into about nine companies and will likely act on two of them before the end of the year. “It’s the concept, the impact, where they are and how quickly can we be of help to them.”