CLEVELAND, Ohio — Neuros Medical Inc., a start-up company that is developing a neurostimulation device to block chronic pain, has landed $1.8 million from several investors during its first round of venture financing.
North Coast Angel Fund in Cleveland led the round in which Glengary LLC in Cleveland, Ohio Tech Angel Fund in Columbus, Queen City Angels First Fund III in Cincinnati and individual investors participated, the company said in a written statement.
Neuros Medical is developing a nerve-stimulating device based on technology created by Kevin Kilgore and Dr. Niloy Bhadra of Case Western Reserve University’s Biomedical Engineering Department and MetroHealth Medical Center, both in Cleveland. The “nerve block” system uses a pacemaker-sized generator and an electrode to stimulate nerves to block pain.
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Initially, the device is being developed to block residual limb pain caused by complications of amputations, as well as chronic pain after surgery and migraine pain.
Neuros Medical will use the investors’ money to kick off product development, hire a chief technology officer to lead product development and research, and complete clinical studies, which likely will begin next year, said Jon Snyder, the company’s chief executive.
It’s a challenging time to be raising money for a start-up, said Snyder, who also is a part-time associate for health care venture capital firm Arboretum Ventures in Ann Arbor, Mich. “When we started fundraising last fall, that’s when everything pretty much fell apart with the recession and the economy,” Snyder said. “A lot of venture capital firms that would look at something more early stage like this really backed off.”
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But in March, pre-seed investors JumpStart Inc. and Case Technology Ventures, both in Cleveland, committed $375,000 to Neuros Medical. Now, angel investors and groups are stepping into the gap. “They really stepped up to fill that early stage investment void and have begun to play a major role there,” Snyder said. “It’s a testament to these investors that they see the promise and realize the need to support companies like ours to help us get to the next phase.”
The investors are “very excited to support Neuros by leading this round of investment,” Claiborne R. Rankin, managing director for North Coast Angel Fund, said in a written statement. “We are impressed with the significant market opportunity and management’s vision for how to realize the potential of this exciting technology.
Glengary Managing Director Steve Haynes said, “Neuros has excellent potential to change how chronic pain is treated today, which affects millions of patients in the U.S. We are very optimistic about the company’s direction, leadership and ability to make this impact.”
Snyder pointed out that the investors involved in the Neuros transaction have support from the Ohio Third Frontier project, the $1.6 billion effort to develop the state’s economy by developing technology and their industries. Economic development leaders are expected to ask Ohio voters to renew the project in May 2010.