Hospitals, Startups

Texas Medical Center joins a growing list of health systems with venture funds

So far, the TMC Venture Fund has invested in five companies sourced from its accelerator, TMC's Biodesign program as well as JLabs@TMC. It is one of many healthcare organizations that either has their own venture fund or is a limited partner in a fund.

dollar, money, funds, cash

Texas Medical Center’s launch of the $25 million TMC Venture Fund adds the organization to a growing list of institutions that have made investing in early stage healthcare startups part of their strategy for cultivating innovation across their networks. TMC has connected the venture fund to its 3-year-old accelerator and other sources of entrepreneurship in its community.

From the perspective of Bill McKeon, Texas Medical Center CEO, the venture fund is a way of helping fulfill a broader vision of cultivating innovation across the health system. In a phone interview, he that although the TMC Accelerator is one source of the startups the fund will invest in, other investment targets will come from TMC’s Biodesign program as well as JLabs@TMC. The venture fund is intended to address some of the funding and technical gaps early stage companies must traverse if they are to become successful businesses in the longterm.

An investment committee for the fund includes representatives from TMC, MD Anderson Cancer Center, Baylor College of Medicine, Texas Children’s Hospital, JLABS @ TMC, Versalius Ventures and Houston Angel Network.

“The venture capital fund has always been part of the plan; it was the last piece,” said McKeon. “We need to help these early stage companies through operational and clinical milestones to get them to series A funding.”

The fund’s investments will span $250,000 to $1 million, McKeon said. So far, the TMC Venture Fund has invested in five companies:

Alleviant developed a minimally-invasive device to treat congestive heart failure. The Houston-based business was among 18 medical device companies to officially graduate from TMC’s medtech accelerator this week.

Briteseed is a product of Northwest University medical innovation program NUvention in Chicago. The company develops smart surgical tools such as using near-infrared spectroscopy sensors to detect the presence and diameter of blood vessels and embedding that technology into cutting devices. The goal is to prevent excessive bleeding during surgery. It graduated from a TMC Accelerator cohort for medical device businesses last year.

CNSDose produced a way to fast-track identifying and selecting the right antidepressant and dose using advanced genetic technology.

Medable develops apps that capture patient-generated data. It works across a few healthcare verticals. For pharma companies, for example, it builds medication companion apps to support data tracking for patients, according to Medable’s website.

Noninvasix developed a patient monitor with the goal of accurately and noninvasively measuring brain oxygenation in premature babies in the neonatal intensive care unit.

Although several health system venture funds have come about in recent years, some have had one for many years. Cleveland Clinic Innovations, Mayo Clinic Ventures, and Kaiser Permanente Ventures are fairly well known but others may be less so.

Ascension Ventures, a subsidiary of the country’s largest nonprofit Catholic health system, is into its fourth fund and is one of the more mature health system venture players — Ascension’s venture capital arm has been around since 2001. The group has 15 hospital and health systems as limited partners and has invested in at least 60 companies. Most recently, it invested in VisitPay, a company that wants to transform medical billing.

Inova Strategic Investments, the venture arm of Falls Church, Virginia-based Inova Health System, was formed last year at the same time as its Inova Personalized Health accelerator program and are both housed in Inova’s Center for Personalized Health.

Partners HealthCare System earlier this month raised $171 million for a second innovation fund Partners Innovation Fund II targeting seed stage investments in life science startups. Brigham and Women’s Hospital and Massachusetts General Hospital each committed $50 million to the fund. The investment strategy involves working with co-investor syndicates to reduce risk and calls for investing in biomedical sectors such as therapeutics, diagnostics, health IT and medical devices.

Spectrum Health in Grand Rapids, Michigan formed Spectrum Ventures, which has a $100 million fund to invest in healthcare companies addressing prevention and wellness, care delivery transformation, consumer engagement, and genomics.

Summation Health Ventures is a partnership of Cedars-Sinai and nonprofit integrated health system Memorial Care.  Among its portfolio companies are HealthLoop, Silversheet, Gauss Surgical and HYP3R. Although HYP3R  has created popularity tables for the hospitality industry, in the healthcare industry it aspires to help organizations figure out new opportunities for personalized patient engagement.

Photo: D3Damon, Getty Images

Shares1
Shares1