Angel
Investor Funds from Hospitals
I should have
seen it coming: angel investor funds from hospitals!
The
pharmaceutical and medical device industry is still on such a strong growth
curve, with profit over flowing, that it seems natural now that hospitals
would join the venture capital ranks with new angel investor funds targeted to
that market.
What is even more surprising is that the
initial angel investor funds from hospitals are aimed at early-stage
companies. This is precisely the arena that traditional venture
capital funds are stepping away from.
During 2005 Beth Israel Deaconess Medical
Center recruited 15 to 20 investors for a "venture philanthropy"
fund with a goal of raising $5 million to $10 million. Children's
Hospital in Boston is forming an "angel advisory group," and
Partners Healthcare Systems Inc. is organizing a fund of angel investors
at its Center for Innovative Ventures.
These efforts are new, both in the
university realm, and in the teaching hospital realm. The basis of
them is that medical research centers need some sort of mechanism to
develop promising research.
At Beth Israel Hospital, the initial push
is to license technology that has already been patented. In fact,
throughout the entire country, there are patents sitting in drawers, with
no way of being commercialized. The Beth Israel fund, named AB2B
("accelerated bench to bedside") is managed by a group of people
from different industries, including medical engineers, entrepreneurs and
research and development experts. The managers were selected for
their expertise, as well as for their investment.
Research organizations pioneered the
concept of venture funds that finance the kick-off of patented
technology. Organizations like The Burnham Institute and SRI have
been doing this for years.
The bottom line for entrepreneurs: more angel investment funds may be in need of your executive and
administrative skills, perhaps even more than your technology. The
patents sitting in universities and research organizations are sitting
there because there are not enough strong leaders to take these products
to market.
It will be very interesting to see how
the Boston experiment progresses.
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