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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