New VC funds looking to health tech for opportunities

Two of the state’s newest venture capital funds are looking for big opportunities in health care technology.

The Wisconsin Technology Council recently hosted a panel discussion spotlighting these funds. Panelists included George Arida, managing director for 30Ventures, based at University Research Park in Madison; and Mike Rodgers, who heads Advocate Aurora Health’s new venture, InvestMKE.

At yesterday’s event, Tech Council President Tom Still pointed out that Wisconsin’s investment landscape is dominated by health care and information technology. According to the council’s recently released Wisconsin Portfolio, nearly 80 percent of all dollars invested in the state last year went into these two categories.

30Ventures closed on its first deal in May, and currently has a pipeline of about a dozen “high-priority deals” targeted for upcoming investment, Arida said. He said 30Ventures will invest largely in series A and B rounds, and is focused on promising ideas in medical diagnostics, instruments and devices, as well as industrial water and chemistry applications.

Arida is looking to raise $15 million for the fund, according to a document recently filed with the Securities and Exchange Commission. Arida noted 30Ventures will be making investments between $250,000 and $1 million.

Invest MKE is slightly smaller, with about $5 million to put into startups over the next five years, and co-invests alongside another Milwaukee fund called Cream City. The fund can make investments of up to $1 million, Rodgers said.

“InvestMKE is really looking for opportunities to bring startups closer to the source of the problems,” Rodgers said, adding the fund is more likely to make seed or series A investments. “We’re looking for digital health companies that are interested in co-locating with us in our facilities.”

It’s no secret that Madison is a focal point both for development and investment in medical technology and biotech. But, Arida points out, “there are really some interesting things going on in Milwaukee as well.”

That first deal for 30Ventures was with a Milwaukee company called TAI Diagnostics. And two of the next four deals the fund is considering are also in Milwaukee.

In the sectors of diagnostics, tools and medtech, Arida notes there’s been a nine-fold increase in early stage seed deals over the past decade or so in the Midwest region. That’s been accompanied by a two-fold increase in series A, B and C follow-on deals, he says.

“It really occurred to us that there’s been such robust angel and incubator and accelerator activity,” he said. “The angel groups are much more organized, and really doing deals that are very financible… very different than when I came here 18 years ago.”

While 30Ventures is looking across the Midwest for investment options, InvestMKE will be working to develop ideas internally.

“The idea is that we’re actually creating new health ventures ourselves and investing in them,” Rodgers said. He adds the fund is most interested in entrepreneurs working in digital health, artificial intelligence and big data.  

Because InvestMKE is part of the greater Advocate Aurora Health system, funded startups will benefit from the system’s network of physicians and other real-world users of medical devices and technology, Rodgers said.

“We will give you access directly to the problems, and give you the live feedback within minutes or hours, so we can actually produce something that the consumer wants, physician wants, and obviously the investor payback that we need,” he said.

Arida says the deal flow in health care diagnostics and tools is “really strong,” and argues these industries are more open to adoption than others, like water technology.

“We’re looking for things that can meaningfully impact health care at a clinical level, and in order to do that, things have to be used and adopted,” Arida said. “You really have to dig into the health care economics and understand reimbursement… It’s really about lowering costs and improving quality of care simultaneously — not just the latter without the former.”

–By Alex Moe