People who make a living creating medical devices, like ultrasound machines or stents to prop open clogged arteries, have lived through a crummy 18 months. But that’s not discouraging a group of prominent medical device entrepreneurs from Seattle who are building the region’s first dedicated network of angel investors who have the money and expertise to bankroll new med-tech startups.
This nascent nonprofit, called Wings, is transforming from an idea into an operating entity inside the Washington Biotechnology & Biomedical Association. I heard what this is about while meeting last Friday with several key players—WBBA president Chris Rivera, Endogastric Solutions founder Stefan Kraemer, Pathway Medical founder Tom Clement, and Bob Wilcox, an entrepreneur in residence at the University of Washington. They were joined by Stephanie Barnes, a commercialization associate at WBBA who is devoting half of her work time to organizing this network.
It might not seem at first glance like the most auspicious time to invest in medical devices. The industry has been caught in a downward spiral over the past 18 months, as unemployment has risen, people have lost health insurance, and hospitals have been applying greater scrutiny than ever before to purchases of new equipment and tools. Many entrepreneurs have screamed bloody murder over a proposal to raise billions of dollars through new federal taxes on medical devices.
The Wings volunteers know that all too well. Still, they say there is money to be made in the industry, and they are filling a void by helping better connect entrepreneurs to the right people who can help them financially and operationally. Many of the people in this budding angel network are thinking hard about how devices can thrive in a more rigorous era of cost-effectiveness studies (beyond the existing requirements that devices are proven safe and effective). That’s why getting the right people engaged is so important.
“If this is going to be successful, it has to be the medical device community that drives it,” Rivera says. “If it were just the WBBA doing it, it probably wouldn’t work.”
The main activities of the Wings organization are to help screen business plans for medical device companies, help connect entrepreneurs with investors, and provide mentorship. Unlike more established networks like Alliance of Angels, it doesn’t have its own pot of capital to invest. Instead, it will host invitation-only investment forums for about 80 wealthy individuals who also happen to have expertise in medical devices, software, or some form of medical technology. It will be up to those individuals as to whether to put their own money to work in the startups.
The group plans to hold investing events four times a year, invite three or four entrepreneurs to give their best pitch, and hopefully spark investments in four to six new companies annually, Rivera says. Investors will vet companies in four main subsectors
