A new $1 million seed fund will help commercialize research at the University of Wisconsin School of Medicine and Public Health, with an initial focus on disease markers and treatments for Alzheimer’s.
The fund is backed by the nonprofit Wisconsin Technology Innovation Initiative (Wi2) and the Wisconsin Economic Development Corp. (WEDC), which provided a matching $500,000 grant through its Capital Catalyst program. Wi2 intends to raise an additional $1.5 million for the fund this year.
Wi2 was founded in 2012 to help bring technology spawned at research institutions, primarily UW-Madison, to market. The seed fund is the group’s first major initiative, said Kurt Zimmerman, Wi2 CFO and director of UW-Madison’s biotechnology master’s program.
The Wi2 seed fund will make investments ranging from $50,000 to around $400,000 in the form of equity, debt financing, or a grant, said Lisa Johnson, WEDC vice president of entrepreneurship and innovation. Any financial returns from portfolio companies’ exits or debt payments will be ploughed back into the seed fund, she added.
Johnson recognizes that these seed investments in the life sciences industry constitute a fraction of what a medtech company needs to get to market, a process that can take more than a decade.
But it’s a start, she said, and the seed fund could help Wisconsin secure more federal research grants as agencies like the National Institutes of Health increasingly link their awards to market potential. The premise underlying a seed fund focused on the life sciences also dovetails with efforts by Steve Blank and others to apply the principles of “lean startups” to biotech companies.
“We just are recognizing that we have to get this money in at the earliest stages,” Johnson said, speaking from San Diego, where she’s part of Wisconsin’s delegation at the BIO International Convention. “Certainly as you get further along the value chain, you need large sums of money in drug discovery. It continues to pose a problem in this nation. But right now, where we can step in and the federal government [can help] with their grants, we can take things at the earliest stages where” private investors are unlikely to invest.
The new fund, which will start taking applications this summer, will likely invest initially in companies spurred by the research at UW-Madison’s Wisconsin Alzheimer’s Institute. The institute says its Wisconsin Registry for Alzheimer’s Prevention, which has been tracking more than 1,500 study participants since the project’s enrollment began in 2001, is the nation’s first and largest Alzheimer’s research program that follows participants over a period of years. It says it has amassed the world’s largest Alzheimer’s data set through its study of middle-aged adults whose parents suffer from the disease, according to a press release. Researchers are using that data to come up with treatments to delay the onset of Alzheimer’s or stymie its progression.
Zimmerman said the fund chose to focus on Alzheimer’s first because of the “richness” of the institute’s data, the research’s potential, and the increasing number of people affected by the debilitating and deadly disease.
“Our hope is this will provide a model of moving across the spectrum of diseases, including cancer and diabetes,” Zimmerman said of the Wi2 fund’s focus.
Wi2 joins a growing number of Wisconsin seed funds and accelerators announced in recent months. WEDC is backing Bridge to Cures, a similar initiative in the Milwaukee area, as well as the $2 million Ideadvance seed fund, which supports startups at UW campuses statewide. The Madworks Coworking at UW Campus accelerator launched this month, and UW-Madison created Discovery to Product (D2P) to help ferry campus ideas to the point of licensing or spinout.
Zimmerman believes Wi2’s fund will complement those initiatives, for example, by investing in a company that has graduated from D2P and taking it to the next level.
“When you surround [entrepreneurs] with resources, you’re going to give them the potential to be more successful,” Johnson said. “We’re trying to show that it can happen here.”
