What One South Carolina Venture Group Looks for in Young Medtech Companies
VentureSouth Managing Director Matt Dunbar on the state of the southeast medtech ecosystem and why investors should make time to attend the annual SEMDA Medtech Conference
From his official bio: Matt Dunbar is Managing Director of VentureSouth. As the founding Managing Director of the Upstate Carolina Angel Network (UCAN), Matt developed the operations that became the template for VentureSouth angel groups, and under his leadership, UCAN has been named a Top 10 Angel Group in the US.
Matt is serving his second term on the Board of Directors of the Angel Capital Association, and is also a Director of Entegra Financial Corp (ENFC). He was previously a management consultant with the Boston Consulting Group and an engineer with Eastman Chemical Company. Matt holds an MBA and Masters in Education from Stanford and a BS Chemical Engineering from Clemson.
Q: What is your investment “sweet spot?”
A: Life science and medtech startups represent roughly one-third of our portfolio. We generally focus on southeast-based companies at the go-to-market stage with some evidence of market traction – but in the life sciences, we will occasionally invest in pre-approval/pre-revenue device or drug development opportunities. Our group can invest $250K – $800K, and we occasionally participate with co-investors in rounds that can be as large as $2 million.
Q: What makes a highly investable young medtech company?
A: Teams with strong backgrounds and track records – with a very clear handle on the market opportunity – tend to get our attention.
We also look for capital efficient businesses with well-developed, relatively clear 2-5 year exit strategies (since we are angel investors rather than institutional investors, we tend to prefer earlier exits). We have made a few investments with a thesis built around achieving regulatory approval in 12-18 months, then quickly moving into strategic partnerships/acquisitions to build out distribution with the depth of the partner’s resources rather than relying on investors.
Q: What are the most common mistakes young medtech innovators make on their path to commercialization?
A: Underestimating the time and cost required to reach planned approvals or milestones,, and overestimating the speed with which health care institutions will adopt a new process or technology.
Q: How has the southeast matured in recent years as a medtech innovation ecosystem?
A: My perception is that the region has steadily grown in terms of activity and visibility. There are more resources available via SEMDA, SCBIO, academic institutions and innovative health care providers that are creating a greater density of talent, technologies and supporting resources than I recall even a few years ago.
Q: What’s still lacking?
A: We all want to see more capital, but capital is always available for strong teams and opportunities. I think we need to continue developing the critical mass of management talent and technology development/transfer that will ultimately lead to strong outcomes and draw in more capital and…which turns the flywheel in the ecosystem to accelerate more innovation and successful startups.
Q: How does the SEMDA annual conference demonstrate the greatest value for you?
A: I attended my first SEMDA Medtech Conference in 2009, and I would encourage other investors to attend for two reasons. First: investors can “surface” promising companies they might not have discovered yet. Second, it is always extremely valuable to connect with people in the ecosystem: investors, resource providers, entrepreneurs and strategics to learn more about trends, best practices, policy changes and new opportunities. There are more than enough smart people sharing their insights at the annual SEMDA Medtech Conference to legitimize the associated investment.
Q: With whom would you like most like to connect:
A: I want to connect with the best entrepreneur out there with a company I don’t know yet. I also want to connect with larger strategic corporate development representatives to gain their latest perspectives on potential acquisitions, the technologies behind them, how they think about their own portfolio and their approach to M&A.
Investors, are you ready to find your next medtech investment? Or are you a young medtech company seeking funding and wondering who is going to pay for your innovation? SEMDA 2018 is the place for you.