A micro-seed fund set up by the MedTech SuperConnector at Imperial is providing vital investment for young medical technology companies.
Four young medical technology companies have received money from a micro-seed fund set up by the MedTech SuperConnector (MTSC), an accelerator programme run by Imperial that supports early-career researchers with entrepreneurial ambitions. The seed fund gives a further boost to teams that have passed through the MTSC programme and are seeking investment to take their ideas to the market.
This stage of development can be particularly challenging for medical technology companies. "They require significantly more money than other startups, because of the technology involved, the regulatory approval they require, and the expertise and research needed to develop a product to the point that it can start to help people," says Hiten Thakrar, head of the MTSC.
The micro-seed fund is a pilot to assess the effectiveness of providing a relatively modest investment at this crucial time for medical technology startups.
Three of the successful companies were created by early-career researchers at Imperial:
- MintNeuro, which is a neurotech company developing novel semiconductor technologies for next-generation neural implants. These are implantable devices for monitoring and eventually treating neurological conditions, such as epilepsy and Parkinson's disease;
- Nex.Q, which is commercialising digital tools that allow hospital staff to manage, isolate and supress major outbreaks of infectious disease; and,
- GO Assistive Technology, which is working on robust prosthetics for use in low- and middle-income countries, beginning with a prosthetic knee.
The fourth company, William Oak Diagnostics, originated at the University of Cambridge, and is developing a point-of-care device that collects blood and tests for numerous micronutrient deficiencies in babies, children and mothers.
Accelerating MedTech ideas
Funded by Research England, the MedTech SuperConnector was set up to explore new ways of supporting early career researchers with commercially promising innovations in medical technology. The addition of seed fund is a further experiment, intended to assess the feasibility of intervening in the early stages of fundraising.
The fund invited applications from the 95 teams that have graduated from the MTSC over the past five years, and received 15 applications. "These are very early stage medical technologies, so having 15 ventures ready to raise money is a significant milestone for us," says Mr Thakrar.
Out of the 15 applicants, eight were taken forwards for further consideration, and four selected to receive a loan of between £60,000 and £75,000. This loan converts into an investment once certain milestones have been reached, with Imperial taking shares in the company.
This is an unusual approach for the university, which does not normally give loans to companies or invest directly. "However, a convertible loan note was deemed to be the most founder-friendly approach to supporting the MTSC graduate ventures, whilst giving us valuable insight into the needs of ventures beyond the programme's involvement, which will help inform the future strategy of the MTSC," says Mr Thakrar.
Filling the funding gap
The MTSC investment is being used for a range of different purposes, depending on the technologies concerned and how close the companies are to the market.
MintNeuro's implantable devices, for example, still require significant R&D. The company has been very successful in securing grant funding to support technology development and validation. However, it often faces a funding gap since the grants are paid quarterly after expenses are incurred. Companies are expected to have their own resources or matching funding from other sources to bridge this gap, which can be challenging in the early stages.
"The more successful you are in winning grants and subsidies, the more money you need up-front," explains Dr Dorian Haci, MintNeuro's co-founder and chief executive. "So the MTSC fund has been extremely helpful, providing immediate cashflow that allows us to focus on R&D work now and be repaid later by the grant funders."
The MTSC funding is also being used for activities such as intellectual property protection and business development, which are often not covered by R&D grants. "Without all of this support, we would have been in a challenging position," he says. "This investment has relieved the financial pressure and has been instrumental in the success of the company."
Testing the product
Receiving the MTSC funding was also a matter of survival for NEX.Q. After completing the MTSC it won an Innovate UK grant to support further development, but had no further prospects in sight. "We were just completing an Innovate UK grant to build part of our product, and the MTSC money arrived just in time, allowing us to really capitalise on those results," says Dr Ashleigh Myall, the company's founder and chief executive.
The MTSC funding, along with venture capital funding that came at the same time, is being used to run pilot tests in a number of hospitals, in order to evaluate the system's performance in real-life settings. It also means that Dr Myall and another member of the team can now work full-time on NEX.Q.
"We've also employed a software developer to provide more technical support," he says, "and we're bringing in expertise to make the pilots more successful, for example building up healthcare economics data. So the funding encompasses quite a lot of different activities."
William Oak Diagnostics has also used the MTSC funding to build its team. "The biggest constraint we have at the moment is time," says Dr Alexander Patto, chief executive and co-founder of the company. "There are not enough of us to go into the lab and develop the five to six assays we want to have working in one the device. The MTSC loan has allowed us to hire a principal scientist who will help us to develop the assays we need to develop, and to optimise them."
The investment has also helped the company progress to other programmes. "We were able to get on the Founders' Accelerator in Cambridge, which started at the end of February, and I think the convertible note was one of the key factors in helping us do that," Dr Patto says.
Investing in quality
Meanwhile, GO Assistive Technology's prosthetics are much closer to the market. The company has already opened a seed funding round to speed commercialisation on its way, and the convertible loan will contribute to its final total, expected to be £500,000. But the funding is already supporting important work, such as getting a CE mark for the knee. This is a European quality standard that will help both sell the product and convince venture capital funds that it is a good investment.
"There are very few CE-marked prosthetics on these low- and middle-income country markets, so that will position us as a more serious competitor," says Dr Clément Favier, co-founder and chief executive of the company. The CE mark is also an ethical decision, offering patients in low- and middle-income countries the same quality that would be expected in Europe.
The MTSC funding is also supporting work on a marketing strategy. "If you are launching in six months, as we are, your marketing should already be under way," Dr Favier explains. "Without the MTSC loan, we would not have been able to kick off our marketing with the support of a specialist marketing agency and accelerate our path to market."
Finally, the MTSC funding testifies to the company's maturity. "When we speak to venture capital companies, they can see that we are not just fresh out of college. We already have investment in the business, and that has a positive effect on the discussion."
Looking to the future
Like everything in the MTSC programme, this seed fund is an experiment, and there are no plans at present for a further round of investment. And while the Research England funding has come to an end, the MTSC programme is continuing thanks to the support of philanthropic and corporate donors such as Orthopaedic Research UK and Novartis. Further sponsors are also being sought.
Meanwhile, the experience gained in the MTSC is now being applied to artificial intelligence with the AI SuperConnector. This programme will support early career researchers from Imperial, the University of Liverpool, the University of Leeds, and the University of York who have promising innovations to commercialise in any area of AI.
The first cohort of the AI SuperConnector opened to applications in April, with a deadline of 9 June.
