The Virginia Tech Foundation and Carilion Clinic has announced the formation of a $15 million VTC Innovation Fund focused on investing in life sciences and disruptive technology opportunities. The private fund will support late-seed and growth-stage companies in efforts to commercialize groundbreaking science and research as well as innovative products and solutions.
“The fund will invest in promising new companies and bring innovations to the marketplace,” said John Dooley, chief executive officer of the Virginia Tech Foundation. “It aims to help commercialize viable life sciences or accelerate general technology assets and attract corporate or venture capital. The investments may lead to real-world applications for the high-quality research coming out of Virginia Tech, Carilion Clinic, and other sources with strong connections to the Commonwealth of Virginia.”
Many of the companies will be within 150 miles of Roanoke or have a strong connection to Virginia Tech or Carilion Clinic.
“We have extremely gifted faculty and students,” said Virginia Tech President Tim Sands. “By providing opportunities for our own startup companies to take their ideas into the marketplace, we are helping fulfill our land-grant mission to transfer technology and economic opportunity to the people of Virginia and the world. Some of the most innovative ideas in science and technology are being developed at Virginia Tech, many in collaboration with Carilion Clinic.”
The VTC Innovation Fund is the latest collaborative effort in the expanding partnership between Carilion Clinic and Virginia Tech, who together in 2016 announced the expansion of the Virginia Tech Carilion Research Institute and the creation of the Virginia Tech Carilion Health Sciences and Technology Campus in the Roanoke Innovation Corridor.
“We know how important our efforts are to our region’s future and we take that responsibility very seriously,” said Carilion Clinic President and Chief Executive Officer Nancy Howell Agee. “As we move forward, we want to make sure infrastructure is in place to make game-changing new achievements in health, medicine, and technology.”
The VTC Innovation Fund is managed by Middleland Capital, a private investment firm based in Washington, D.C., that focuses on venture-stage opportunities across multiple sectors.
Dooley said the fund’s objectives are complemented by the firm’s familiarity with life sciences. The foundation and Carilion Clinic worked with Middleland Capital Managing Director Scott Horner, who has extensive venture capital investing experience, to set up the fund.
Horner has been based in the Roanoke region since 2008 and has worked closely with various regional investing initiatives over the past several years, including the Innovation Blueprint, a strategic plan to build the innovation economy within the Roanoke and New River valleys.
“The region is developing an impressive portfolio of startup opportunities in life sciences and technology,” Horner said. “We want to leverage existing intellectual assets that are overlooked and take advantage of a robust syndication network to drive co-investment opportunities. We are looking to collaborate with investors throughout the region, but also use our network to access capital outside the Mid-Atlantic.”
Outside investors may include venture capital groups, strategic investors, and angel investor networks.
To support the fund, Middleland hired James Ramey as a principal and fund manager. He will serve as the primary interface to the regional entrepreneurial ecosystem and lead investment activities.
Before joining the VTC Innovation Fund, Ramey was a vice president at Tyton Partners, a leading merger and acquisitions advisory and strategy consulting firm within the education and global knowledge sectors.
In addition to practicing law at a mid-sized civil firm, Ramey’s prior experience includes a number of years as an associate and senior associate at a regional venture capital fund, Invest Nebraska. He will be based in downtown Roanoke.
“The VTC Innovation Fund is well-timed and well-positioned to take advantage of a large, fast-growing, and cutting-edge knowledge base in the region,” Ramey said. “We are excited to partner with high-caliber management teams as well as investors around the country to commercialize innovative technologies, accelerate growth, and build long-term value from a return perspective, as well as drive systemic entrepreneurial growth throughout the region.”
Growth-stage companies in a university and research environment often depend on sources of capital such as the VTC Innovation Fund to drive proven ideas from the research bench to the marketplace, according to Michael J. Friedlander, Virginia Tech’s vice president for health sciences and technology and executive director of the Virginia Tech Carilion Research Institute.
“Intellectual property is developed across Virginia Tech and in collaborative research partnerships with Carilion Clinic, such as those that occur at the VTCRI, some of which have enormous potential for commercialization in the health sciences space to help people — if it receives the right support,” Friedlander said. “Investors are needed to take the work being done in the lab to the market because you can’t use research grant money or university money for those purposes. It takes private investment capital to take an idea to the next stage and build a virtuous cycle of discovery, innovation, translation, application, and commercialization.”
The fund has a regional focus, an intended consequence of which is to expand the growing entrepreneurial ecosystem in the region, which is already being spurred by Virginia Tech or Carilion Clinic technologies.
However, the crucial element is that the companies must have strong potential to provide substantial investment returns.
“We are investing in medical technology, with the top bullet point of delivering cutting-edge products that can help people while also delivering a return on investment,” Horner said. “While the majority of the fund will focus on life science opportunities, we also have the capacity to look at other disruptive opportunities that don’t necessarily fall under that definition.”
About 60 percent of the fund will be devoted to investments within health and medical sciences — including biopharmaceuticals, pharmaceuticals, medical technology and devices, and biotechnology.
Additional investments will be made in disruptive technologies, information technology, technology-enabled services, value-added agriculture, engineering, advanced materials, and advanced chemical companies.