AngelMD Aims to Harness Houston Physician Braintrust for Investments
Houston—In the last few years, Houston’s biotech community has made big strides in assembling the ingredients needed to build a robust innovation ecosystem. But one factor, capital, remains in short supply, says Dan Parsley of angelMD.
That’s partly why the Seattle-based investment platform opened a Houston office last September. The idea is to help bridge the gap between healthcare-related ideas and the money those concepts need to become devices and medicines that can improve health. Parsley, a native Houstonian and longtime executive in the city, opened angelMD’s Houston office at the Texas Medical Center’s Innovation Institute last fall.
He says he has mostly spent his time so far focusing on physician investors: individuals who are already familiar with the healthcare problems at hand, who might be willing to contribute funding to experimental technologies to solve them.
“It’s going to take a while to turn older Houston families, who have traditionally always invested in energy and real estate,” says Parsley, who is angelMD’s senior vice president of corporate development. “Over time, I’ve been able to invite a lot of these family offices and high net-worth individuals [to the startup scene] and expose them to what’s going on here.”
Parsley says he believes that as these investors become more comfortable with the promise of health-related investments, they will supplement angelMD’s core base of physician-investors in Texas.
AngelMD was founded by Tobin Arthur four years ago with a seemingly straightforward proposition to physicians: Invest in what you know.
Investors on angelMD’s network are presented with company profiles each month but they may also browse through the list of startups looking for investment. In addition to money, Parsley says physician-investors also tend to provide advice and strategic introductions.
It’s the latter that gives angelMD a particular strength when it comes to biotech investing, he contends. Other venture groups “may have a handful that are advisors, but we have thousands of advisors,” he says. “They are not shy; they provide unique advice, with up-to-the-minute trends and perspectives.”
Today, angelMD has 4,200 members—half are physicians in 35 specialties—in 48 states and 20 countries that can invest in a portfolio of 850 startups. Parsley says angelMD has completed 14 syndicates that have invested in 11 companies (some startups had multiple investments). angelMD has personnel in Denver, CO, as well as its headquarters in Seattle and the Houston office.
In addition to the matchmaking-style platform AngelMD began with, the group launched its own $10 million fund in April that will invest in angelMD-approved companies. Parsley says the fund will begin investing in the next month in as many as 20 startups with individual investments of between $250,000 and $500,000.
Offering a fund in which angelMD has vetted the investment choices appeals to physicians who may not have a lot of professional experience or time to do due diligence on investments, Parsley says. “They may not have that confidence or experience to decide in which deal to invest and how much,” he adds.
So far, angelMD’s Texas investments include Curtana Pharmaceuticals, an Austin, TX-based biotech company developing treatments for brain cancers in adults and children that was founded in San Diego. (The company agreed to move to Texas in 2014 after receiving a grant from the Cancer Prevention and Research Institute of Texas.) Another is Saranas, a Houston-based medical device company.
In May, angelMD announced it was investing in Windpact, which makes a patented padding system that uses air and foam to absorb and disperse impact energy to improve the performance of helmets and other protective gear. Windpact participated in the inaugural 1st and Future startup contest held during Superbowl weekend in Houston this past February.
Going forward, Parsley says angelMD is looking to offer premium memberships for a fee—right now it’s free for startups and investors to sign up—for extra services and events the platform is developing. And another source of revenue for the group would be sponsorships by affiliated groups who want to get in front of angelMD’s affluent membership roster, he adds.
Before angelMD’s arrival, there were other physicians playing prominent roles in Texas’ venture capital scene. Joe Cunningham, and his brother Casey, are both doctors and partners in Sante Ventures, which is based in Austin. And physician Clay Heighten is a founding partner of Green Park & Golf, a venture firm based in Dallas.
There is room for growth, Parsley says. “There are 900,000 physicians in the U.S.,” he says. “We just have a very small number of that.”