Texas Medical Center Steps Into the Venture Arena with $25M Fund

Xconomy Texas — 

Houston—The Texas Medical Center announced Wednesday it has created the TMC Venture Fund, a $25 million fund to support early stage biotech and life sciences companies.

The companies don’t need to have been part of the medical device or health IT cohorts in TMCx, the medical center’s accelerator, but do need to have some sort of connection to Texas: have operations in the state, be based in Houston, or be working with a TMC member institution.

“This is not our natural thing,” Bill McKeon, TMC’s president and CEO, told me in an interview. “We’re not venture capitalists. … But this shows we are a major node in the innovation community. Great things are happening in Houston.”

Money for the venture fund is coming from TMC operations, McKeon said, and an investment committee will meet twice a year to review funding applications that will be accepted on a rolling basis.

McKeon made the formal announcement at the start of TMCx’s latest demo day, which featured a class of 18 medical device startups. The companies, of which one-third are Houston-based—with others from as far away as Australia—pitched a variety of technologies, including using ultrasound to detect blood clots, a microcatheter with a camera attached, and a system to capture waste anesthesia to recycle into anesthetic that can then be sold. The group has raised a total of $26.2 million in outside funding during the four months of the program, said Erik Halvorsen, who leads the TMC Innovation Institute, which runs the accelerator.

The first recipients of the TMC Venture Fund’s investments are Alleviant (which is developing a minimally invasive device to treat congestive heart failure), Briteseed (building smart surgical tools), CNSdose (using analytics to match a person’s genetics to the proper type and dosage of antidepressants), Medable (which provides do-it-yourself platforms on Apple’s ResearchKit), and Noninvasix (developing a patient monitor to measure brain oxygenation in premature babies).

The group received a total of $2 million in funding. (Individual investments were not disclosed.) Each of the companies has been a part of TMCx, JLabs, or the TMC Biodesign Fellowship program.

“This fills a gap,” McKeon said, referring to the complaint that Texas lacks the robust venture network needed to fully support young biotech companies.

The TMC announcement comes a few weeks after Houston city and tech leaders officially kicked off Houston Exponential, which features a $40 million fund of funds designed to boost the city’s tech startup community.

McKeon said the venture fund is the latest move in a strategic effort to make Houston one of the top biotech hubs in the country. In the last two years, the TMC has created the TMC Innovation Institute—which runs the accelerator and the TMC Biodesign Fellowship—as well as recruiting AT&T to locate one of its Foundry programs on the campus. JNJ Innovation opened a JLabs outpost there in 2016 and on Thursday will launch its first-ever Center for Device Innovation, which is being led by longtime inventor and heart surgeon Billy Cohn.

McKeon said that, apart from the new fund, the TMC has already invested nearly $70 million in its effort to build up Houston’s biotech ecosystem. “We’re putting our money behind our intentions and our passions,” he said. “We’re committed to this for the long term.”