Akron hopes to lure another group of biomedical and technology-related companies to the city with $1.75 million in new private equity funds.
Akron BioInvestments Fund I, established in 2012, helped build 13 businesses and products that concentrate on everything from surgical glue and image-guided surgery to online therapy for children with special needs and DNA analysis software.
Managers of Akron BioInvestments Fund II will start accepting applications June 1.
“It is exciting for our city to be able to offer the necessary private equity to support and invest in the creation and development of innovative, high-technology based, biomedical-related companies in Akron,” Mayor Dan Horrigan said in a statement announcing the new funds.
The bioinvestment funds are a city initiative, a for-profit arm of the city’s Akron Development Corp. No city money was used in the first fund, $1.5 million bankrolled by five groups, including Akron’s FirstEnergy Corp. and Ohio insurance giant Medical Mutual.
Bob Anthony, director of entrepreneurial services-life sciences for the city’sBiomedical Corridor, said the five initial investors are also a part of the second fund, along with 10 new investors.
He declined to name the new investors, unsure if they all wanted to be publicly identified. But the city said the $1.75 million is coming from a mix of public and private entities involving business, government, academic and health care communities.
Anthony said the funds are important to developing Akron, but it’s only a part of what the city is offering to lure new business here.
“It’s never just about the money. If you don’t have it, you’re behind the eight ball from the start,” he said. “But it’s the ecosystem — the networking, the collaboration that’s attracting business.”
Apto Orthopaedics might not exist without $25,000 from the first Akron BioInvestments Fund, said Dr. Todd Ritzman, an Akron Children’s Hospital doctor who helped develop a device to treat children with severe scoliosis without requiring multiple operations. The device uses a magnet outside the body to adjust metal screws inside the body after an initial surgery.
“It was vital. It first allowed us to build a prototype to prove our concept,” he said. Once that happened, larger federal and state grants followed.
This week, Ritzman said he learned their life-size prototype in tests exceeded the strength needed. The device, he said, will soon be tested on animals at Case Western Reserve University, the next step toward getting it approved for use in humans.
Anthony said the first company to receive money from Akron BioInvestments Fund I — 7signal, which monitors Wi-Fi performance at businesses that depend on it to do their work — is probably the fund’s biggest success so far because it’s had longer to grow.
When 7signal received $250,000 from the fund, it had three employees and one customer, Akron Children’s Hospital, said Eric Camulli, vice president of marketing and product management.
Now it has nearly 20 employees (most in Akron), and more than 50 customers across the U.S. and Europe, he said, adding that the company is just beginning to grow by targeting large hospitals, large universities and Fortune 500 companies.
As with the orthopedic company, once 7signal secured money from Akron’s fund, other money flowed.
New York, Boston and San Francisco have been so successful in attracting new business because they have access to capital, he said.
“But startups should look at Northeast Ohio to grow business, too,” Camulli said. “Not only do we have talented people and universities, but we have access to capital, too.”
Akron BioInvestments Fund II is offering up to $25,000 for product development for companies “at the late incubation stage.” Recipients must stay in Akron for a defined time, often three years.
Up to $225,000 is available for companies a little further along in the demonstration stage or nearing the market with products. Companies must commit to Akron for a longer time, often seven years. They also must create a specified number of new jobs, often 10 jobs over three years.