In the last 25 years, the engineers and designers at Insight Product Development have come up with a portable CT scanner and a wireless cardiac implant monitor. For the next generation of breakthrough medical devices, the Chicago design shop is turning to the area’s research universities and entrepreneurs.
Insight is opening an accelerator program called Insight Labs for fledging medical device-makers, hoping to help young companies get from a concept to a market-ready product.
The firm is asking technology transfer officials at Northwestern University, the University of Chicago and the University of Illinois at Chicago to suggest candidates from their schools for an 18-month residency at Insight’s Ravenswood office. The five selected companies will collaborate with Insight, whose product development services are geared toward Fortune 500 companies and would normally be out of a startup’s financial reach.
Insight Labs companies need a feasible concept, or proof that the technology works, said Steve McPhilliamy, an Insight partner who is the accelerator’s executive director.
“It might be as ugly as sin, but (the) technology proves the intent of the device,” he said.
Like other accelerators that have popped up in recent years, Insight Labs will connect its entrepreneurs with mentorship and financial resources in exchange for a stake in the companies. But instead of giving startups capital in exchange for equity, as most programs do, Insight will offer a 20 percent discount on its services. It plans to take a 6 percent stake in the portfolio companies. McPhilliamy said the firm arrived at this model after looking at other accelerators, which typically run three-month programs and take a stake of 6 to 10 percent.
About 70 percent of Insight’s business is in medical devices, but its portfolio also includes items that are familiar to consumers, including the BigBelly solar-powered garbage compactors seen around the city and headsets worn by NFL coaches. The firm has expertise in ergonomics and testing how people use products in the real world. It also has experience navigating Food and Drug Administration regulations, which can be a confusing and expensive hurdle for makers of medical devices.
“It’s not enough to have a really cool technology that works,” said Maryam Saleh, invention manager at Northwestern University’s Innovation and New Ventures Office. “You have to design it in a device that’s easy to use. And whereas many academics may be experts at developing a high-tech device that has the right function, they’re not as familiar with the ergonomics of handling a device.”
Insight Labs’ charter startup is BriteSeed, a company founded by Northwestern students that builds infrared imaging technology into surgical tools. The light detects blood vessels, helping surgeons prevent accidental cuts into arteries. BriteSeed won the startup pitch competition at last year’s Techweek Chicago conference and is closing on a seed investment round.
Investors’ “eyes are going to pop out of their heads when they see (BriteSeed’s technology) is viable,” McPhilliamy said. “So many folks we’ve worked with would love to integrate it into their tools.”
For BriteSeed, striking a technology licensing agreement with a device-maker or getting acquired are potential exit scenarios when the company completes the Insight Labs program.
“A minimum viable product could get us a licensing deal,” said BriteSeed co-founder and Chief Executive Paul Fehrenbacher, who has delayed his graduation from Northwestern’s Feinberg School of Medicine to work on his business venture.
The launch of Insight Labs comes during a period of heightened entrepreneurial activity at local universities, which want to see more research transformed into successful business ventures.
“We’re seeing a lot of accelerator models starting to come up, which is exciting because we’re seeing an opportunity for ideas coming out of universities to be successful,” said Nancy Sullivan, director of the Office of Technology Management at UIC and interim CEO of IllinoisVentures, an early-stage technology investment firm launched by the University of Illinois.
The University of Illinois is building a health technology incubator in the Illinois Medical District that will open in May or June and “create sustainable startups out of our intellectual property,” Sullivan said. Companies that come out of the incubator could then move on to a program like Insight Labs.
Meanwhile, the University of Chicago has set aside money for a proof-of-concept fund to help projects cross what the industry calls the “valley of death” — the financing gap between research and commercialization. In the last two years, U. of C. has spent just over $1 million on 19 projects that fall in this category. Saleh said Northwestern is raising funds for a similar initiative.
Insight Labs should provide a good home for companies that come out of universities and are ready for the next step, said Alan Thomas, director of the Office of Technology and Intellectual Property at U. of C.
“When we get that cocktail right — when we can pull together the idea, the market opportunity, the entrepreneur and wrap a mentoring team around them, maybe give them some proof-of-concept funding, then they need a place to be,” Thomas said. “There’s a shortage around town of places where people can be together and share experience.”