A Coralville-based medical software start-up born out of the University of Iowa has attracted $2.5 million in funding.

Vida Diagnostics said Wednesday that it has received $2 million in funding from Next Level Ventures, a Des Moines venture capital firm created to invest in Iowa companies. That investment comes on top of a $500,000 loan Vida received from the state.

Susan Woods, Vida’s president and CEO, said the company will use the $2.5 million to expand its sales, improve its technology and hire more people. Vida employs 18 people, Woods said.

Four University of Iowa professors initially started Vida. The start-up is working on software that takes data from medical images to find more specific diagnoses for pulmonary disease.

“We have a lot of patients with pulmonary disease that don’t always react the same to different treatments,” Woods said. “We are trying to target the right treatment for the right time.”

Woods said the investment from Next Level Ventures and the state is significant for a start-up trying to stay in Iowa.

“Without this kind of access to funding, a company like Vida is forced with the question of whether or not it leaves the state,” Woods said.

Vida is the third Iowa start-up Next Level Ventures has invested in since it started in February. It is the only fund in the state whose investors can receive state tax credits for their investments.

Craig Ibsen, Next Level’s managing principal, said Vida is a good investment because it has had good management and revenue and is gaining ground in its market.

“The magical formula to investing is you have traction and you have the right team,” Ibsen said. “Those two ingredients are essential in a successful investment.”

Next Level Ventures first gave $4 million to BirdDog, a Des Moines-based recruitment firm. Next Level Ventures has also invested $2.5 million in Igor, the Johnston-based smart lighting company.

via Coralville start-up VIDA attracts $2.5M in funding.