Restore Medical Solutions, one of the original startups that participated in the inaugural ZeroTo510 cohort, will proceed to a full round of venture capital funding led by Innova Memphis and MB Venture Partners, program organizers announced Friday.
Financial terms were not released, but the multimillion dollar deal may include additional investors, said Jan Bouten, partner at Innova and ZeroTo510 adviser. During the recent ZeroTo510 Investor Day held at Memphis Bioworks Foundation, Restore Medical representatives sought initial investments of $2.5 million.
The move toward venture capital funding signaled that the Restore Medical Solutions, which designed a modular tray and method for reprocessing sterile surgical instruments and already has a customer base, is at a mature market-entry position. The company is awaiting clearance for its product from the U.S. Food and Drug Administration, which should take about 90 days. During that time the company will not be able to sell its product, but may continue medical trials with participating hospitals.
In addition to Restore Medical’s venture capital funding, four other ZeroTo510 startups will advance to the second phase of the program and each will get an additional $100,000 in funding. That’s on top of the $50,000 seed capital initially awarded to each of six startups in the program.
Those chosen are: BioNanovations, which developed a device that uses bionanotechnology for rapid diagnosis of bacterial infections; EcoSurge, which developed an environmentally friendly alternative to traditional foam patient positioners used in surgeries; Nanophthalmics, which developed a surgical device to more effectively treat corneal abrasions; and Urova Medical, which developed a minimally invasive treatment to address feminine stress urinary incontinence.
“In each case, we believe these four companies have shown the progress, the growth and proof-of-concept that were expected to move to the next phase of funding,” said Allan Daisley, director of innovation and sustainability initiatives for Memphis Bioworks Foundation and program director for ZeroTo510. “It is extremely rewarding to us as an organization, because the funding of four companies exceeds what we considered to be a measure of success when this program was launched.”
Added Bouten, “For each of these companies, this next phase in their development is a major accomplishment, but the vast stretch of the road to success still lies ahead. We expect each of the four companies receiving the additional $100,000 investment to use that money to further prove a concept or reach a level where they are ready to really begin building a business. That is the ultimate measure of success, a viable business with employees and a strong future, growing in Memphis and making a lasting impact.”
The $100,000 cash infusions will allow the startups to refine their business models, work on technology and build out their teams, Daisley said. There is no set timetable for how long each startup may remain at the business accelerator that’s located at Memphis Bioworks, but Friday’s awards mark the end of ZeroTo510 funding for the original participants.
“How long they’ll stay depends a lot on how quickly they use up their funding, but at that point it’s sort of a situation where they need to leave the nest and learn to fly on their own,” Bouten said. “They’ll need to start looking for other investors, but they’re actually probably doing that already.”
The only participant not selected for additional funding was Handminder, which developed a portable hand rehabilitation device for stroke victims. The startup’s device offered great promise, ZeroTo510 leaders said, but will benefit from further research and incubation.
ZeroTo510, under the auspices of the Greater Memphis Accelerator Consortium, is a startup accelerator program focused on medical device research and manufacturing. The goal of the three-month program is to guide entrepreneurs through the process of achieving the Food and Drug Administration’s 510(k) premarket notification filing.
Plans are now under way to offer the second season of the program, which will kick off next spring.
“We’re looking at what worked well this time and what we can do better,” Daisley said. “We expect to get our next round of participants after the first quarter of 2013.”
For more information, visit zeroto510.com.