Virginia Tech Foundation, Carilion Clinic again partner to form new venture capital fund
December 12, 2018
Nearly two years after the creation of the VTC Innovation Fund, the Virginia Tech Foundation and Carilion Clinic have again partnered to create the VTC Seed Fund, a $7 million venture capital fund, to facilitate additional pathways for innovative products and technologies to be commercialized.
Unlike the VTC Innovation Fund, which provides larger investments for established growth-stage companies, the VTC Seed Fund is intended to provide smaller investments ranging from $100,000 to $150,000 to earlier-stage, higher risk companies.
“By investing in promising early-stage companies and entrepreneurs, the new VTC Seed Fund will create pathways for new technologies to be commercialized and facilitate the continued development of the regional entrepreneurial ecosystem,” said John Dooley, chief executive officer of the Virginia Tech Foundation. “It will also increase the standing of Virginia Tech, Carilion, and the Roanoke/Blacksburg region as an entrepreneurial and innovative place to do business.”
The VTC Seed Fund expects to further increase engagement and mentorship with Virginia Tech alumni, Carilion faculty/employees, regional entrepreneurs, and high-net-worth individuals. It also aims to spur the interest of local angel investors in the region through the direct cooperation with this critical early-stage investment resource.
Ideal VTC Seed Fund investments will be post-proof-of-concept; however, these opportunities will not yet have significant market traction. The VTC Seed Fund will focus on investment opportunities within 75 miles of the greater Roanoke and New River valleys or companies outside the region that have ties to Virginia Tech or Carilion Clinic.
“The VTC Seed Fund’s sweet spot will be early-stage companies who have clear proof of concept in large markets with significant unmet needs,” said James Ramey, managing partner of the VTC Seed Fund and principal and fund manager of the VTC Innovation Fund. “The VTC Seed Fund will have a much higher risk appetite than the VTC Innovation Fund, and although we will only invest in high-growth opportunities, we are also explicitly aiming to directly grow the regional and Virginia Tech and Carilion Clinic entrepreneurial ecosystems by making smart early-stage investments.”
The VTC Seed Fund will build on and expand the early success of the VTC Innovation Fund.
Since launching approximately two years ago, the VTC Innovation Fund has been active locally as both an investor and as a sounding board/mentor for earlier-stage regional companies. The VTC Innovation Fund has built a strong portfolio of four companies, all of which have meaningful ties to the region and/or Virginia Tech or Carilion Clinic.
Importantly, all the VTC Innovation Fund’s investment syndicates have included significant capital from institutional investors based outside Virginia.
“By syndicating all our investments, we have brought millions of dollars of capital to the greater Virginia Tech and Carilion ecosystem and highlighted the innovation coming out of this region,” said Ramey. “Our efforts have helped put our ecosystem ‘on the radar’ of investors across the country and around the world.”
“We knew it was important to find ways to fund entrepreneurship in our region,” offered Nancy Howell Agee, president and chief executive officer for Carilion Clinic. “The early successes of the VTC Innovation Fund encouraged us to invest again, and we have faith that the VTC Seed Fund will do its part to help entrepreneurs in our region.”
“We have extraordinarily talented faculty and students already contributing to the entrepreneurial ecosystem in our region, and our alumni often want to stay in the region,” said Virginia Tech President Tim Sands. “By providing additional opportunities for startup companies to take their ideas into the marketplace, we are helping fulfill our land-grant mission to transfer technology and economic opportunity to the people of Virginia and the world.”
VTC Innovation Fund success
The VTC Innovation Fund’s first publicly announced investment, Tear Solutions, is a novel therapeutic targeting Sjogren’s disease, an orphan indication. The fund co-led Tear Solutions’ Series B round alongside global funds such as Russia-based PharmStandard Ventures and Japanese pharma leader Santen Ventures. Tear Solutions is now conducting human clinical trials at Roanoke-based Vistar Eye Center, a Carilion Clinic partner.
The VTC Innovation Fund has also invested in two Virginia Tech alumni-led companies in the food and agriculture space.
Growers Inc., an emerging leader in the precision agriculture space, is revolutionizing soil data analysis and providing recommendations to farmers that increase yields and profits. Growers works closely with several farmers in Southwest Virginia and is engaged with Virginia Tech’s College of Agriculture and Life Sciences. The VTC Innovation Fund’s co-investors included Lewis & Clark Ventures, a St. Louis-based food and agriculture venture fund.
Shenandoah Valley Organic is another alumni-led VTC Innovation Fund portfolio company. The fund invested alongside S2G Ventures, a national leader in the food and agriculture sector, as well as several Virginia angel investors. Shenandoah Valley Organic provides and processes high-quality organic poultry raised to some of the industry’s highest levels of animal welfare. In addition, Shenandoah Valley Organic is addressing farmer well-being with its unique farmer-owned business model, and the company recently launched its own consumer brand, Farmer Focus, which allows consumers to know where their food comes from by “meeting their farmer” through a unique electronic tracking system called Farm I.D.
The VTC Innovation Fund invested alongside New Science Ventures and AV8 Ventures in PlanetIQ, a Virginia Tech alumni-led and founded company in the weather satellite space. PlanetIQ’s satellites aim to provide high-volume and high-quality weather data through cutting-edge radio occultation technology. Additionally, PlanetIQ is in the process of sponsoring a significant research collaboration with the Virginia Tech Department of Aerospace and Ocean Engineering.
“The VTC Innovation Fund has built a robust and diversified venture portfolio over the last two years. We are executing on our model of partnering with top-tier management teams building innovative solutions for large problems,” said Ramey. “We have successfully syndicated all our investments with globally recognized leaders in each vertical, and importantly, all our investments have meaningful connections to Virginia Tech, Carilion, and/or the region.”
In addition to the VTC Innovation Fund’s investment activities, the fund’s management team is active in the regional and Virginia Tech and Carilion Clinic entrepreneurial ecosystem.
VTC Innovation Fund management regularly judges pitch contests, gives lectures about raising capital, and attends ecosystem and Mid-Atlantic region startup events, conferences, and networking gatherings and helps companies in nonmonetary ways, such as providing strategic advice, pitch feedback and investor or business development introductions.
“While we can’t invest in every company, we pride ourselves on giving helpful feedback and guidance to local companies that are early in their phase of growth,” said Ramey.
The VTC Seed Fund and VTC Innovation Fund are among the many collaborative efforts in the growing partnership between Carilion Clinic and Virginia Tech, which together in 2016 announced the expansion of the Virginia Tech Carilion Research Institute (now renamed the Fralin Biomedical Research Institute at VTC) and the creation of the Virginia Tech Carilion Health Science and Technology Campus in the Roanoke Innovation Corridor.
“We’ve already seen so many innovative ideas in science and technology emerge from the Virginia Tech Carilion partnership,” said Carilion Clinic Executive Vice President and Chief Financial Officer Don Halliwill. “We know these are important to the region and the commonwealth, and this new fund further strengthens our investment in our community."