Benefits to Entrepreneurs
Steve Schiefen, HanGenix Founder and CEO, gives an overview of his experiences as an entrepreneur and the CEO of one of the first companies spun out of the Accelerator program.
Summary: HanGenix is a company that was spun out of the CIMIT Accelerator Program last fall. The company produces products designed to reduce hospital-acquired infections caused by poor hand hygiene. Its products have a large potential market because one hundred thousand deaths per year are caused by hospital-acquired infections. The products themselves consist of portable transmitters that send reminders about hand hygiene to hospital staff members. Through the Accelerator Program, the engineers and business leaders at HanGenix were able to make connections with clinicians, who helped them identify what software would go best with the company’s existing hardware. HanGenix installed a system for its first customer in August and has its next three customers lined up. After being spun out of the Accelerator Program, the company has continued its product development. The business plan that it crafted with the help of the Accelerator Program has made it easier for the company to attract additional investment because risks to investors have been reduced.
Benefits to Academic Hospitals
Frances Toneguzzo, PhD MGH Research & Licensing Director and Partners Research Ventures & Licensing Director, gives an overview of the Accelerator program from the perspective of the licensing offices of hospitals who have produced the base IP.
Summary: Today’s economic environment is not very hospitable to early-stage medical device companies. Investors have become highly risk averse, and federal funding for academic research is tight. Sources of funding such as the CIMIT Accelerator Program are important because they help bridge funding gaps for research and development. Most investors are only interested in products or companies that have demonstrated technical and clinical feasibility. Shortening a product’s time to market is of the utmost importance to investors, who seek to maximize their rates of return. Academic researchers hoping to commercialize a new medical device need to work in a mode that resembles commercial product development more than academic research. Concrete objectives help projects stay on schedule. Determining who is accountable for making sure that deadlines are met remains a complicated issue.
Benefits to Investors
Joshua Tolkoff, Ironwood Capital Managing Director, discusses the Accelerator from the perspective of a potential investor in the companies that are spun out of the Accelerator program.
Summary: The main goal of venture capitalists is to maximize the return on their investments. Improving clinical outcomes and building good companies are secondary objectives. As one seeks to commercialize a new medical device, one is in the business of risk reduction. Venture capitalists will not want to fund a project with a high chance of failure. On average, it takes a successful project 18 months and 36 visits with distinct funds to obtain funding. Once a project receives money, its leaders must lower risks further. Biological risks are hard to control, so market risks must be carefully understood. The CIMIT Accelerator Program can help innovators create low-risk business plans. Having a good executive team in place helps ensure that a new product will progress steadily through the multiple phases of research and development.