Newly-launched Southeast Minnesota Angel Fund Makes First Two Medtech Investments
The newly established Southeast Minnesota Capital Fund has made its first two angel investments, with Minnesota-based medical technology firms addressing carpal tunnel syndrome and concussions named as the recipients.
The fund was launched in August through the efforts of Rochester Area Economic Development Inc. (RAEDI), the local nonprofit devoted to growing new businesses in the city, and the Journey to Growth Partnership, a five-year economic development plan spearheaded by RAEDI as a way to diversify Rochester’s economic growth into the surrounding counties of southeastern Minnesota.
RAEDI officials said last year they had succeeded in raising a total of $1 million from a group of several dozen angel investors as well as from the Southern Minnesota Initiative Foundation (SMIF), a regional development and philanthropic group – all despite the loss of Minnesota’s angel investor tax credit program, which was allowed to “sunset” in the last state legislative session.
Since then, it has grown to $1.4 million with 41 investors under its umbrella.
Now, Southeast Minnesota Capital Fund chairman David Herbert has announced its leaders have chosen a pair of medtech firms as the first recipients of its capital backing.
“Our investors are incredibly excited to make our first investments in these two companies,” Herbert said in a statement. “They have unique solutions for carpal tunnel repair and concussion diagnosis and show great promise for growth, job creation and an interest in staying in our region and state,”
One of the recipients is Sonex Health LLC, of Rochester, maker of the SX-One MicroKnife, which is described as an “ultra-low profile” surgical device allowing physicians to perform carpal tunnel release surgery through a single micro-incision using ultrasound guidance. The company was founded in 2014 by Mayo Clinic physicians Dr. Darryl Barnes and Dr. Jay Smith, as well as by chief financial officer Aaron Keenan. Sonex is currently a tenant in the Mayo Clinic Business Accelerator, which is operated by RAEDI.
The company last year announced the successful completion of the first ultrasound-guided carpal tunnel release procedure in the United States using the MicroKnife device.
“We are very grateful for the trust and shared vision demonstrated through this investment from the (angel fund),” Dr. Barnes said in the release. “We are confident that this relationship will help us achieve great strides in providing a better treatment option for patients with carpal tunnel syndrome.”
Also receiving funding was Oculogica Inc., founded by Hennepin County Medical Center neurosurgeon and University of Minnesota professor Uzma Samadani. The company has developed EyeBOX, described as the only concussion diagnosis tool which, through eye-tracking, can determine how “different cranial nerves” have been impacted by a blow to the head.
It uses a proprietary algorithm to detect concussions which unlike current methods does not require earlier baseline testing. The company says EyeBOX “cannot be swayed” by the ability of some patients to hold their attention following a trauma — for instance, athletes who want to fool a test so they can remain in a game following an injury.
Test accuracy, it claimed, is also not impacted by fatigue, attention problems or distraction.
“Oculogica is thrilled to be one of the initial investments of the Southeast MInnesota Capital Fund,” said CEO Rosina Samadani. “We are excited to have their wealth of relevant knowledge and valuable network supporting our efforts.”
The amounts of the financings were not revealed. However, fund treasurer Xavier Frigola of RAEDI told TCB last year its investments would likely be in the $50,000-per-company range.
In addition to announcing the financings, Herbert also revealed members have voted to expand the angel fund to $2 million. It will be accepting new members until that level is reached or by June 30, 2018, whichever comes first.