One Rochester Medtech Startup OK’d for Public Funding as Another is Written Off
A startup with a way to keep temperature-sensitive medical materials cool during transit was recommended for funding but an earlier investment in a healthcare IT firm was written off as a loss for Rochester’s Economic Development Fund during the fourth quarter.
The “EDF” was launched in 2012 with $5 million in municipal sales tax revenues. It’s administered by Rochester Area Economic Development Inc. (RAEDI), a nonprofit business consulting group, and overseen by the Rochester City Council with a goal of investing in startups deemed promising for creating jobs in the city.
Any deal of $75,000 or more much be approved by the city council, and so RAEDI keeps the panel apprised of the EDF’s status by issuing quarterly reports mapping the progress of its investments.
Its latest report covering the final three months of 2017 was released in late March and revealed the fund’s managers have recommended a $50,000 investment in Rochester-based Thaddeus Medical Systems Inc., which is developing “smart packaging” technology for cold-chain medical supply logistics.
The device targets temperature-sensitive products such as medical samples, drugs and vaccines, which can be spoiled by lack of proper temperature control during transit.
The firm was founded by chief scientific officer Steve Scully, who, according to his online biography, holds an M.D. from University College Dublin as well as doctorates in pharmacy (from Mayo Clinic Medical School) and in molecular biology (from the University of Massachusetts-Amherst).
Thaddeus Medical says its first product is “a smart, all-in-one, hardware and software IoT packaging solution” integrating four key features: active temperature control, real-time tracking, bluetooth-enabled communication and automated documentation.
The young firm attracted the financial backing of the Southern Minnesota Initiative Foundation in its 2015 seed round, according to the Rochester Post-Bulletin. Crunchbase, an online venture capital-tracking database, indicated that Innova Memphis, an early-stage VC firm, is also an investor.
Thaddeus Medical was recently selected from among hundreds of companies to participate in the Maersk Venture Programme in Copenhagen, Denmark, the Minneapolis trade group Medical Alley reported in a blog post. The group said Maersk, the largest container shipping company in the world, “is seeking innovative logistics startups that could become strategic partners and leverage their global scale.”
On the other side of the ledger, however, RAEDI reported a 2015 investment in Hunhu Healthcare Inc., has gone south – the first outright loss in the EDF’s six-year history. The fourth-quarter financial report revealed that fund managers have written off a $12,500 loan made to the healthcare IT start-up, which, they said, has “failed.”
The company described itself as a “provider of intelligent social wellness solutions to vulnerable individuals and their supporters via an integration of cloud technology, predictive analytics and a proprietary wearable device.” In 2014, it announced a licensing agreement with Mayo Clinic aimed at developing “best practices” and optimal uses for its product.
Mayo Clinic Ventures was also an early investor in Hunhu.
Overall, the report stated the EDF has a current balance of $2.84 million. It has provided $1.55 million in loans and other types of investments to 15 companies since its inception. Three loans have been fully paid off, while only the Hunhu loan has been written off.
RAEDI asserted companies receiving EDF support have raised a total of $61 million in funding (44 times the amount of public funding invested), creating 80 jobs in the process and occupying almost 48,000 square feet of office space in Rochester.