Posts

BioCare Thinks Infrared Light Heals People

Jon Weston is convinced that his company’s product can help take away pain, help the body heal twice as fast in some cases, and even save lives. It is particularly interesting to see a former pharmaceutical executive get so excited about a non-drug, non-invasive therapy that helps people use less medication. After I saw him pitch, I had to find out more.

I was first introduced to BioCare’s product when Jon presented at the Angel Capital Summit in Denver earlier this year. He showed the LumiWave, a powerful and safe near-infrared light therapy used to relieve pain and promote healing in many tissues in our bodies. The device uses rectangular pods of LEDs a couple of inches wide to emit a frequency of light, which provides pain relief, increased blood flow, and even the growth of new blood vessels when applied to an injured area. This means that in addition to relieving chronic pain like arthritis, it can cut healing time by more than 50% in some injuries – and in other cases can re-start healing where the body has been stagnant in an injured state for years. The science is fascinating, but too involved to go into on this site – check out my explanation here. (coming soon)

I had heard of (and played with) infrared light therapy before, since my father, a MD in Michigan, had been using another device in his practice for the better part of the last year. He’s been finding profound and sometimes unexpected success, especially in curbing or curing a variety of chronic ailments for patients who weren’t responding effectively to traditional medicine. My mom tried it on her arthritic hands, and the pain all but disappeared after a few weeks of sessions. My dad calls pretty frequently to talk about the latest treatment or a cool new medical device, but it meant more to hear my mom talk about how a light therapy took away pain that has invaded her life for years.

While that device certainly helped people heal well, they have some limitations. They’re not as easy to use, and not cheap, either – the units he’s purchased have cost over $2,000 per light. BioCare’s product was entirely different from the other infrared treatment devices I’ve seen (and dramatically less expensive) so I had to take a closer look.

I gave Jon a call to hear about it in more detail, and we were able to grab coffee by DU, where he got his MBA, and I got my bachelor’s degree. He is a molecular biologist by training; a former pharmaceutical executive who spent years bringing products from R&D to market for companies like Searle (now Pfizer) and Gambro. While some of these medications went on to do very well, he’s convinced that infrared can be safer and more effective than traditional drugs for some problems. A number of years ago he met BioCare co-founder and Chairman Sherry Fox, who worked with her late husband (a biomedical engineer with 15 patents) to develop the initial technology for the LumiWave. Jon came on board as COO in 2005, and stepped into the CEO role in 2009.

It’s no secret that medical device companies need a longer runway than other startups due to the intensive R&D process. Techstars CEO David Cohen joked at a Silicon Flatirons event this week about a “17 year accelerator” if they were to have one in the biotech industry. Many investors aren’t comfortable with or don’t understand the R&D process, so thankfully BioCare has been able to bootstrap the company so far. Before opening it up to investors, they wanted to make sure the biggest risks were taken care of – the technology was sound, real units were selling and being used extensively, and strategic partnerships were in place. They’ve also had the chance to acquire patents, an over-the-counter FDA clearance, and they’re sailing toward the next approval level. Their patents and years of progress in these areas provide particularly high barriers to entry for even large medical device companies.

While IP is great, it doesn’t make money… well, until it actually makes money. That’s why it’s so valuable to have product sales and revenue while rounding out the R&D process. Aligning with lean startup practices, they signed high value, paying customers (who generated real market feedback) as early as they could. They’ve made some pivots, and their open-mindedness has allowed them to find some of the fastest growing sectors of their potential market.

It can be both a blessing and a curse to have a product that can be used so widely. Pinpointing not just the largest markets, but the ones most motivated to act on their literal pain points was of key importance. Perhaps the most common use of infrared light therapy is for the treatment of osteoarthritis or other types of chronic pain, like my mom had, so that was BioCare’s first major application. While the chronic pain segment may have the largest number of people and dollars in it, Jon saw early on that the only way to really make a difference there is with widespread adoption by the health insurance companies, not known for moving quickly and fairly preoccupied with legislative items at the moment.

While the insurance companies are still moving toward adopting infrared, he wasn’t going to wait for permission. The sports medicine and physical therapy industry was another reasonable market choice, and once they tried, he saw considerable traction here. This segment is especially motivated to pay for faster healing times, especially at the highest levels of competition, where there is also often significant pain with injuries. Thankfully for BioCare, the U.S. Olympic Training Center in Colorado Springs was only a short drive from Denver, and the Olympians took to it very quickly. The effects were so dramatic and positive that the Manager of Sports Medicine and Training for the US Olympic Centers offered to be on BioCare’s advisory board. She’s joined on the board with others who have volunteered after seeing the device in action – a few top orthopedic surgeons, three professors of medicine, and a trainer for the US Naval Academy, among others.

While sports medicine seems to have done very well for BioCare, they’ve kept an eye out for other substantial markets on the horizon. The most exciting and revolutionary development recently is the treatment of injuries that are less obvious and often more damaging – traumatic brain injury. As a neuroscience nerd, this was particularly riveting for me. More of the science here (coming soon)

For the treatment of traumatic brain injury (TBI) BioCare is partnering with Cerescan, an industry leading, Denver-based brain imaging company. I was able to tour Cerescan with CEO John Kelley, who told me they have tested literally a team’s worth of NFL players for the diagnosis of TBI, some after suicide attempts. There is another group terribly affected by TBI – our nation’s military. BioCare and Cerescan joined with the Tug McGraw Foundation for the Invisible Brain Injury Project to study just that. This project will continue remarkable pilot testing they’ve done with veterans so far.

The military experience often adds a dangerous element to a volatile situation in the brain – the high prevalence of PTSD upon returning from service. The number of deaths from combat is horrifying and significant – and the increasing number of veterans who take their own life is a sad, and unfortunately frequent tragedy. It is made worse by being poorly understood, with few effective treatments and no real cures available – so far. In the initial round of testing, they’ve seen remarkable success with every patient they’ve tried it on. One particularly moving story involved a vet with TBI, PTSD, and a few recent suicide attempts. After a brain scan confirmed his neurological issues, and then a number of weeks in treatment, he was off all of his psychiatric medications. He had a follow-up scan, and then went back to work for the first time in a year and a half. Other participants have had similar stories, and while this treatment still needs to be validated in a study with a larger sample size, all signs are pointing in the right direction.

If these treatments continue to work so effectively, how much value will someone place on getting their life back? What will the family think as they watch a loved one go from nearly dead to “feeling like their old self again”?

I see a fair number of startup pitches. Most have at least pretty good ideas, and nearly every entrepreneur projects a hockey stick-shaped growth. A few have the chance for real traction, and it’s rare to find a company that claims such a big impact on the real quality of life for its customers. Biotech is hard to launch, but when it works, it can return big. It will certainly be interesting to follow BioCare as they attempt to change the world by healing the people in it.

 

 

NexGen Storage Acquired For $119 Million – From the VC's Perspective

Article by Tim Harvey, regular contributor to Rockies Venture Club Blog

This week, Fusion-io acquired Louisville, CO based NexGen Storage for $119 million. The next day, I had a chance to sit down with venture capitalist Kirk Holland of Access Venture Partners, who was also on NexGen’s board. Access Venture Partners co-led the $2 million series A round with Grotech Ventures, and Next World Capital later led the $10 million series B.

NexGen founders John Spiers and Kelly Long have been around the venture capital circuit before – they were co-founders of Boulder-based data storage company LeftHand Networks, which sold to Hewlett-Packard in 2008 for $360 million. A few years later, they again had a vision for a better data storage technology and started from scratch. This time around, solid-state disk drives and cloud infrastructure were ever more important, and they developed their product from the beginning with these ideas in mind, building it to intrinsically protect their competitive advantage. John and Kelly bootstrapped NexGen to get started in 2010, and reached out to Kirk regarding venture funding after about 6 months. Due diligence meetings, which went on for a few months, were held in Kelly’s basement where they first hatched the idea of NexGen – and a few short years later the $12 million in capital turned into an acquisition nearly 10X that amount. The exit was faster than expected, but they thought the terms were great and they were excited to work with Fusion-io.

Kirk’s previous firm, Vista Ventures in Boulder, began investing in LeftHand in 2001 so he had the chance to get to know John and Kelly over many years. He was impressed with the team more than 10 years ago, so in this deal he said “working with John and Kelly took the team risk off the table.” Given this strong relationship and the fact that LeftHand had one of the biggest VC exits Colorado has seen, they were ready to do it again. “The industry was pretty crowded when we made the investment,” Kirk said, with both venture-backed and big name tech companies all trying to do the next big thing in data storage. He thought NexGen’s technology could leapfrog the other products, and the experts Access Venture Partners brought in for due diligence confirmed that. “They were really passionate about building a great, sustainable business. NexGen reinforced the idea of working with trusted relationships,” Kirk said.

Access Venture Partners is a big name in the Colorado venture capital landscape. This is the second fund they’ve closed, and the MD’s there have invested over $100 million in more than 50 technology startups so far. These companies as a group have gone on to raise over $1.1 billion in additional capital, growing revenue 15X since initial investment, and creating over 3500 high paying jobs in Colorado. AVP currently has 20 companies in their active portfolio, with 19 successful exits. Their focus is on high-margin technology businesses in large or rapidly growing markets, especially in data security/storage, cloud computing, and digital media/consumer internet businesses. They lead the vast majority of fundraising rounds they participate in, and while sometimes that means writing the largest check, they also lead by investing first and getting other VC firms on board. They also like to work closely with entrepreneurs after the investment is made, often taking a board seat and using their connections to help place key executive talent, as they did with NexGen.

Kirk is a heavy hitter in the area as well, after moving to Colorado from the Bay Area. In addition to the nearly $500 million in exits he’s been involved with through LeftHand and NexGen, he led the Series B round for Rally Software, which raised $84 million in an IPO in April 2013. He was also an investor/board member for MX Logic, an Englewood, CO SaaS company that sold to McAfee in 2009 for $140 million. He’s been a TechStars mentor from the start, with Access VP also supporting and investing there early on. His focus within AVP is on cloud technologies and SaaS/consumer internet companies, and although he likes to leverage existing relationships, he also explores as many other startups as he can. “You have to keep looking under rocks and be open to the next generation,” he says. He believes in entrepreneurs who are passionate about building a great company, not looking for a quick buck. “It’s a red flag when I think someone is only in it for the money,” he says. Nonetheless, many of these companies have gone on to create substantial value here. “We’re really most happy for the founders and the (NexGen) team’s success. We’re here to support the entrepreneurs, but they’re really the ones that drive it.”

Big exits, especially in the 9-figure range like NexGen, are going to really help put Colorado on the VC map. While Boulder may be famous from investors like Brad Feld and TechStars, Kirk believes there is a shortage of early-stage capital in the area. “Early-stage investment has dropped in Colorado over the last 5-10 years as VC’s didn’t raise follow-on funds, while the number of young companies has grown”, he says. Venture capital isn’t limited to state lines, but it’s certainly helpful to have investors nearby. Fusion-io actually has offices just miles from NexGen, so this acquisition was sort of in their backyard as well. The universities in the area (CU, DU, CSU, Mines) attract technology and engineering talent, and many of the students that come to Colorado don’t want to leave after graduation. That’s what happened to me, and even though skiing might’ve been my excuse to move here when I was 18, it’s the people and the startup community (and the weather) that have keep me here. These schools also have close connections to the startup community, through groups like CU’s Deming Center for Entrepreneurship, and Colorado School of Mines’ Technology Transfer program to help students commercialize their inventions. Big players like Google, Microsoft, and Oracle are also importing talent by adding to their already-large ranks in Colorado. “The people here are very motivated and passionate about what they do,” Kirk says, “without the focus on a quick buck that leads to higher employee turnover rates” that concerned him with some companies he saw in the Bay Area. Colorado is also a less expensive place to build a business than anywhere in the big coastal cities, and still has solid venture capital groups like VCIRRockies Venture Club, as well as the sweetheart of Boulder, TechStars.

Although April was a great month for Colorado VC-backed firms, we have to keep innovating and building great companies to strengthen the region. More investment capital will certainly help – but it’s the people here that drive entrepreneurial success.

Article by Tim Harvey, regular contributor to Rockies Venture Club Blog