Every startup that’s raising money needs to start somewhere. For startups in Northeast Ohio, that place is the Innovation Fund. That’s where Doug Carr brought his startup.
Doug founded medical device company Thermedx® in 2007 to transform surgical fluid management. During many endoscopic procedures, fluid is delivered to the surgical site to expand the body cavity and wash away blood and debris. This provides the surgeon with a clear field of view. Thermedx® wanted to develop a system that offered improved control, performance, functionality, and safety compared to the “old and tired” devices that were serving the market.
But the company needed cash to take its Fluid Smart™ System from idea to working prototype. And Doug wasn’t looking for just any investment. He had entrepreneurial friendly money in mind. “We wanted early-stage capital that was non-dilutive,” said founder Doug Carr. “That’s what brought us to the Innovation Fund.”
The Innovation Fund is a safe jumping-off point for anyone with an innovative technology or business idea. Startups win up to $100,000 to complete projects that move their ideas closer to commercialization.
What makes the funding so attractive? The Innovation Fund doesn’t take equity. This is important for startups, especially those the Innovation Fund invests in, since they’ll have to raise more money. The investment doesn’t dilute the startup’s ownership. And that’s what Doug was looking for.
Thermedx® received $100,000 from the Innovation Fund in 2009 and put the money to work defining the specifications, performing initial development work, and fleshing out the business concept. The investment moved the business from idea to early prototype, making Thermedx® ready for angel investors. Angels liked the business concept and seeing a working prototype embodying the features and capabilities of the system raised their interest level and ultimately helped to facilitate their investment.
“The more progress you can make before you have to take in equity investments, the more favorable the terms of the equity investment become” Doug says. “That’s why early non-dilutive financing is so important.”
In four years, Thermedx® raised a substantial amount of capital, helping it obtain patents, get FDA 510(k) clearance, set up manufacturing, and gain initial market traction. Last year, the company entered into an exclusive distribution agreement with a subsidiary of a major medical device company.
The distribution partner has made the FluidSmart™ a major, strategic focus of its business and because of it, Thermedx® is starting to realize the growth associated with having the best surgical fluid management system on the market and a highly trained, engaged, and motivated national sales force behind it.
Without question, the $100,000 Innovation Fund award made the startup process a little easier for Doug and his team. It was the right amount at the right time and under the right terms. It was entrepreneur friendly.
“The Innovation Fund is truly unique and extremely beneficial to entrepreneurs,” Doug says. “To receive non-dilutive financing at a very early stage and achieve important milestones confer credibility on the venture and strengthens the position of the entrepreneurs.”