Archive for October, 2010

Sleep Apnea: The New Cholesterol

The October issue of Start-Up magazine includes an article on growth opportunities in the 25-year old field of sleep medicine – an enormous group of serious and chronic diseases that remain largely undiagnosed.

One of these diseases – sleep apnea – has strong links to cardiovascular conditions (atherosclerosis, myocardial infarcation, hypertension, stroke, and heart failure) and metabolic disorders (obesity and diabetes).  Sean Heyniger, CEO of Watermark Medical (a portfolio company of ours) likens it to “cholesterol 30 years ago,” as it is “both a risk factor of and an agent that worsens other progressive and chronic diseases.”

The most common current diagnosis and therapy are expensive and suffer from a high failure rate – 50% of patients abandon treatment within the first year.  Even those who stay with the treatment regime fail to meet very low compliance standards, through misapplication of the device or removal of same in the middle of the night.

Watermark provides a medical device and software platform which empowers primary care physicians to prescribe home sleep tests, addressing the 90% of patients with undiagnosed (and therefore untreated) Obstructive Sleep Apnea (OSA).  The advantages to home-based sleep testing are simple:  increased patient comfort and compliance, improved diagnostic speed and accuracy, and lower cost.  Home-based, end-to-end, diagnostic-to-therapy platforms are a growing trend in health care.  Sean and his team at Watermark are already experienced in providing home-based monitoring from their success at PDSHeart (a previous portfolio company in our first BPV fund), a leader in the remote cardiac monitoring space.

The New York Times covered this “broad transformation”  last May in High-Tech Alternatives to High-Cost Care.  The Times singles out Watermark as exemplifying the promise of these changes:

…an array of technology-enabled, consumer-based services that provide a new form or primary health care [that] emphasize early detection, prevention, and management of chronic disease.

As insurers and the government begin to reimburse at-home testing and monitoring devices, the trend promises to: 

shift a lot of the diagnosis, monitoring and treatment of disease from hospitals and specialized clinics, where treatment is expensive, to primary care physicians and patients themselves — at far less cost.

The article further concludes that additional chronic conditions such as heart disease and diabetes could also someday be monitored by Web-based personal devices similar to Watermarks’ ARES (Apnea Risk Evaluation System).  It is exciting to partner with entrepreneurs like Sean who are at the forefront of efforts to use the latest technology to simultaneously increase the quality and reduce the cost of health care in this country.

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Bands of Angels

The October 2010 issue of Florida Trend includes an excellent feature on a critical piece of the state’s entrepreneurial ecosystem: local groups of investors providing funding to emerging companies.

These “Bands of Angels” all work with early stage companies, and therefore have a higher tolerance for risk, but tend to operate in slightly different ways.  Some meet regularly, some don’t; some pool their capital, some leave the investing decision to each individual; some focus on industries or region or type of entrepreneur, and some by “what they know.”

Angels provide more than capital and expertise - their networks and reputations assist with introductions to additional sources of financing.  Rhys Williams of New World Angels in Boca Raton (whose recent testimony before the United States Senate on the importance of early stage investing can be found here)  explains:

For entrepreneurs, it’s the smartest money you can get.  You could be getting 40 investors committed to your success who use their networks to grow the company and who will help you find the next round of capital.

Sean Christiansen of Catapult Capital in Orlando describes how local sources of this type of funding are vital to the future of Florida.  Viable local capital can prevent high-growth companies from relocating to be close to their source of funding:

Historically, Florida has lost companies because they went to venture capital firms who prefer local businesses, and most of those [venture] firms were not in Florida.

The Florida Trend article also includes insights from Tim Cartwright of Tamiami Angel Fund in Naples, Barbara Boxer of Women Angels in Miami, Allan Keen of Winter Park Angels in Winter Park, and Alan Rossiter of Springboard Capital in Jacksonville.

Developing the state’s and region’s entrepreneurs and the infrastructure that supports them are favorite topics of ours.  Here are convenient links to the Florida Angel Funds mentioned in “Bands of Angels”:

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Upcoming panel discussion on company valuations

Next Wednesday – October 13 – Matt Rice will represent the venture industry in a panel discussion on company valuations.  The panel, hosted by the Florida Venture Forum and the Gulf Coast Venture Forum, will be held from 5:30-8:30 at the Hyatt Regency in Sarasota.  Details can be found here.

Other panelists include Rob Campbell, CEO of Voalte, Nelson Castellano, Attorney with Trenam Kemker, and Brian Zophin, CPA, Senior Manager with Cherry, Bekaert & Holland, LLP.

If you are in the area, please drop by and join the discussion.

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