IU Philanthropic Venture Fund Wraps First Year of ‘Perpetual’ Model

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IU PhV says it currently has 30 “qualified opportunities in our pipeline." IU PhV says it currently has 30 “qualified opportunities in our pipeline."

The Indiana Philanthropic Venture Fund (IU PhV) is on the doorstep of its one-year anniversary and, although not limited to the life sciences, it has funneled $1.6 million into the sector’s early-stage Indiana-based companies. Its visionaries designed the evergreen fund to be a “perpetual resource” and an answer for Indiana University alums who want to support the university and its entrepreneurs.

Launched in March 2018, the $15 million IU PhV has invested in five life sciences startups, two of which were founded by or are led by women. In addition to the $15 million IU committed to the fund, IU PhV aims to raise another $35 million from alumni and supporters of the university. IU PhV Executive Director and Fund Manager Teri Willey says the fund invests in ventures with strong IU connections, such as companies founded by IU faculty or alumni and licensees that are developing IU intellectual property.

A second factor that makes the fund unique is its philanthropic model; IU Foundation board members and the Innovate Indiana Fund investment committee repeatedly heard requests from potential investors for their returns to go back to the university and related ventures.

“[IU PhV] is like a regular early-stage venture fund in every way except we don’t have traditional limited partners who are going to share in the returns; anybody who puts money into the fund doesn’t expect a return directly, they expect the return to go back to IU,” says Willey. “The biggest advantage of that is we can be patient and flexible investors, because the regular 10-year timeframe of a traditional fund doesn’t necessarily apply to us.”

Managed by the IU Research and Technology Corp., IU PhV recently invested $500,000 in Indianapolis-based Diagnotes Inc. The startup has created a cloud-based technology that “keeps everyone in the loop”—such as clinicians, administrative and office staff and patients.  

Nurses, doctors and care coordinators can securely text, voice or video chat with each other within the system, and each medical staff member can see a patient’s electronic health record (EHR). Diagnotes says the technology integrates with any EHR system, giving everyone real-time access to call schedules and enabling documentation of every discussion.

Willey says the investment is a bridge to a series B round and supports the young company as it expands into behavioral health. Indianapolis-based Scioto Biosciences is the fund’s other $500,000 life sciences-focused investment. The company is developing biofilms, or communities of “good” bacteria, for a variety of applications. Scioto says bacteria in a biofilm are better able to survive stress from the environment, such as passage through the gastrointestinal system, potentially enhancing their efficacy.

Indianapolis-based NERx BioSciences Inc., which is developing targeted therapeutics for cancer, will also receive a $500,000 total investment from IU PhV. Earlier-stage companies Indianapolis-based Care Revolution and Vascugen, also in Indianapolis, were the fund’s first investments; Vascugen received $200,000 and Care Revolution was awarded $150,000.

Vascugen is a regenerative medicine company developing therapies to repair human tissue damaged by reduced blood flow due to disease or injury, and Care Revolution is working to decrease the number of unnecessary transfers from nursing homes to hospitals.

Startups in the life sciences or related sectors comprised the fund’s first four investments; IU PhV has now awarded $2.9 million to nine startups. Willey says IU PhV currently has 30 “qualified opportunities in our pipeline now, and it’s only January.” In 2019, the fund will focus on generating more sector diversity in its portfolio and finding strong early-stage management for its startups, “which are determined to see their ideas have an impact in the community.”

“And we’re helping them do that in a way that, if we’re successful, would not only return money to the fund, but also generate a larger and larger community of people—investors and management—that are going to be ready to do this again,” says Willey. “Building that capacity is exciting.”

Willey says, while Indiana’s venture community is steadily improving, she believes it could be more coordinated.
Willey says a key focus for IU PhV in 2019 is addressing one of the “biggest issues” in early-stage tech.
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