Mass Medical Angels Forms to Invest in Life Sciences Startups-And Get the Ball Rolling for VCs

4/3/09

Richard Anders, a veteran Boston-area entrepreneur and investor, has long shown an interest in life sciences through his affiliations with the Museum of Science in Boston, the Dana-Farber Cancer Institute, the Harvard-MIT Health Sciences and Technology program, and other organizations. Along the way, he’s seen a major problem: many promising life sciences inventions never reach the market. So after spending more than a year thinking about how to solve this problem, he led the formation of an angel investment group called Mass Medical Angels (MA2).

“I had been frustrated,” says Anders, “I wondered what can we do to bring more cash and innovation into life sciences.”

Mass Medical Angels, which held its first meeting in December, is to Anders’ knowledge the only angel group in Massachusetts dedicated solely to investments in life sciences. The angel group aims to help entrepreneurs in the biotech, medical devices, and other science-related fields raise enough money to make sure that their great ideas for products don’t die on the vine. And though the challenge of raising seed money for life sciences startups predates the financial meltdown, the formation of the angel group could be extremely timely because the down economy has forced many venture firms to reduce their bets on seed-stage companies.

However, there’s a reason why there are so few angel groups focused only on life sciences. Life sciences startups, particularly those developing drugs, often need to raise huge sums of money before they reach a liquidity event such as an acquisition where investors see a return on their investments. That spooks some angel investors, who prefer to make bets on firms in the Web or software industries that require less money than life sciences startups. Yet Mass Medical Angels plans to invest in capital-efficient life sciences firms such as medical devices and healthcare IT startups, or even in fledgling biotechs that require relatively small amounts of money to do research that will lead to a larger institutional round of financing with VCs, Anders says.

Part of the strategy at Mass Medical Angels, Anders says, has been to stack its ranks … Next Page »

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