MC3, With Six Spinout Companies, Navigates Challenging Terrain of Medical Device Incubators

2/7/11Follow @xconomy

Medical device incubators are like low-carb donuts. They sound like a good idea on paper, but no one has really been able to create a successful one.

Scott Merz is certainly trying. Since 2000, MC3 in Ann Arbor, MI, the accelerator Merz co-founded and currently leads, has spun off six companies, all of them still in business and in varying degrees of development.

MC3 boasts some important advantages. The firm enjoys a strong relationship with the University of Michigan, specifically its technology transfer operations.

In fact, Merz founded MC3 in 1990 to commercialize a blood pump he had been developing with a university surgeon while a graduate engineering student. Medtronic eventually acquired the technology and then sold it to Edwards Lifesciences.

But the taste for entrepreneurship never left Mertz’s mouth. In 1999, he decided to convert MC3 into an incubator because “we had some experience that could benefit other people.”

At the time, Merz says, the university’s tech transfer office was only starting to ramp up.

“There were a number of technologies in the lab but the office had a hard time getting interest from investors and companies,” he says.

The big problem: the technologies just weren’t developed enough to convince an investor to risk cash.

MC3 helps by offering a complete package of services, on both the technical and business sides. The company assists startups with concept and feasibility studies, design, and manufacturing, and also helps them attract government grants and pitch to investors.

However, MC3 faces an uphill climb, says Peter Bianco, a former executive with Johnson and Johnson Development Corporation who studied medical device incubators.

Incubators need “superstar” talent and lots of capital, Bianco says, who is now leading efforts to … Next Page »

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