New Michigan State Medical Society-Backed Fund to Help Startups Grow
Late last month, the Michigan State Medical Society (MSMS) announced the launch of Quantum Medical Concepts, a first-of-its-kind fund for early-stage medical startups based in Michigan. Companies funded by Quantum will also have the opportunity to get business support and coaching through a partnership with Common Wealth Enterprises, a startup management firm that runs the NEO Center business incubator in Lansing, MI.
“We are always looking for ways we can support physicians in the state and help them better care for patients,” says Ben Louagie, chief operating officer for MSMS, a statewide professional association. “We saw a lot of opportunities in the medical startup space, and a big funding gap between ‘friends, family, and fools’ and angel investors. Why not have MSMS be part of the process? We came to the conclusion that we wanted to invest in companies that bring value to the medical field.”
Quantum’s goal is to invest a total of up to $250,000 in two to three medical startups per year for roughly five years. The fund will also provide each startup with a 24-step plan, customized to its particular strengths and weaknesses, for bringing its products to market.
Louagie says Quantum is open to funding any early-stage medical device, medical technology, medical data, or medical services startup willing to build its business in Michigan, and Common Wealth CEO Tom Stewart says his organization vets the applicants to determine which are the best fit.
Louagie declines to specify exactly how much equity startups will have to give up in order to receive Quantum funding because he says it will vary from startup to startup. “Our goal is to help companies grow and succeed, but also to get a financial return for our members,” he says, adding that the money to fund the Quantum investments comes from MSMS business revenue rather than the dues of its 15,000 members.
Quantum is the latest indication that Michigan’s medical community is getting serious about entrepreneurship. “We think physicians are key to the success of healthcare delivery, and I think they can play an equally important role in medical innovations,” Louagie says. “The medical establishment is becoming more open to entrepreneurship. Often, doctors are the ones coming up with the best new ideas for medical devices or therapeutics.”
Stewart is also looking forward to seeing what kind of startup ideas will emerge from “the garages and basements” of Michigan’s community of physician-entrepreneurs. “After working on this for the past nine or ten months, I think Michigan is slightly above average when it comes to medical innovations,” he says. “There just hasn’t been as much emphasis on technology commercialization in the private sector—in Michigan, it’s driven much more by institutions and academia.”
Stewart says in addition to the investment and coaching, the biggest value that Quantum offers is its ability to connect startups with the MSMS membership, which represents thousands of potential customers capable of giving expert feedback about market fit.
Stewart says that although nothing has been formalized, he imagines Quantum will work closely with university technology transfer programs and organizations like the Michigan Economic Development Corporation to fill the state’s startup pipeline. “We have every intention of being a feeder system for bigger fish,” he adds.
Quantum has already garnered attention from other state medical associations interested in launching a comparable initiative. “There’s nothing similar to this [medical association-based fund] that I know of,” Stewart says. “We’ve been contacted already by Minnesota to see if they can replicate our efforts. As we get further into it, I’ve wondered why something like Quantum hasn’t happened earlier. We may be onto something new here.”