Cultivation Capital’s Life Sciences Fund Finds Sweet Spot

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Since its inception in 2013, Cultivation Capital’s Life Sciences Fund’s portfolio of 14 companies and one accelerator have raised $321M in total funding–with a $10.3M total dollar investment from the firm–while creating 180 jobs in St. Louis. The Life Sciences Fund I invested in six sectors: Therapeutics, Medical Devices, Research Tools, Agriculture Technology, Diagnostics and Healthcare IT. By leveraging deep operational expertise in life sciences and capitalizing on the untapped value of Midwestern companies, the Life Sciences Fund hit pay dirt and continues to grow.

BioGenerator
Scientists at work in a BioGenerator lab. BioGenerator creates, grows and invests in promising companies and entrepreneurs in the St. Louis region.

Midwestern life science companies offer unique value in a variety of ways, which underscores why 64% of the fund’s deal sourcing is based in the Midwest. “We have seen a number of compelling investment opportunities right here in St. Louis and throughout the Midwest,” says Bill Schmidt, Managing Partner of Cultivation Capital Life Sciences Fund. “Our vast network of partners and investors introduce us to promising startups, and when we couple their expertise and connections with ours, we can truly help portfolio companies scale and ultimately exit.”

Strong personal networks of entrepreneurs and investors, combined with a unique partnership with BioGenerator, the investment arm of the non-profit BioSTL, brings local institutions together to grow the St. Louis region’s potential in biosciences.

The two biggest sectors capturing Life Science Fund investment are Therapeutics (31%) and Research Tools & Reagents (26%).

Galera Therapeutics, funded in part by the Life Sciences Fund in the Therapeutics sector, has experienced extremely high growth and as of February of 2016 had raised $42M in Series B funding. Although the company itself is now based in greater Philadelphia, it’s founder and COO Robert (Al) Beardsley lives and works in St. Louis at the company’s research labs.

“St. Louis is acknowledged as a center of innovation in life sciences and in pharma,” says Beardsley. “Just like Celecoxib, one of the biggest drugs ever, Galera’s drugs were invented here. The ideas that come out of WashU, SLU, and former Pfizer, Mallinckrodt and Monsanto people are every bit as innovative and game changing as on the coasts.”

The fund contributed $3.2M to five Therapeutics companies, which was 31% of its total investment. Money raised by Therapeutics sector companies makes up 66% of the total raised by the portfolio.

Medical device development support is not as strong in St. Louis as pharma, but the Life Sciences Fund is working to change that. Veniti Endovenous Therapies, supported in part by the Life Sciences Fund, is a medical device company based in St. Louis that develops medical devices to treat vein diseases. Catherine Matthes, CFO, says, “St. Louis is trying really hard to develop an infrastructure: buildings, labs, people and money. Those are the four tiers you have to have for a successful startup community. I’ve had varying degrees of success and failure on all of those fronts. It’s difficult in the medical device space, which is much smaller than the IT and pharma sectors in St. Louis.”

Veniti Endovenous Therapies is one of three companies in the Life Sciences Fund’s Medical Device sector. The Life Sciences Fund invested $2.5M in the Medical Device sector which was 24% of its total investment. Medical Device companies raised 24% of the total raised by the portfolio.

Healthcare IT is another important focus for the Life Sciences Fund.

Blue Strata EHR focuses on providing an electronic health care system to long term care and skilled nursing facilities. Now experiencing late stage entrepreneurial success, Blue Strata received $800,000 of investment from the Life Sciences Fund.  Bill Schmidt, also a Board Director for Blue Strata, formed a capital strategy designed to hit Blue Strata’s major milestones. Tony Coco, President, said, “There is so much that the health care industry needs today to help facilitate what they’re trying to do electronically. There is plenty of opportunity to develop adjacent products whether in long term, acute care or other areas that could prove to be really useful to the user. There is also a lot of engagement and activity in the investment community in trying to make that happen.”

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