Every company, no matter how big or small, needs some help in the beginning. Whether it’s resources, advice or finances, it’s hard to go it alone. For pre-seed medical startups in Michigan, a helping hand has become easier to find thanks to Quantum Medical Concepts.
Currently, there is a serious funding gap between pre-seed medical startups (companies that are in the pre-revenue stage of business) and venture ready companies (those that are ready to go to market). Quantum looks to bridge that gap in the state of Michigan.
Launched in January of 2014, Quantum Medical Concepts is a partnership of Common Wealth Enterprises and the Michigan State Medical Society (MSMS) (although separate from the State of Michigan and Michigan State University). Created by Thomas Stewart and Benjamin Louagie, Quantum provides pre-seed medical startups with access to more than 15,000 medical professionals, a strong management support team and up to $250,000 in startup funding in exchange for 7 to 10 percent equity in each startup company.
“In the Lansing area, there aren’t companies that are investing in these startups in such a high amount,” said Stewart. “I think there’s a huge need [for this] not only in Lansing, but for the state of Michigan. There are lots of firms that are interested in investing half a million or more, but there aren’t good ways to get those companies to that point. So we [Commonwealth Enterprises and MSMS] really saw an opportunity to fill that gap for Michigan.”
While investing in startups is fairly common, Quantum stands out for three main reasons: they only invest in pre-seed companies in the medical sector; they provide in-depth management support along with access to an extensive medical professionals’ network (through their partnership with the MSMS); and they only invest in companies that are in the early product development stages of business.
“We’re doing something different than the normal routine here,” said Stewart. “Instead of looking for other people operating at this size here in the state of Michigan, we wanted to use that to leverage our network but to also gain more matching funds, like the Michigan Accelerator Fund or the Michigan Pre-Seed Fund. These companies can apply for these funds without private sector help, but it really helps when they have private sector backing because it makes them seem more valid and marketable.”
The current goal is to invest in two companies per year. So far, Quantum has invested in four pre-seed medical startups, with 89 applicants to date. Some companies are sought out through business plan competitions, while some apply online via the Quantum website. A few of the companies are also sourced from “innovation clusters,” including physician innovation centers, universities, hospitals and more.
Companies must submit an application to Quantum (via the website), regardless of being sought out or not. Stewart sits down with each company and has an initial discussion, gauging the group and discovering their goals. The discussion then moves on to the physician’s network at the MSMS, who then comes back to Quantum with any questions or concerns they might have. After other legal and financial due diligence has been taken care of by Quantum, the company that is up for decision is presented to Quantum’s investment group (a panel of physicians) who decide on the final financial decisions by a majority vote.
“We’re trying to add more partnerships with universities and other healthcare partners, both to raise more funds to invest but also so that our network of resources becomes maximized,” said Stewart. “Essentially, we are working to leverage the power of the healthcare network in Michigan so that the companies that are in our portfolio are taking the least amount of risk.”
While several other cities (both in and out of Michigan) have shown interest in Quantum’s innovative approach, it still remains one-of-a-kind.
“There aren’t associations (regardless of healthcare in general) that are acting like this,” said Stewart. “This is also a model that could be replicated elsewhere. It could work in other states. We’re excited to see where this goes.”