VPmag summer 2013

PORTFOLIOVENTURE

EYES ON PRECYSE

INNO360 takes web to new depth + How Organovo plans to print organs

SUMMER 2013www.venturportfoliomag.com

ALSO:InVivo aims for

finish line in spinal injury cure

Fastcase legal eagles keep information

flowing free

How tracking what’s lost became a deadly serious industry

m

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Developing

BIG IDEAS

into world-changing companies

37BODY BUILDING How the 3-D scientistsat Organovo are going to construct people

6 The Need for Speed: Innovation, service keep Ciena at crest of network industry8 Rolling to the Finish Line: InVivo steps closer to cure for spinal cord injury11 School’s in Sessions: Virtual art school didn’t wait for change to hit higher ed. Instead they took charge14 The Green Arrow: The unexpected value of today’s angels15 What’s New: Current Portfolio company updates16 Wisdom of the Crowd: InnoCentive answers the tough questions by tapping into experts19 On Watch: Precyse Technologies knows the value of finding what’s lost in danger zones21 Formula for Hope: Myriad has warned more than 1 million women of cancer risks24 Keeping Health Care Viable: Cybersettle’s patented tech accelerates bill resolution31 Making Conversation: Health Dialog founder sets sights on funding chair for scientific inspiration33 Coming Full Circle: Inno360 delves into deep web to bring bankable intel to big clients43 Venture Portfolio Marketplace44 Venture Scout: Looking for diamonds in the rough

FEATURES

CONTENTS

Summer 2013 Venture PORTFOLIO 3

Washington, D.C. company makes sure law stays in the hands of those who need it.

40

ON THE COVER

FASTCASE LAYS DOWN THE LAWHEADL INES

27NOURISHING CULTUREEl Super bodegas bring Latino food and traditions to mainstream

23FUNDING INNOVATIONAngelina Jolie makes brave choice in face of positive Myriad test

COVER PHOTO BY MAX ORENSTEIN: Precyse founder Rom Eizenberg envisioned technology that could make people safer.

Access videos, stories and more from the VP mag team at www.ventureportfoliomag.com

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FROM the EDITOR

No resisting the gravitational pull of innovation

‘Massachusetts is in the lead for seed-funded startups that secure A Round funds, beating out New York and even California—for now.’

There should be a special sticker col-or for my name tag at startup events.

I’ve worn yellow for entrepreneur, blue for service provider, and green for VC. But none of those actually represent what I am. Make me a purple one, or orange—something bright and jarring that says I’m on everyone’s side.

Angel investor, let me introduce you to my genius friend right here who has just solved the water/energy nexus. Entrepreneur, step right up and tell

this lawyer your story—if you patent this now, you will succeed, because you are solving ... A. Real. Problem.

I followed a great story right into entrepreneurship myself, fully infect-ed with the virus of wanting to make something better. I traded in a news-room of more than 200 bright, cyni-cal, tireless journalists for an incuba-tor full of entrepreneurs. Some looked as though they’d moved the party from the frat house, some looked like they brought the boardroom with them. But it was impossible to know who would succeed. Entrepreneurship is a door to which no one inherently holds the key.

When you consider that, accord-ing to New York research firm CB Insights, more than 1,000 funded startups will die this year, how do any survive and advance?

From TechCrunch: “1,000 to 4,000 recently funded companies that have raised in excess of $1 billion in total at the seed stage will be ‘orphaned,’ as in unable to raise follow-on financing, at the next level.”

Isn’t that the bullet-just-missed-me, compulsion of innovation? You have to find your own way through alive, and if your idea has merit, if your timing is kismet, and your alchemy all spins together with the right fric-tion and support, you might survive long enough to drive revenue. The

increase in seed deals only makes death-match competition for earning a Series A more vicious. Massachu-setts is in the lead for seed-funded startups that secure A Round funds, beating out New York and even California—for now. The good news is that we’re seeing more and more startups that are worth funding.

Moving through the circles of noisy business-building isn’t easy, and there are plenty of frauds and players who circle, ready to prey on those whose dreams rely on execution and focus and proper guidance. But still we all show up, because the fight is on, and it’s so compelling. The stories are irresistible.

Journalists love an underdog, and we’ve seen some good ideas grow with the right help, so here we are. Our goal at Venture Portfolio is to connect the real, human stories to the heroes of the ecosystem, so dy-namic, fundable companies grow in tandem with our understanding. We want to learn from them as we learn about them. Best,

SHELAGH BRALEYEditor-in-Chief

[email protected]

SUMMER 2013 www.venturportfoliomag.com

PHOTO BY LEIGHANNE STURGIS

Innovation Culture: The Big Elephant in the Room

Find out how an innovative culture operates and get advice on how to move toward creating such a culture in your company from industry thought leader Stefan Lindegaard.

Need innovative solutions to real problems? Looking to expand your openinnovation capability? Let InnoCentive help. Contact us at www.innocentive.com or call 1-855-CROWDNOW to speak directly with one of our innovation consultants.

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Emma Johnson is a freelance business writer based in New York City. She has written for The New York Times, The Wall Street Journal, Entrepreneur, Wired, Men’s Health, Glamour and other publications. She is a con-tributing editor of SUCCESS magazine and blogs at WealthySingleMommy.com.

Keelin Daly’s award-winning work has been published in The Wall Street Journal, The New York Times, Interna-tional Herald Tribune, Newsday, Houston Chronicle, San Francisco Chronicle, The Los Angeles Times, Chicago Tribune and magazines including Time and Newsweek. She is based in southern Connecticut. You can see high-lights of her work at KeelinDaly.com

Joel Brown cannot draw a lick. A freelance writer based in Newburyport, Mass., he has written for The Boston Globe, Boston Herald, The New York Times Syndicate and many others. His new book is The Essex Coastal Byway Guide. Find out more at essexbywayguide.com.

Max Orenstein, a Brooklyn-based New York photogra-pher and video producer, is a graduate of the Gallatin School of Individualized Study at New York University. He has photographed for such major newspapers as Newsday, The Jersey Journal and The Morning Call, and is currently a video producer for TVGuide.com.

Jeff Wallner is a freelance business and sports reporter in Cincinnati, Ohio. He contributes weekly business sto-ries to the Cincinnati Enquirer. Wallner also has written for the Associated Press, Sports Xchange, MLB.com, Boston Herald, Baseball America, Philadelphia Inquirer, and many others.

Photographer Tony Tribble has shot for such media out-lets as the Cincinnati Enquirer, Our Town Magazine, the Associated Press, ESPN Rise, Style Network and more. You can view his portfolio at CincySportsPhotography.com.

Derek Jensen, a 15-year journalism veteran, has cov-ered everything from a fugitive Iraq war Marine on the FBI’s most-wanted list to the Sundance Film Festival. He spent nine years at The Salt Lake Tribune tracking gov-ernment and growth in the West. He covered the 2002 Winter Olympic Games for NPR and has written for Out-side Magazine. Jensen is currently a writer for Reuters.

Karen Robes Meeks is an award-winning journalist with more than a decade of experience covering crime, politics, tourism, trade and business trends. Her work has appeared in several news and trade publications, including the Press-Telegram, the Orange County Reg-ister and Southern California Real Estate.

Seasoned journalist Terri Somers has covered life sci-ences and legal affairs in some of the largest biotech-nology clusters in the world, focusing most of her work in Southern California. Her awards include being named Top Business Writer by the California Association of Newspaper Publishers and Editors.

Franci Richardson Ellement is a 17-year newspaper reporter based in Boston. She has covered national stories for the Boston Herald, The Boston Globe, The New York Daily News, Lawyer’s Weekly and other outlets. Her series on wrongful convictions, considered for a Pulitzer, led to changes in state law. Her work has always reflected a push for change.

Faith Ninivaggi is an award-winning photojournalist based in Boston. After earning her B.F.A. from The Art Institute of Boston, she collaborated at the Maine Pho-tographic Workshops with many of the finest photogra-phers in the field, before joining the staff at the Boston Herald. Faith’s professional experiences allow her to capture and memorialize the human experience.

Rod Lamkey Jr. is a two-time Pulitzer Prize finalist based in Washington, D.C. As a photojournalist, he has worked for UPI, AFP, Chicago Tribune, Washington Times, and more. He has spent time on Capitol Hill, in Lebanon during the height of war, and the Gulf Coast in the face of approaching hurricanes. You can view more of his portfolio at RodLamkeyPhotography.com

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Dan Gainor has worked at several newspapers including The Baltimore News-American and Washington Times. His business column ran in The Baltimore Examiner and his work has been published in numerous outlets includ-ing Investors Business Daily, The Orange County Regis-ter and The Chicago Sun-Times. Gainor is a member of the Society of American Business Editors and Writers.

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Jose Martinez is an award-winning journalist who got his start covering national and international stories with The Associated Press. His work has appeared in the Boston Herald and The Boston Globe, as well as The Ride Mag-azine. He also has served as deputy press secretary to the Massachusetts Governor’s Office and taught journal-ism at Emerson College in Boston.

Renee DeKona has been a working photojournalist for the past 20 years, on Cape Cod and in Boston. She finds people are infinitely fascinating. In addition to her news experiences, she also photographs at local universities while pursuing wedding photography and portraiture of people.

Mary Welch is a veteran business writer whose work has appeared in The Atlanta Journal-Constitution, Atlanta Business Chronicle, Daily Report, Ad Age and General Counsel. Former editor of Business to Business mag-azine and Atlanta Woman, she also wrote the book Forever Green with Chuck Leavell of the Rolling Stones. You can view more at www.marywelchwriter.com.

Karen Blum has 20 years’ experience writing and editing health and science news. Her work has been published in daily newspapers including The Baltimore Sun and The Palm Beach Post; national news websites like msn.com and WebMD.com; and magazines for health pro-fessionals including Anesthesiology News, Pharmacy Practice News, and Internal Medicine News.

David Rossiter is a senior staff photographer at the Lethbridge Herald in Alberta, Canada, and a member of the News Photographers Association of Canada.

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The need for SPEEDInnovation, customer service keep Ciena at crest of network industry

By DAN GAINOR

HANOVER, MD — He did not want to become a factory worker. Or a coal miner. In fact, Gary Smith did not fancy any of the jobs available around his home city of Birmingham, England.

The son of a seamstress and an auto machinist, Smith left school at 15 with no distinct idea about what he would do in his career. He set out to find a position that suited him—one that led him to heading up one of the top telecom companies in the world, an enterprise that as of today expects second-quarter revenue upwards of $490 million.

“In my early 20s, I was hired by a telephone equipment company to sell internal phone systems and fax machines door to door around office parks,” Smith says in a recent New York Times interview. “After a few months, I became one of the top salespeople in the company.”

His unique trajectory, from the emerging days of phone service to the apex of growth at Ciena Corporation, has given Smith and his team an edge over the competition. “The way we engage with the customers, it’s really all about a very high degree of customer inti-macy and understanding,” Smith says. “We’re able to bring a lot of unique value and insights into their business challenges as well as their network challenges, and I think that’s separating us, frankly, away

from the competition, who are trying to be all things to all people.”

Market analyst firm Heavy Reading, in an independent survey, ranked Ciena No. 1 over its primary rivals in the telecom field, best-ing much larger industry generalists Cisco, Alcatel-Lucent and Hua-wei by a 2-1 margin. Ciena also has posted a record first-quarter performance and is predicting Q2 revenues of $465-$495 million.

“Our strong first-quarter performance (in 2013) reflects a solid start to our fiscal year,” Smith says in a written statement to investors. “We have positioned Ciena to take advantage of the underlying market dynamics, which are increasingly aligned with our strategy and com-petitive strengths. We believe the combination of our technology and market share leadership as well as our strategic customer relation-ships will enable us to continue growing faster than the market.”

Ciena (www.ciena.com) has come a long way since its startup days, when Spencer Trask spearheaded its first round of financing. By 1997, the company went public and brought Smith onboard, with the singular goal of further developing fiber optics to enable carriers to scale up their communications networks. Now it’s one of the top firms providing ever-increasing speed and security around network bandwidth that once was only imagined, creating scalable and programmable network architecture that handles rapid data

Ciena CEO Gary Smith, above: ‘We’ve built that (trust) up over many years with many customers.’

6 Summer 2013 Venture PORTFOLIO

delivery for more than 1,000 high-performance customers.

But Smith weathered some tough transitions to keep Ciena on track, and the company has outlasted many of its competitors from the early tech boom. “I was named CEO in 2001, the same year the telecom bubble burst, and our annual revenue plummeted,” says Smith. “In my first 12 months on the job, our revenue went from $1.6 billion to $361 million. It was baptism by fire.

“We resisted pressure to drastically cut back the company. It was a contrarian approach,” Smith says of the drive to growth in the midst of market collapse. “We pushed ahead to develop and in-vest in the optical switching technology to allow movement of large amounts of data at high speeds.”

Even Smith couldn’t have predicted what would become a $1.7 trillion-dollar industry—or what global issues could be solved in a world connected by high-speed optical fiber.

Renowned futurist Jim Carroll, who has consulted for NASA and hundreds of future-focused global industries, says exponential network speed is inevitable. “Science is accelerating to a huge degree because of the very connectivity the Internet provides,” he says.

Carroll cites agriculture as one of the major market needs that expanded technology and Internet connectivity will meet, bring-ing about the revolutionary ability to feed and sustain the planet’s more than 900 million hungry. “We’ll have robotic tractors auto-matically seeding the fields, and drones that will fly low over the crops to spot weeds—which will then summon a robotic device to that spot to kill the weed.”

Ciena’s Smith acknowledges the power of connectivity as a pro-found influence on society, one that’s changed so many lives and made the once-impossible a reality. “Ciena pioneered the ability to create virtual fiber. Without that, (the Digital Age) wouldn’t have happened, so I can’t think of an industry that has had a greater impact on people’s lives around the globe than the kind of things that we’re doing.”

But as world-changing innovations and the proprietary data re-quired to create them become a progressively more vulnerable target, leaders in both business and government are putting cru-cial focus on network security, especially in light of recent alleged hacking scandals out of China and Southeastern Europe. Smith, a member of the National Security Telecommunications Advisory Committee, advised President Barack Obama as he addressed the issue of cyber security in his State of the Union address in January, calling for Congress to act as well, “by passing legislation to give our government a greater capacity to secure our networks and deter attacks.” Obama followed that with a February Executive Order “to strengthen the cyber security of critical infrastructure by increasing information sharing.”

According to Ed Amoroso, AT&T’s chief security officer, the size of network attacks has become unmanageable even for large busi-nesses. Amoroso, in a recent interview, warns against denial of ser-vice assaults. “Large global network providers can help enterprises protect their ability to continue to do business, even in the event of such attacks,” he says. Network experts such as Ciena have es-sential security roles, ensuring that customers feel their networks are protected.

“Yes, it’s about technology and all of those things, yes,” says Smith. “But it’s really around the values of the people, essentially around trust. We’ve built that up over many years with many customers.”

Ciena’s other major industry advantage, according to its top cli-ents, is success over distance. Ian Harris, system integrators leader for Ciena, says the company’s technology is crucial to the success of the cloud because it provides a huge capacity for storage from great distance, at rates of transmission that don’t disappoint.

“You see Big Data everywhere. Well, big data requires big band-width, and boy, can we provide it,” Harris says. “In addition to that capacity and those large volumes of data, distance becomes ever more important. And we at Ciena—with our ultra-high capacity optical transport infrastructure, our coherent technology in partic-ular—are really best placed to marry those two demands of dis-tance and large data, really dissolve distance … to give customers a choice where they put those available IT workloads. “

CenturyLink, Inc., recently announced that it contracted with Ci-ena to upgrade a network that reaches 50 different metro areas across the nation. CenturyLink, the U.S.’s third-largest telecom-munications firm, will deploy some of Ciena’s most cutting-edge equipment—the 6500 Packet-Optical Platform—placing it in rank among AT&T, Sprint, Comcast, Verizon and more.

CenturyLink Senior Vice President Pieter Poll emphasized speed as a key reason for the contract. “Ciena’s … optical technology allows us to provide speed and capacity improvements to our interna-tional and domestic regional networks, creating a true, end-to-end 100G network to deliver today’s bandwidth-intensive services and applications.”

“Ciena’s driving a lot of the changes that you’re seeing in the marketplace today,” Smith says. “When you look at some of the things that have happened over the last few years, we’re respon-sible for the technologies that really facilitated the whole of the Internet.” ST

Ciena employees check out one of the many walls of equipment that customers are given access to during the technology demon-strations at Ciena Vectors Summit.

Venture PORTFOLIO Summer 2013 7

Aiming for the FINISH LINEInVivo champions path to recovery from spinal cord injury

By JOSE MARTINEZ

CAMBRIDGE, Mass. — Recent develop-ments at a Cambridge, Mass., biotech firm have sent ripples of anticipation through the relatively small community of paralyzed individuals whose lives changed–seemingly irrevocably–the day their spinal cords suf-fered paralyzing injuries. Once an up-and-coming motocross racer, Jason Fowler severed his spine in a bike crash in 1991. He was just 17 years old.

Similarly, then-Boston Police cadet David Es-trada was left paralyzed when his motorbike was clipped from behind by a car in 1995. “I remember coming to between a parked car and the curb. There were people standing over me and I tried to do a sit-up. I couldn’t do it. I knew right then I was paralyzed. I went

into shock,” Estrada said.

Today, both men lead highly independent lives from wheelchairs. Estrada works for the Boston Police Department and serves as director of the Boston Chapter of the National Spinal Cord Injury Association. Fowler works for a medical device compa-ny and races marathons and triathlons. Yet both men are anxious to see what comes next out of nearby InVivo Therapeutics Holdings Corp., which has been working on a device to help treat severe spinal cord in-juries like theirs since its founding in 2005. “The first thing people said to me after the accident—which was 22 years ago—was that with so many advances in research, they said 10 years from now there may be a cure. “In all that time, I haven’t seen that sort of advance anywhere but here (InVivo),” Fowler said.

There are currently no approved treatment options to intervene directly into the spi-nal cord following a traumatic injury like Fowler’s or Estrada’s—or the 12,000 to 20,000 other Americans who suffer spinal cord injuries each year, according to the Centers for Disease Control and Preven-tion. In the span of just 24 hours in April, how-ever, (www.invivotherapeutics.com) In-Vivo Therapeutics revealed two regulatory milestones involving a spinal cord implant its researchers have used successfully in the lab to help rats and monkeys walk again. The device is a fingernail-sized scaffolding of biodegradable polymers that provides support at the site of the spine injury, lim-iting the secondary scarring that causes paralysis.

Jason Fowler, paralyzed from the chest down in a motorcycle accident, mentors the newly injured: ‘Any recovery is really impactful.’


“Every monkey we treat runs within three weeks,” InVivo CEO Frank Reynolds said. “People were ready to have me declared insane when I told them I could make our monkeys walk again.” The U.S. Food and Drug Administration not only approved InVivo’s bid to conduct a clinical study of its biopolymer scaffold in humans with spinal cord injuries but the agency also granted the company a humanitarian use device designation for the product.

Together, that means InVivo could bring the scaffolding to market years sooner than standard regulatory paths would allow, provided the clinical study shows the spinal cord implant poses no significant risk of injury or illness. The designation also gives InVivo seven years of federally approved monopoly once the scaffolding is approved for sale, Reynolds said. Speed to market is key for Reynolds, who said spinal cord injuries have put 1.1 million more people in wheelchairs since he first ap-proached the FDA for approvals on the scaffolding in 2008. “It’s tough to celebrate. We have to help some people fast,” he said. InVivo now is in the process of lining up five human patients for the study, which will be conducted at several hospitals. The FDA has set very specific guidelines for the clinical trial, which can only involve people with recent injuries to the thoracic or mid-back area of the spine with no motor or sensory function below the injury, and whose spines have been neither penetrated nor completely severed.Reynolds said he is optimistic the human studies will prove the bio-degradable scaffolding works safely, particularly since the device is made of the same material InVivo co-founder Robert Langer invent-ed to help burn victims in need of skin grafts and artificial skin. The

scaffolding also may eventually be used as a mechanism to deliver medicines and stem cells directly into the spine and could have fu-ture applications in the treatment of neurological conditions including ALS, MS and Parkinson’s Disease, Reynolds said. But bringing any new product to market—regardless of its merits—requires money, something InVivo has managed to do quite well with early help from venture capital firm Spencer Trask. In 2010, Spencer Trask helped InVivo raise $13 million through its network of investors, a move Reynolds credits with helping InVivo expand. The company has moved into new headquarters in Kendall Square and recently recalled early investor warrants, a move that is expected to provide up to $16.1 million in equity. Reynolds hopes to see the company’s stock, which has been trading on the OTC market, start trading on the NYSE or NASDAQ within months. Biotech analyst Jason Napodano of Zacks Investment Research Inc., said if all goes well with the human trials, InVivo could be on the brink of bringing a billion dollar treatment to the marketplace. “This is such an unmet need,” Napodano said. “This would be tre-mendous, to be able to go to Level 1 trauma centers and say we have this device that can help new spinal cord injury patients. Right now, there is nothing.” Neurosurgeon Dr. Adetokunbo Oyelese navigates the limitations of spinal cord repair every day at Rhode Island Hospital. In most cases, doctors can remove bone fragments from the spine and support the vertebrae with plates and screws but can only try to

David Estrada, director of the Boston Chapter of the National Spinal Cord Injury Association, works on a rowing machine as part of his rehab.


Jason Fowler finishes the 2013 Boston Marathon, his 12th time racing in the historic Hub event. ‘What InVivo does is fantastic,’ he says.

create a better healing environment overall—often by raising the patient’s blood pressure—to help the spinal cord heal itself. “Spinal cord injury is a complex problem,” said Oyelese, director of Neurosurgery and Spinal Disorders at the Providence hospital. “The spinal cord and brain do not regenerate very well and do not recover very well from injury.” While not dismissing the possibilities presented by InVivo’s spinal cord implant, Oyelese said doctors must be careful not to oversell the hope of better-treatments-to-come when talking to patients faced with debilitating spinal cord injuries today. “You can’t promise what you can’t deliver. The honest truth with someone with a complete spinal injury is they will not walk again. There are a few people who will, and we give them all the opportunity to declare who they are going to be in that spectrum,” Oyelese said. But hope goes a long way with Estrada and Fowler, who both act as mentors to people who recently suffered spinal cord injuries. Estrada estimates there is a community of 300 or so paralyzed in-dividuals living in Massachusetts. “We know you think your life is over, but we know it is not,” Estra-da said. “We try to lead by example.” When Fowler crashed his motorcycle, he landed on his head and compressed his spine down to the T5 vertebra. Doctors used ste-roids to try to stave off swelling in the first few hours of the injury but still he lost the use of his legs, trunk, lower back and abdomi-nal muscles from the chest down. The higher the spinal injury, the more complete the paralysis.

Even with just his upper body, Fowler has accomplished more ath-letically than most people with full use of all their limbs. In 2009, after several attempts to even qualify for the race, Fowler won the handcycle division of the Ironman World Championship in Hawaii, and finished his 12th Boston Marathon in April, coming in 36th place at 1:57:01. “People hope there will be this miraculous recovery when they get injured, but that really is not realistic,” Fowler said. “But hope is really important and what InVivo is doing is fantastic. I’m really excited to see where it goes.” Fowler said he hopes the InVivo study succeeds and gives people like him a chance at recovering even some function. “It is amazing how just the levels of injury are very different,” said Fowler, who counts InVivo among his racing sponsors. “Think of a quadriplegic, then me. I can do triathlons, road races, Ironman. “But any recovery is really impactful for anybody. Having balance. Things you take for granted unless you live in that world. It’s simple things. Just going to the bathroom. Or just being able to balance in your wheelchair or lean over and pick something up off the floor. Or to feed yourself or button up your own shirt,” Fowler contin-ued. Had InVivo’s scaffolding been available when Fowler had his acci-dent, he said he would have “jumped on it in a second. Anything to improve my chances to regain feeling and function—even just partial function.” “This is a huge milestone,” Fowler said. “It can really change peo-ple’s lives.” ST

School’s in SESSIONSAs higher ed braces for profound changes, online college leads the way

PHOTO BY MAX ORENSTEIN


PHOTO BY NEIL UNGERLEIDER


School’s in SESSIONSAs higher ed braces for profound changes, online college leads the way


The ability to award federal aid to students will be a

“cornerstone of our growth,” said Sessions President

Gordon Drummond.

BY JOEL BROWN

NEW YORK — Sessions College For Professional Design President Gordon Drummond barely had time to respond to an email.

“Sorry for the late reply. Our school was approved yesterday to join the federal student aid system, so we are busy to say the least,” Drummond wrote in early January.

The approval by the U.S. Department of Education is “a very im-portant step,” he said in a later phone call, because it means Ses-sions degree students are now eligible for Pell grants, direct loans, PLUS loans and other sources of tuition funds.

“It’s going to be a cornerstone of our growth, and that’s why we worked so hard to get it,” he said, noting the process had taken a year and a half.

The school (www.sessions.edu) has developed a reputation for education innovation, with about 1,100 students enrolled in class-es and certificate programs delivered fully online. Its curriculum in-cludes graphic design, web design, digital arts, marketing design,

videogame art and more. For the last two years, it also has offered associate’s degrees in graphic design, web design and digital me-dia.

Enrollment jumped 18 percent last year in part because of that, CEO Doris Granatowski said. Only about 6 percent of Sessions students are enrolled in degree programs now, but “we expect those numbers to change dramatically, percentagewise, for the next several years,” she said. “That’s our growth plan: our degree programs.”

The appeal of an online degree is evolving for a new generation of education consumers—savvy digital natives who must balance the pressure of debt against precarious economic conditions that may keep them from earning enough to make a six-figure educa-tion worthwhile. As student debt in the United States alone nears the $1 trillion mark, online learning platforms, or MOOCs (mas-sive open online course), are gaining in popularity, due in part to increased global accessibility for students and the possibility for increased revenue for financially flagging schools.

Most MOOCs are “an innovation looking for a business model,”

said Kevin Kinser, an associate professor of higher education pol-icy at the State University of New York at Albany, in a recent Wall Street Journal interview. Some schools try to turn profit through curriculum licensing, some charge recruiters for access to gradu-ates through job placement services, still others provide targeted classes by such brands as Google Inc. and Autodesk Inc. that need consistent, specific additions to their work force. Most schools, even elite programs, however, have yet to prove a definitive model for success in this ever-growing market.

Yet Sessions seems to have cracked the code: “(Our) business model that supports keeping college costs low really speaks to the efficiency of online education,” Drummond said. “Though we have a substantial annual investment in digital course develop-ment and updates, we don’t have the massive overhead that a tra-ditional school has, or the need to spend on the litany of additional services that colleges provide to attract students.”

And talk about distance learning. Sessions’ administration is in New York City. Offices such as admissions and student services are in Tempe, Ariz. The education department is in Massachusetts. The faculty is all over the country, and the students live and study around the globe. Sessions thrives by bringing together a diverse student body with instructors and classes that can help them grow professionally. “We can simply focus on efficient and effective online education, which is one area where being a purely online school is an advantage,” Drummond said.

“The online environment has been a wonderful tool for me,” stu-dent Erin Ramsdale, 27, of Sicamous, British Columbia, said via email. “I live in a small, rural area, and design school choices are limited. With Sessions, I am able to gain a well-rounded design education from home.”

Ramsdale earned an associate’s degree in web design last year, and she is now studying toward an associate’s in graphic design, hoping the dual degrees will improve her career prospects. “I do work full time, so I am able to arrange my school time around my working hours,” Ramsdale said. “This provides me the opportunity to get my degree while remaining debt-free.”

Keeping a handle on the cost of education is a huge priority for Sessions. “Many of our online competitors’ programs are priced at the high-end of tuition – $500-750/credit – at the same rates

Art by Sessions graduate Hiba Abugosh

as equivalent brick-and-mortar courses,” Drummond said. “Our degree program tuition is $275/credit (with certificate programs comparable), so a student can find many ways to afford the edu-cation, whether it’s self-paying, or financial aid, or a payment plan – without going into debt. And they can compare the cost of ed-ucation with entry-level income or an expected career boost they are planning to achieve, and realize that it makes sense.”

The school started small in New York in 1997 and was accredited by the Distance Education and Training Council beginning in 2001, when Drummond joined. An experienced corporate “change agent,” Grana-towski joined the school around the same time at the behest of investor Spencer Trask, she said. Spencer Trask is a network of private investors that supports innovative companies focused on social impact.

Granatowski bought majority ownership of the privately held school in 2004. “The school has been profitable for most of its history,” she said.

Additionally, in the last three to four years, the school has reached a series of major landmarks. In 2009, the bulk of operations moved to Arizona, where the company now has 12 employees. Grana-towski, Drummond and a handful of other executives remain in Manhattan.

The school’s faculty is made up of more than 30 working design professionals from around the country, who spend an average of more than three years with Sessions, teaching beginning and ad-vanced design courses in their fields and providing individual cri-tiques of student projects. The three-member education department, located in Easthampton, Mass., works with them to design and test

Art by Sessions student Latisha Floyd



classes and monitor online teaching, ensuring consistent quality.

“We sometimes get a little skepticism or lack of understanding from people who want to know how it works,” Drummond said with a laugh. “A lot of people don’t know how art education can work, never mind how it can happen online.”

The way they structure the classes is project-based, he said, “so you have a series of projects that are creative and open-ended … so you’re learning techniques and skills and then applying them to a creative project that will let you demonstrate those skills to your instructor.”

Student Hiba Abugosh, who turns 22 in February, first grew up in In-dianapolis but has lived in Saudi Arabia with her family for more than a decade. Currently living in Jubail, she found it difficult to pursue her graphic design dream after graduating high school.

She researched various online schools, which led her to Sessions. “While enrolling, I didn’t know what I was in for. I guess people always assume it will be tedious and boring and maybe even difficult to study on your own, but it was actually quite the opposite,” Abugosh said.

“Not only does online learning provide a lot more flexibility (time wise) but it also offers a much more personal, one-on-one expe-rience with the professors and instructors and you really feel like they treat each student with special care.” At the end of their Sessions education, student work is available for viewing through a custom-built online service called “My Gal-lery,” which stores all of their finished projects. “We try to help students build a broad, deep portfolio as they go through the

program,” Drummond said. “If they’re going through our degree program, for example, they will take 29 or 30 classes in a two-year period. If we didn’t help them with that, it would be easy for stu-dents to lose track of their work.”

Abugosh’s story already has a happy ending. “I just graduated with an associate’s degree in graphic design in December, but actually got a job just a month before that,” she reported. “My job sort of came up out of the blue when a friend of a friend called and said she had heard I was a graphic designer looking for a job. I went to the interview and it all went great, and the fact that I was about to graduate was really helpful.” ST

Art by Sessions student Kyle Gilbreath

(Our) business model that supports keeping college costs low really speaks to the efficiency of online education.” PRESIDENT GORDON DRUMMOND“

‘Angels, though certainly desiring a handsome return, are at least as interested in playing an important and active role in the company.’In a recent survey of nearly 2,000 ac-credited, high net-worth angel investors conducted by the Spencer Trask Institute, today’s angel investor expects to bring more than just capital to the table when funding startups. In fact, in many cases, the cash investment is akin to a poker game ante—it’s the price you pay to get in the game and stay there as the game plays out. This is an important aspect of the angel investing game that both the angel community and entrepreneurs seeking investment capital would be wise to understand.

Today’s angels, particularly those who invest as standalone individuals, are looking for something more than just absolute financial returns from their investments. According to our survey results, the eco-nomic return on their invested capital was only the fourth most important aspect of their investment decision, and while no angel wants to lose money on any deal, his investment decisions are motivated by sev-eral other factors relating to personal goals, emotional/psychological needs, and a host of other non-financial criteria. Let’s look closer at these other motivating factors.

The No. 1 issue driving individual an-gel investment decisions among survey respondents (42 percent) was their desire to bring their specific prior knowledge and experience to bear in the companies

in which they invested. The third most important factor in the survey, or 36 percent, said it was their desire to play an active role in the investment process that motivated them to invest.

Taking these two issues together, we can infer from the survey results that angels, though certainly desiring to reap a hand-some return, are at least as interested in playing an important and active role in the company. Considering that the traditional angel demographic tends toward those who are past the prime of their working careers, retired or semi-retired, they prob-ably feel that their years of accumulated knowledge can and should be put to good use by steering early stage companies toward success.

In interviews with selected angels, a com-mon theme among many of them was the need to remain relevant, especially among younger retirees. Many had long and successful careers running, managing or starting businesses where they called the shots every day, made all the critical deci-sions, were highly regarded among their industry peers and were thought-leaders in their areas of specialty.

This group of angels was seeking out-lets for their talents while simultaneously expecting that their angel activities would keep them sharp, abreast of technolo-gy and mentally stimulated, and were prepared to trade some investment risk for the opportunity to stay in the game. Entrepreneurs should consider these factors when interviewing potential angel investors—many can bring more capital to the table than just investment dollars and want to be involved in the company’s operations and strategy.

For many early-stage companies, this situation can result in the ideal angel investor—an individual willing to (1) put up money in the earliest stages; (2) share valuable insights gained from long and successful career, and possibly take a seat on the Board of Directors; and (3) provide a sanguine, realistic, and prudent voice to balance a youthful and dedicated, but often inexperienced, entrepreneur/founder. A business-savvy angel who is deeply involved in the company can help management avoid the common pitfalls of early-stage companies, such as preserva-tion of cash and failing to identify specific buyers with specific needs.

They also add value downstream, scouting to find additional talent during the scale up of operations, networking within their peers to identify selling opportunities, and helping out in a wide range of daily operational distractions that often prevent the entrepreneur from focusing on getting product built and delivered to market. By taking ‘ownership’ of the company, they are aware of emerging needs for follow-on capital (which they can often provide without a burdensome fund-raising effort), their involvement with the company can provide needed marketplace credibili-ty—to investors, partners, and prospective customers—that is often the make-or-break element in a company’s success.

These super angels—call them what you will, from ‘involved investor’ to ‘Venture Coach’ to ‘CEO mentor’—can be the deciding factor in guiding an early-stage company from seed to success, and entre-preneurs seeking early-stage capital would be wise to cultivate and nurture these types of investors early in the game. The right combination of investor and entre-preneur can change the odds of success dramatically and represents the very best formula for long-term returns for everyone involved.

Mr. Clifford is Chief Executive Officer of Spencer Trask & Co., and a General Partner of the New Vista Capital Group.

THE INSIDERBill Clifford

Today’s angels want to bring more than $$ to game


COMPANY UPDATESWhat’s new on the inside of some of the world’s top growth companies

SAN DIEGO—Organovo Holdings, Inc. (OTC-QX: ONVO), a biotechnology company focused on delivering breakthrough three-dimensional (3D) bioprinting technology, announced that its common shares were approved to list on the New York Stock Exchange and could begin trading on July 11, 2013.

The company will continue to trade under the symbol “ONVO” but will withdraw its shares from listing on the OTC QX concurrent with listing its shares on the NYSE MKT, the premier U.S. equities market for listing and trading of small growth companies.

“Trading on the New York Stock Exchange is an important milestone for Organovo and will be valuable to our business and shareholders. Our decision to move to the NYSE was based on a firm belief that the exchange offers the best set of conditions for Organovo’s success, and thus the best opportunity to add value for our share-holders,” said Organovo CEO Keith Murphy.

“We found NYSE to have made an unparalleled commitment to providing a fertile platform for growth to early-stage biotechnology compa-nies, and we look forward to a great future on the exchange.”

Organovo rings the bell, opens exchange

Waltham, Mass.—InnoCentive, Inc., the glob-al leader in open innovation, crowdsourcing, and prize competitions, announced the launch of a new challenge, Real-Time Sensor to Monitor Sewer Overflows, seeking ideas for a new generation of low-cost, low-main-tenance sensors to monitor sewer overflows. This $10,000 ideation challenge is being offered through the partnership of Cincinnati Innovates, the U.S. Environmental Protection Agency (EPA), the Cincinnati Metropolitan Sewer District and Northern Kentucky Sewer District 1.

The ability to effectively collect real-time information from these locations is key to reducing sewer overflows in urban areas such as Greater Cincinnati. The lack of cost-effec-tive technologies to monitor such overflows often makes data collection efforts in these areas inefficient and unsuccessful. This Chal-lenge seeks ideas for an efficient, low-cost and low-maintenance real-time sensor to monitor sewer overflows and characterize the impact of wet weather on urban sewers.

“EPA supports this challenge in partnership with Confluence, the water technology innova-tion cluster in the Greater Cincinnati region,” said Sally Gutierrez, director of U.S. EPA’s Environmental Technology Innovation Cluster Program. “Billions of gallons of raw sewage and storm water runoff pollute our waterways each year. This Challenge is a great way to en-gage members of the water technology sector to foster collaboration, innovation, and create economic opportunity, while solving current, pressing human health and environmental issues like water pollution.”

For more info, visit www.innocentive.com/epa

EPA teams with InnoCentive for new challenge

WAYNE, Pa., and ALPHARETTA, Ga.,—Precyse, a leader in Health Information Management technology and services, announced high scores in healthcare research firm KLAS’ 2013 Mid-Term Performance Review: Software & Services report. Precyse received an overall score of 93.2 for ICD-10 Consulting and a 93.1 for Transcription.

According to the KLAS report, all performance scores have been compiled from the feedback of thousands of healthcare providers at phy-sician offices, clinics, hospitals and integrated

delivery networks throughout the United States. Precyse also was given high marks in Konfidence Level, which denotes the number of unique provider organizations that provided feedback to KLAS.

“To achieve these outstanding KLAS scores, as well as being named 2012 Best in KLAS for Transcription Services,1 it takes commitment, hard work and a relentless focus on serving our customers’ needs,” said Precyse President Chris Powell. “I am so proud of our colleagues who make these scores possible.”

Strong marks for Precyse in midterm report

Companies: Send your news updates to editor@ ventureportfoliomag.com


WALTHAM, Mass. — Ask and you shall receive … multiple answers of depth and quality.

That’s the egalitarian philosophy that drives InnoCentive, the industry leader in crowdsourced problem-solving.

Crowdsourcing harnesses collective intelligence, and creates direct channels between problems and all potential solution sources. It allows companies, foundations and cities to solve their major innovation gaps quickly and efficiently, giving voice to those who might have insight and inspiration but not direct industry access. InnoCentive (www.innocentive.com)

uses its virtual exchange platform to engage the right prob-lem-solvers with the creative and analytical skills to make light work of heavy complexities.

Answers to these intricate and varied problems can come from the personal experiences of people from all walks of life, InnoCentive founder Dr. Alpheus Bingham passionately con-tends. His Waltham, Mass.-based company, launched in 2001, has borne out this theory through approximately 1,500 prob-lems posed by businesses, foundations and nonprofits to an online pool of more than 275,000 problem-solvers who have won prizes between $500 and $1 million.

“If we assign a problem to me, or to Mary or to Joe, how do we know that one of us will have one of these clever, unique, breakthrough solutions? ... On any given evening, not every-one is going to come up with the breakthrough solution,” says Bingham when reached recently for an interview.

“We need a way where many minds can be exposed to a

Wisdom of the CROWDInnoCentive fills in knowledge gaps by tapping into experts

By FRANCI RICHARDSON ELLEMENT Photos by FAITH NINIVAGGI


Clockwise from top left, VP of Marketing Steve Bonadio; VP of Engineering Mike Michaud; founder Dr. Alpheus Bingham; and SVP of Clients & Partners Jen-Ling Liu


‘We need a way where many minds can be exposed to a problem,’ says Alph Bingham. ’It is more important to get all of this difference of thought—as different as the number of people you’re exposing it to—to reach breakthrough creativity.’

We try to point out ... that their primary stakeholders actually aren’t hung up on who solves the problem. They want the problem solved.’ INNOCENTIVE FOUNDER ALPHEUS BINGHAM“

problem,” he says. “It is more im-portant to get all of this difference of thought—as different as the number of people you’re exposing it to—to reach breakthrough creativity than it is to make sure it is approached by a Harvard-trained scientist with 25 years’ experience and a Nobel Prize.”

What qualifies as breakthrough cre-ativity? Bingham says it’s the best solution possible, instead of a rou-tinely acceptable answer.

Receiving his Ph.D. in organic chem-istry at Stanford University, “there were 20 to 25 reasonably smart peo-ple (in our class), and each time we got together, there could be most-ly good work but not breakthrough knowledge,” he says.

Bingham, now 60, recalled the class where he and other students were assigned complex weekly problems that could take up to 60 hours to solve and had to be defended before a critical professor.

The business of InnoCentive goes nearly against his own experience, instead recognizing that people who haven’t been as formally educated but have different frames of refer-ence can solve problems. He recon-ciles this with a quote from Damon Runyon from the play Guys and Dolls.

“The race is not always to the swift nor the battle to the strong, but that’s the way to bet,” he recalled one of his favorite quotes recently. “At Inno- Centive, we wondered, ‘Can I some-how cheat and place my bet after?’ We run the race first and then take the results and pick the winner from among them.”

The privately held InnoCentive now employs more than 50 people, and according to Bingham, hosted 200 new major challenges in 2012 alone. The company started in 2001 as a sub-sidiary of Eli Lilly, where Bingham had been in charge of research and design. Five years later, an investment from venture firm Spencer Trask allowed InnoCentive to spin off from Eli Lilly, gain some independence, and at-tract other large companies, including pharmaceutical firms, as customers.

“(Spencer Trask’s investment) also provided additional capital for hiring, et cetera,” says Bingham. “It was cru-cial to InnoCentive.”

Though Bingham expresses a certain degree of satisfaction with the com-pany’s growth, he says he believes egos still stand in the way. A com-pany or foundation’s reluctance to publicize problems they cannot solve puzzles him, particularly in academia, from which most of InnoCentive’s trusted problem-solvers hail.

“Their identity is, ‘I’m a problem-solv-er.’ They think if they post on Inno-Centive, it goes against their comfort zone of what their identity is,” Bing-ham says. “We try to point out to businesses, foundations and govern-ments that their primary stakeholders actually aren’t hung up on who solves the problem. They want the problem solved.”

Out of 452 crowdfunding platforms in the United States in April 2012, Inno- Centive ranks high because of the number of challenges it has complet-ed. According to industry research lab Crowdsourcing.org., those plat-forms raised a cumulative $1.5 billion in 2011, and 2012 was predicted to have seen a 300 percent increase in revenue.

Among its clients, the City of Boston, suffering from bumpy, pitted roads, recently crowdsourced a solution to its pothole problem by posing an InnoCentive challenge for a mobile application that would allow resi-dents to reliably report potholes. The $25,000 award offered by Liberty Mutual was split three ways between a Somerville-based group of most-

veloping, from this new application, a pavement condition index that would help the city address the most serious potholes and manhole repairs in order of priority, Osgood said.

Gerald C. Kane, an associate professor of information systems at Boston Col-lege’s Carroll School of Management, sees crowdsourcing as a way for peo-ple to obtain credibility in their field with no experience.

“It’s a great opportunity for people try-ing to make their way into the field, be-cause it gives them opportunities they wouldn’t have otherwise had, to build reputation and a portfolio of work be-fore they even get a job,” says Kane.

The majority of problem-solvers spe-cialize in research within academia with master’s level and doctoral degrees. Many are exposed to InnoCentive through partnerships with The Econ-omist, Nature Publishing Group and Scientific American. Of the 34,000 sub-missions provided by problem-solv-ers, about 1,300 financial awards have been given to the best answers.

One of InnoCentive’s problem-solvers, Wurner Mueller from Dallas, was a pas-

sionate scientist, but every time he was successful, he was promoted to man-agement. When he retired, he set up two workshops on his property: a labo-ratory and a woodworking shop. When he came across InnoCentive, he made its problems part of his daily structure.

Bingham says the growing popularity of crowdsourcing could have a slight im-pact on traditional business structure, but is more reflective of an existing trend.

“You know, there is a free agency kind of mentality that we see creeping into that relationship,” he says. “Employers are—by necessity, by business performance—less likely to hire you for 45 years and give you a gold watch” at retirement.

“Our current generations aren’t think-ing gold watch. They’re thinking about mobility, personal growth, experience ... A lot of problem-solvers say, ‘This way of working works for me. I’m not in-terested in all of the other performance issues that come with being an employ-ee. And I can choose what problems I want to work on and hunker down in my basement and write you an algorithm.’

“We’re just following a trend that is al-ready out there.” ST

ly MIT graduates, a professor from Grand Valley State University and an anonymous solver. The app is cur-rently available on iTunes.

From the 700 submissions, InnoCen-tive’s team whittled down the number presented to Chris Osgood, co-chair of the mayor’s Office of New Urban Me-chanics, to about 10 high-quality an-swers, three of which were chosen. The city was able to select the right answer after they saw the winners brought a “commonality of approach.”

“The typical way we might have gone about this was to write a stan-dard contract where we would have partnered with someone based upon their resume and references and their experience,” says Osgood, who es-timated the city saved thousands by crowdsourcing.

“What was interesting for us was to choose a solution based upon the quality of solutions ... “It’s great that we could tap into this network of folks that InnoCentive has built.”

Edward Aboufadel, head of the math department at Grand Valley State in Michigan, says he and three students worked on Boston’s problem every day for eight weeks.

“For the pothole challenge, I had just purchased my first smartphone a few months earlier, and I was intrigued with the data that can be collected using it,” says Aboufadel, who had read an article about InnoCentive in Wired magazine and signed up as a prob-lem-solver.

“When I read about the challenge, I had an idea that we could use wavelets (a mathematical tool used in research) as part of the solution.”

Aboufadel was surprised when he learned that he won the competition. “I remember reading the e-mail right after I woke up one morning, and I had to read it three times to believe it,” he said. “It was exciting! It was nice to demonstrate that mathemat-ics can be used for a clear purpose. Winning also validated the work that I did with my students.”

Boston has gone on to smooth more of its roads and is interested in de-

InnoCentive provides a creative environment for virtual problem-solving and collaboration among the world’s top thinkers.




On being PRECYSESmart device tracks people, things in deadly situations

By MARY WELCH

ATLANTA – Imagine trying to keep track of hundreds of workers on a dangerous oil platform in the Gulf of Mexico or the North Sea. One explosion on the rig could sink operations and all on board within minutes. How would you find them all or know they were alive to be rescued?

Atlanta-based Precyse Technologies (www.precysetech.com) has been finding what’s lost with speed and accuracy—people, as well as costly capital assets—since its founding in 2004. An industry leader in entity awareness solutions, the company combines soft-ware, a wireless network, and data gathering and analysis tools that keep track of things and people in near-real time.

“There were all these competitors, including us, who were trying to figure out how to create a small device that can transmit, locate a satellite—like a GPS—and that could tag hundreds or thousands of assets,” says Rom Eizenberg, Precyse Technologies co-founder and chief marketing officer. “And then we had to figure out who the market was. So the initial challenges were pretty big.”

Precyse started in Israel, and first worked with the Israeli army, keeping track of tanks, says Eizenberg. “Radio-frequency identifi-

cation (RFID) was a new industry in the ’90s with everyone working with the idea of how to use radio wireless technology to identify and locate physical objects.”

RFID uses radio-frequency electromagnetic fields to send data that identifies and tracks objects that have tracking tags attached to them. Tags can be powered in various ways, including through use of magnetic fields, batteries or UHF radio waves.

The nascent industry’s challenge was figuring out how to tag as-sets (people and machines) from a distance and for long periods of time without losing its energy source. Precyse’s answer was its patented Entity Awareness Product Suite (E-cubed or EQs), which is a wireless real-time location, sensing and control solution. EQs can tag and track objects as far away as a mile, with an energy source that lasts at least two years, work inside or outside and do it reliably, cheaply, seamlessly.

In addition to creating the technology, Precyse wasn’t even sure whom to market to—and if they would find a receptive audience. The company’s technology, which can be customized, is aimed at helping manage strategic physical and human assets in four basic areas: safety and security, intelligent vehicle and fleet management, smart supply chain and equipment management and control.

Precyse Technologies co-founder and CMO Rom Eizenberg, above: “In safety drills, we’ve seen significant response in the time it takes to find the man down: 45 minutes without the system, to under 9 minutes.”


http://www.precysetech.com

“Everyone, including us, was chasing everything under the sun looking for markets,” he says. Right now, Precyse is concentrating on two industries: airports and the gas and oil sector.

According to Eizenberg, large airports have about 10,000 movable assets. Supply chain management is intense and complicated. “If an airplane is on the runway needing a part, they need to be able to locate the part and the transporting cart as soon as possible,” he says.

“We reduce that waiting time, which makes the passengers happi-er, and it reduces the time the plane is idling, which means it uses less gas. Using less gas means saving money and fewer emissions go into the atmosphere, and it helps the environment. It’s a big deal.”

The oil and gas industry is another prime sector where employ-ees, wearing Precyse’s customized EQ badges, can quickly detect dangerous agents such as toxic hydrogen sulphide (H2S) and call for help. If something happens to a worker, such as an accident or exposure to deadly agents, the system automatically alerts the control room that not only alerts them about the safety issue but also reveals the exact location of every worker in near-real time.

The first responders’ time to find and evacuate employees is cut dramatically, and in trauma situations, those first moments make the difference between rescue and the raw reality of recovery. “In safety drills, we’ve seen significant response in the time it takes to find the man down: 45 minutes without the system, to under 9 minutes,” Eizenberg says.

Saving lives is of the utmost importance, but Eizenberg also points out from a public accountability standpoint, the company is able to say that all the employees have been accounted for and evac-uated.

“Safety drives adoption and then once everything is in place, com-panies see they can keep track of trucks, tools. The ability to do that is not insignificant. We help provide a safe work environment as well as operational efficiencies. Frankly, it’s an easy sell.”

Precyse caught the eye of Spencer Trask, a private venture capital fund. “Spencer Trask did our initial funding as a startup and has proven to be very important in many ways in addition to the fund-ing,” says Eizenberg. “They have been a mentor and given us very smart advice.”

In 2010, the company closed on $11 million second-round funding from a Georgia-based private investor group. The company also relocated to Georgia, although Eizenberg said that other issues, such as quality of life and proximity to Georgia Tech, also factored into the move.

Leland Strange is one of the investors and sits on the company’s board of directors. Strange founded Quadram Corp., which in 1983 merged with Intelligent Systems Corp., where he serves as its chairman, president and CEO.

“I found the company (Precyse) an interesting one and I believe in the technology,” Strange says. “One of the main reasons for my involvement was (Precyse CEO) Andy Mullins and I believe they have a very sellable product.”

What satisfies Strange about the potential of the company is its repositioning, putting more value on the human element of the tracking technology. “The new management is taking it in a new

direction—more toward the personal as-pect as opposed to physical aspects.”

As for the future, Eizenberg says Precyse’s technologies can be used on behalf of any company requiring a better grip on its assets—both human and physical. “There are other industries where there are significant opportunities. We are working with three Caterpillar plants and their major assembly line components, as well as a car rental company where we are keeping track of 80,000 vehicles. And, of course, there is the military.

“If we can cut 10 percent out of their supply chain costs, that’s saving them millions,” he says.

With its recent funding and about 20 customers, the company broke even the last quarter of 2012 and is now profitable. Al-though two of its top competitors, Sweden-based Niscayah and Illinois-based WhereNet Corp., were acquired for $230 million and $126 million respectively, Eizenberg says Precyse is not looking to be acquired—at least not yet.

“Our goal is to make money for our shareholders,” he says. “We can do that by being acquired or by growing organically. Frankly, it’s too early to make decisions like that.

“A few years ago, we got customers because the CEO was a vi-sionary who wanted the new technology. Now we are seeing our buyers are other managers who are looking to solve a problem; they care about the economic (benefits) and the functionality of our products. That’s a good sign.”

Precyse Technologies has targeted among others the oil sector, monitoring employees aboard offshore oil rigs, such as this maze-like platform in the North Sea, and ensuring all can be accounted for immediately in case of emergency.

CEO MULLINS

ST


Formula for HOPEMyriad Genetics turns medical discoveries into ‘crystal ball’ for cancer


Formula for HOPEMyriad Genetics turns medical discoveries into ‘crystal ball’ for cancer

By DEREK P. JENSEN

Tucked inconspicuously inside a research park atop Salt Lake City’s foothills, Myriad Genetics has spent two decades rising from a pi-oneering biotech startup to a global leader in molecular diagnos-tics. Along the way, the company has helped more than a million people assess their risk of debilitating disease through a patented cancer test proven to save lives.

Ethicists and other critics argue Myriad has wrested a monopoly over an intrinsic element of human health: the gene. The patented genes at issue, BRCA1 and BRCA2, are used by Myriad to detect risk of breast and ovarian cancer, then aid in treatment options. Women who test positive for the presence of gene mutations using the so-called BRACAnalysis have an 82 percent higher risk of breast cancer and 44 percent higher risk of ovarian cancer. To them, the early detection is less a debate over gene commodifica-tion and more a “crystal ball” for long-term health.

“Without the test, it would have been an additional 10 years be-fore I ever would have gone through my first breast MRI and mam-mogram,” says Myriad patient and cancer survivor Anne Dietz.

“And I don’t know whether I would be alive today.”

Even so, the Supreme Court has agreed to decide in summer 2013 whether genes can be patented following a review of an appel-late court decision that upheld Myriad’s right to patent “isolated” genes that account for the hereditary cancers. The emotional and intensely contested issue will have sweeping consequences for the future of gene-based medicine — and for millions of potential can-cer victims worldwide.

Unraveling the mysteryFounded in 1991, Myriad Genetics was one of the earliest compa-nies in the genomics sector focused on understanding the function of proteins and the role they play in human disease. Now home base to more than 1,000 employees and a host of prognostic med-icine products, Myriad directs its industry-leading laboratories and arsenal of scientists toward a simple premise: Preserve and en-hance human life. The gene testing is used not only for assessing disease-development risk but also for an individual’s likelihood of responding to drug therapy and their risk of disease progression or recurrence.

no chemo, no radiation … all I had to do was have my prostate out,” he marvels. “I think having the BRCA test and having that knowledge is like looking at a crystal ball … it actually helped.”

For years, Jenny O’Brien shook her head at people who pursued the “crazy” test. “Why would I want to walk around knowing I was going to get cancer?” she writes on her blog. “Why would I want to wake up every day thinking cancer was looming in my body?”

Then, O’Brien’s mother was diagnosed with breast cancer for a second time—15 years later—and genetic testing became her cru-sade. Her blog is now devoted to encouraging high-risk women to get tested by chronicling her own BRCA test for gene mutation. “There are people in this world who are diagnosed with cancer when it’s too late,” she writes, “and being diagnosed as BRCA positive … well, you have the chance to know before that hap-pens.”

Order or the courtArguments before the high court in Association for Molecular Pa-thology v. Myriad Genetics, Inc. are scheduled to begin in April, with a decision expected by the end of June. The ruling on gene patents carries high stakes—potentially impacting every industry pathologist and clinical laboratory. Experts say the outcome will turn on whether justices decide isolated genes are “products of nature” or “human-made inventions” eligible for patent protec-tion.

Siding with Myriad in 2011, Circuit Judge Alan Laurie insisted the tests are products of man. “Everything and everyone comes from nature, following its laws,” he writes for the majority, “but the com-positions here are not natural products.”

The American Civil Liberties Union (ACLU), which brought the case, argues the patents violate the First Amendment and suggests it is “inconceivable that a company can own a patent on something as naturally occurring as DNA.”

But Meldrum says a loss at the Supreme Court could imperil the medical treatment of hundreds of millions of people. “The discov-ery and development of pioneering diagnostics and therapeutics require a huge investment,” he told Reuters, “and our U.S. patent system is the engine that drives this innovation.”

Medical proponents argue the genetic tests curb suffocating healthcare costs, while patients point to something more pre-cious—calling them a gift, not a death sentence.

“Someone who is BRCA positive is given the gift and opportunity to be proactive and in control of their health,” O’Brien writes. “It’s life-saving information.”


The financial bet was worth the risk for early investors and found-ers, which include Spencer Trask and Dr. Walter Gilbert, a Nobel Prize winner in chemistry for his contributions to the development of DNA sequencing technology.

Though Myriad has competition, Chief Executive Peter Meldrum explains his company turns its genetic discoveries into predictive medicine product lines, complete with a sales force and attractive revenue rates. Despite the limping economy, Meldrum points to a “modest” burn rate, six consecutive quarters of growth exceeding 20 per-cent, and a 2013 revenue projection reaching $585 million. What’s more, the CEO notes, Myriad’s two major products are reimbursed by HMOs and insurance companies—meaning Myriad does not depend on its patients to pay for the tests. As such, Meldrum is bullish on Myriad’s position in the biotech market and the potential return to investors.

“Myriad has a strong therapeutic prod-uct pipeline and is one of the few genomic companies with a drug in human clinical trials,” Meldrum recently told The Wall Street Transcript. “So we’ve accomplished a major hurdle that most of the other genomic com-panies have not yet faced: the successful marketing of gene-based products.”

Results appease skepticsFor Robert Kaitz, Myriad was a godsend—and a revelation. “I had no idea guys could get breast cancer,” says the 52 year old, who survived stage 3 breast cancer following a 2006 radical mastecto-my. It turns out that was just the first twist on Kaitz’ rollercoaster ride through cancer diagnoses. Thinking he was cancer free, Kaitz nonetheless stayed proactive once reminded he was of Ashkenazi Jewish descent, which carries considerable risk of BRCA2 gene mutation. Kaitz found Myriad and Myriad found prostate cancer.

“Luckily, they caught it so early because of the BRCA test that I had

Myriad is one of only a few genomic companies with a drug in human clinical trials, a huge milestone in development.

CEO MELDRUM

ST

“ Without the (BRCA) test ... I don’t know whetherI would be alive today.’ MYRIAD PATIENT/CANCER SURVIVOR ANNE DIETZ


A version of this article appeared May 21, 2013, on page A15 in the U.S. edition of The Wall Street Journal, with the headline: Gene Patents Drive Medical Innovation.

FUNDING INNOVATIONBy Kevin Kimberlin

The biotech industry began in 1978 when the University of California applied for a patent on the gene for the human growth hormone. Since that filing nearly 20 per-cent of the 20,000-plus genes in our DNA have been patented.

The current Supreme Court case challeng-ing the patent on the breast cancer gene (Association for Molecular Pathology v. Myriad Genetics) could invalidate thou-sands of these patents, affecting hundreds of diagnostic and therapeutic products. The biotech industry saves tens of thousands of lives and creates as many jobs. However, a ruling against the patent will deep-six future life-saving technologies as investor support for such discoveries disappears.

I know this because I wrote the check to start Myriad Genetics—the firm that holds the patent on the breast cancer gene—and talked some 200 investors into its first ven-ture funding.

These investors hoped to make a difference as well as a financial return. To us, the prom-ise of a patent was crucial. The first page of Myriad’s initial offering in 1993 made this connection clear: “The Company has filed a patent application claiming the BRCA1 gene and methods for its detection.”

BRACAnalysis, Myriad’s breast cancer test, has warned 1 million women about poten-tial genetic breast and ovarian cancer risk. Angelina Jolie’s discovery that she car-ried the mutated BRCA1 gene led her to choose a preventive double mastectomy.

Although not all women carrying the gene make this choice, they should know their predispositions to weigh their options. Early detection is always better. The same BRCA1 and BRCA2 anomalies may also sig-nal a genetic predisposition to ovarian can-

cer, which is extremely difficult to diagnose in its early stages. Women like Jolie who receive and act on this genetic warning can significantly reduce their risk.

Understandably, some people are uncom-fortable with the concept of awarding pat-ents based on human DNA. But let’s keep four points in mind:

No one “owns” a part of you. At issue are mutations of the BRCA1 and BRCA2 genes.Some argue that these sequences are obvi-ous products of nature and not patentable. The reality is it took more than 17 years of intense research, involving sophisticated genetic mapping and sequencing skills to discover and isolate the molecules at the heart of the breast-cancer test. The com-plexity required to purify these molecules makes them anything but obvious.

Patents promote research and competi-tion. Patent-holders do get exclusive right to commercialize their discoveries, but they must disclose all the details. In that way, a patent actually provides information for further research and competition. Since the BRCA1 patent was granted, more than 9,600 studies have been published based on this gene. Several other ways to detect breast cancer have been developed—but there is still no better predisposition test.

Scientific acclaim is not enough: Innova-tion requires money. Before forming Myr-iad, one of the co-founders, Walter Gilbert of Harvard, won the Nobel Prize in chem-istry for co-developing DNA sequencing. Co-founder Mark Skolnick of the Univer-sity of Utah, and some of his colleagues created the gene-mapping technique that catalyzed the Human Genome Project. Ul-timately, neither researcher could translate his scientific innovations into a viable test.“I’d helped uncover the best resource on the planet for getting at the underlying genetic cause of cancer,” Mr. Skolnick lat-er said. “I just didn’t have the resources to take advantage of it.” It took an invest-ment of $500 million to commercialize the BRACAnalysis test.

Patents lure investors. Medical innovations require investors willing to take great risks over long periods. Two decades passed be-fore Myriad recouped its enormous invest-ment—an investment that would not have happened without patent protection.

We have entered the golden age of the genome. Consider recent cutting-edge discoveries such as the studies on prenatal heart defects due to genetic mutation, and inherited heart disease risks. Without pat-ents, who will take the financial risk to bring such medical findings to market? A patent system that protects medical innovation encourages investors to make these types of long-shot bets. Ruling against patents on isolated DNA will drive this risk capital elsewhere.

An adverse decision would also silence researchers. Findings with commercial po-tential will disappear into trade secrets, much as Coca-Cola has kept its formula under wraps for 100 years. Brilliant insight and scientific discovery, now available to all through patent disclosures, will be kept confidential.

At stake is a system that shares the life-sci-ence miracles that propel humanity for-ward. The Supreme Court must uphold the ability to patent isolated DNA to keep this innovation engine going at full speed.

Mr. Kimberlin is a co-founder of Myriad Ge-netics Inc. and chairman of Spencer Trask & Co., an advanced-technology venture firm.

Thank you, Angelina

Jolie, 38, underwent a preventive double mastectomy in May 2013, after confirming a mutated BRCA1 gene. Jolie’s mother suc-cumbed to breast cancer at age 56, in 2007, and her aunt died at 61, just two weeks after Jolie’s successful procedure.

Without the (BRCA) test ... I don’t know whetherI would be alive today.’ MYRIAD PATIENT/CANCER SURVIVOR ANNE DIETZ


Settling up to keep health care HEALTHY

Patented technology accelerates bill dispute resolution

By EMMA JOHNSON Photos by KEELIN DALY


“ The market is there. It is just a matter of how fast we can effectively and efficiently ramp up the business to create profound value.’ CYBERSETTLE CEO ROBERT BALLOU

STAMFORD, Conn. – Hospitals can’t survive or provide quality healthcare if they cannot get paid. That’s why PayMD makes good business sense, says Robert Ballou, CEO of the par-ent company, Cybersettle.

PayMD is a patented secure pay-ment platform that helps hospitals, clinics and physician groups make it easier for patients to settle their portion of their medical bills. In the United States, patient responsibility for medical bills totals $700 billion annually, yet just 16 percent of these patients pay these bills, according to one McKinsey & Co. report. “The po-tential marketplace for our services is enormous – the size of the health-care industry in this country is unfath-omable,” Ballou says. “But failure for patients to pay is a chronic and life-threating problem for hospitals and the communities they serve ... If we can help hospitals recover patient responsibility, we can help save pa-tient lives.”

Cybersettle (www.cybersettle.com) has been in business for 12 years, building solutions that allow end users to negotiate the price of goods and services, and settle bills. The third line of business is revenue recovery –

the technology upon which PayMD was launched. In its dozen years, the Stamford, Conn.,-based Cybersettle has secured 23 patents, Ballou says.

But three years ago, a troubled Cyb-ersettle sought the services of Spen-cer Trask. “Spencer Trask had the foresight to see the potential of the cyber-settlement business, and they provided the financial and intellec-tual support to bring PayMD to mar-ket,” Ballou says.

“Without Spencer Trask, Cyberset-tle was on track to experience what many good ideas experience in the absence of strong execution: We would have died on the vine.”

That is not to say that the compa-ny’s technology did not prove use-ful. New York City Comptroller John C. Liu announced that Cybersettle’s technology saved the city $94 million between 2004 and 2009 by helping to settle personal injury claims made against the city. Cybersettle’s software created an online, automated process that replaced the old protocol of face-to-face and telephone meetings with adjusters. Liu reported that claims were settled faster, and at a fraction of the cost per settlement. In fact, during that five-year period, claims settled using Cybersettle technology aver-aged just $9,000 per claim, compared with nearly $28,000 per claim for those settled without the technology.

Cybersettle CEO Robert Ballou checks in with Alan Hurwitz, chief operating and financial officer. Cybersettle’s Pay-MD has signed six hospital groups as new clients since November 2012.


Today, it is clear that Cyberset-tle is no longer at risk of dying on any vine. PayMD is excelling, and Cybersettle is thriving. In the two months following its November 2012 launch, PayMD signed on six hospital groups, which represent 4 percent of the New York City-area market and about $1 billion in patient responsi-bility revenue, Ballou says. In the 18 months leading up to January 2013, the company doubled in size to 19 employees, and was on track to dou-ble again in the following 18 months.

Growth potential, Ballou says, is enormous. Healthcare costs are, too, and the trend is shifting to-ward more patient responsibility in an effort to keep reins on employ-er-paid premiums. In the past two years alone, the percentage of total healthcare costs for which the pa-tient is responsible jumped from 21 percent to 26 percent, or $700 bil-lion in 2013, Ballou says, and that figure is expected to balloon to $1.6 trillion by 2017. These trends only add to the pressure on health-care groups to find a way to get pa-tients to pay.

“This is the first time in my 35-year business career that the potential market has not been an issue,” Bal-lou says. “The market is there. It is just a matter of how fast we can ef-fectively and efficiently ramp up the business to create profound value for our clients and create a metric value for our shareholders.”

PayMD’s value lies in its ability to bridge the gap between the fact that 98 percent of patients are both willing and able to pay for some of their out-of-pocket medical expens-es, yet only about 16 percent of patients ever pay at all. Those who fail to settle their bills claim misun-derstandings about what is owed, forgetting, and a lack of payment op-tions, among other reasons. “There is general confusion about medical bills,” Ballou says.

PayMD stands to bridge this signifi-cant gap by providing a user-friendly way for healthcare providers to com-municate with patients and provide simple tools for them to pay their portion of their medical bills. ST

Upon leaving the healthcare provid-er, patients are given a one-page cli-ent-branded document that is specific to the patient’s experience, insurance and other information.

This document clearly lays out how much is owed, why, and how they can pay. The patient is invited to log in online to deal with their bill. There, on a client-branded website, they can chose to pay online, negotiate a lower bill or agree to a payment plan.

“Research shows that the more you give the patient the tools to pay when they want, where they want and how much they want, they are far more likely to settle their obligation,” Ballou says.

“We’ve recently trademarked the slogan, ‘We save hospitals that save lives.’ The more we can help hospitals recover revenue they are owed, the better the chance that those hospitals will be there to serve each and every one of us when we need them.”

Cybersettle CEO Robert Ballou: ‘We save hospitals that save lives.’

“ Ninety-eight percent of patients are both willing and able to pay for some of their out-of-pocket medical expenses, yet only about 16 percent ever pay at all.


Providing food and cultural familiarity to burgeoning Latino market pays off for El Super bodegas

TASTE OF HOME

By KAREN ROBES MEEKS

Pushing a shopping cart brimming with bags of groceries, Rox-anna Fuentes made her way out of her neighborhood El Super market in Wilmington, Calif. and toward a crowded parking lot late on a Saturday morning.

Fuentes, a house cleaner who has lived in the working-class, harbor community for 25 years, said she feels more comfort-able at El Super and prefers it to other stores for the prices and the products.

“I come here all the time, every week,” she said as she and her husband loaded more than a dozen grocery bags into the trunk of their small red car. “It’s more cheap and they have very good stuff—the beef, the specials, everything.”

Many shoppers such as Fuentes frequent El Super’s bright and airy Latino-driven supermarkets, where rows of donkey-and star-shaped piñatas decorate the shelves and the smell of pink-sugared pan dulce, a Mexican sweet bread, welcomes in-

coming customers. Latin products, often tucked away in the ethnic foods aisle of most Ameri-can grocery stores, are prominently on display at El Super.

Here, customers zero in on produce signs that read naranjas (oranges) and jitomates (tomatoes) and Mexican products such as LaLa blueberry yogurt that share real estate with the likes of Chobani Greek yogurt in the dairy aisle.

“Everything is there,” Fuentes said. “We need more (places) like this.”

El Super is doing just that—providing more grocery stores that make shopping for Latinos an inclusive, sensory, familiar experience.

That was El Super founder Al Lujan’s vision in the 1990s, when he first conceived of the idea and brought it to Spencer Trask as a potential investment. Lujan wanted to build an ethnic food superstore that could stand as a symbol of welcome as well as bring the flavors of home to the millions of incoming Latino immi-grants to the United States.

Charting unprecedented census growth of 43 percent since 2010, El Super serves and suits this surging population. Latino numbers have now topped 50 million, and account for about one out of every six Americans, according to current U.S. Census Bureau statistics. Facing a wave of market demand, El Super took on a strategic partnership with Grupo Chedraui, one of the largest supermarket chains in Mexico, to grow, bolster and streamline its operations.

Sixteen years after opening its first store in South Gate, Calif., Bodega Latina Corp., do-ing business as El Super, now operates more than 40 stores in Latino-concentrated areas throughout California, Arizona and Nevada. U.S. retail sales of Latino food products are expected to reach almost $10.7 billion by 2017, according to the 2012 Hispanic Food

and Beverages in the U.S. report.

The Paramount, Calif.-based food retailer ranks No. 3 in Supermarket News’ 2013 list of the Top 50 Small Chains

Latino and American shoppers alike are treated to the sights and smells of colorful food and culture as soon as they enter El Super.


and Independents. The rankings, assembled by the weekly food distribution industry trade magazine, took into account the food retailer’s sales gains, mergers and acquisitions.

Bodega Latina moved in rank from last year’s No. 10 to this year’s No. 3 based on its recent acquisition of eight high-vol-ume stores from K.V. Mart in Carson, Calif., according to Supermarket News.

“This is a time of growth,” Bodega Latina Corp. Chief Execu-tive Officer Carlos Smith said after his company purchased sev-en stores from its competitor, Gigante, in Southern California. “We believe that bringing the Gigante stores into the El Super family will provide synergies that will benefit both the company and the consumers in Southern California,” Smith said.

Bodega Latina Corp. has been capitalizing on a growing His-panic population that boasts much larger than average

households, with 3.8 people per household versus 2.5 people per non-Hispanic household, according to U.S. Census data.

Grocery budgets among Hispanic households are expected


Most of the associates are your neighbors. They really understand who you are because they are a part of your community.”

GABRIELA ALCÁNTARA-DÍAZ “

to grow as well, at an annual average rate of 5.7 per-cent in the next 10 years, compared with 2.5 percent for non-Hispanic households, according to a recent study by Credit Suisse.

With an estimated $1.2 trillion in buying power, Hispanics are considered the “ideal staples consumer,” according to a study by AHAA: The Voice of Hispanic Marketing, a national organization that promotes the Hispanic market-ing and advertising industry.

Many American supermarkets try to stake a position in the Hispanic market by evaluating their overall Span-ish-language advertising and marketing to Spanish-dom-inant customers, said Gabriela Alcántara-Díaz, president of Miami-based GADMarketing Communications and a board member for AAHA.

“You may have those Hispanics who are still trying to get acclimated into the environment and into their own communities, so they go for something that’s familiar and (Bodega Latina Corp.) is really a huge success because they are bringing the Hispanic shopper into the main-stream to their store,” she said. “A lot of supermarkets are moving away from just having centralized ethnic shopping aisles and are positioning them as mainstream Hispanic shoppers.”

As an independent supermarket company, El Super has been able to grow and integrate into the neighborhood it serves, she said.

El Super Contigo participates in community programs such as Student of the Quarter and the annual El Super Scholarship Program, as well as making donations to charitable organizations and sponsoring such local events as the East L.A. Mexican Independence Parade, Hun-tington Park’s Christmas Lane Parade and St. Ignatius Annual Casino night, according to the company’s website.

El Super also provides and supports a volunteer pro-gram that motivates its employees to give their time and energy to various causes, including tree-plant-ings, community cleanups and turkey and toy drives.

“Those supermarkets are not only about food but they also represent the community,” Alcántara-Díaz said. “Most of the associates are your neighbors. They really understand who you are because they are a part of your community.”

It’s one of the main reasons why Wilmington resident Jose Rodriguez said he likes to shop at his neighbor-hood El Super store.

“It’s the people; I’ve known them for years and I grew up in Wilmington,” the gift shop business owner said as he left the store with cartons of Coca-Cola and gallons of orange juice for a family picnic at a nearby park. “That makes you want to come back even more.” ST

In the Seat of HONORHealth Dialog seeks to endow chair for groundbreaking scientist’s influence



BY JOEL BROWNPhotos by RENEE DeKONA

BOSTON – An academic study gave birth to a hugely successful private venture devoted to improving health care decision-mak-ing. Now some of that capital is being turned back to make sure the scholarly research continues.

The chairman of the board of directors of Health Dialog, George Bennett, is leading a $5 million drive to endow a chair at Dart-mouth College to honor the work of Prof. Emeritus John E. “Jack” Wennberg, founder and director emeritus of The Dartmouth Insti-tute for Health Policy & Clinical Practice.

Wennberg’s research into the unintended variations in medical care around the country provided the spark for the founding of Health Dialog. Bennett, the company’s co-founder and former CEO, says he’s already put $1 million into the drive and hopes to announce its success at the 2013 Wennberg International Conference at Dart-mouth in October. Among those working with him is Spencer Trask, the venture firm that helped fund the company’s launch.“It ends up that Jack Wennberg’s work is among the most pro-found research work in the area of big data that has ever been con-

ducted,” Bennett says. “He has documented the wide variances in treatment patterns around the country, and it has impacted policy at the highest levels. … His work has had more and more influence on more and more decision makers.”

Bennett expects the first occupant of the Wennberg chair to be Professor Elliott Fisher, cur rent director of the Dartmouth Institute “and well qualified to carry on Jack’s work” in the relationships between treatment decisions and quality and, ultimately, the cost of care.

In the 1990s, investor and entrepreneur Bennett encountered Wennberg’s work showing that the very same medi-cal condition often received significantly different care in two dif-ferent locations – a big difference in price without necessarily a difference in outcomes.

“It’s a little bit like ‘Field of Dreams.’ If you build it they will come,” said Bennett, using an example he attributes to Wennberg. “In the healthcare arena, if you have three heart surgeons in a small community, there will be enough heart surgeries to keep the three busy. And if in that same community, you have five heart surgeons,

Health Dialog founder George Bennett is leading a $5 million drive to endow a chair at Dartmouth College, honoring the work of Prof. Emeritus John E. “Jack” Wennberg.

In the Seat of HONORHealth Dialog seeks to endow chair for groundbreaking scientist’s influence

n To participate in this fund-rais-ing initiative, contact Spencer Trask & Co.

by a strange set of circumstances, there seem to be enough sur-geries to fill up the schedules of five.

“He is not impugning the integrity of the people, he is just saying there is a tendency, if you have a lot of imaging capacity, you tend to get a lot of images, and if you have a lot of heart surgeons, you get a lot of heart surgeries,” Bennett said.

This has major implications for the U.S. healthcare spending, which reached $2.7 trillion in 2011 – $8,680 per person or 17.9 percent of our gross domestic product, according to the government’s Centers for Medicare and Medicaid Ser-vices.

Wennberg’s work has become an im-portant part of regulation under the soon-to-be-fully-implemented health reforms known as “Obamacare,” Ben-nett says, which aims to reduce healthcare costs. But long before that, it was clear that private initiative was needed to ad-dress the issues raised.

In the late 1980s, Wennberg and his colleague Albert G. Mulley Jr. formed a not-for-profit group, now called Informed Medical Deci-sions Foundation, to put Wennberg’s data and Mulley’s studies of shared decision-making to work together to help patients make better decisions.

“They started making videos that showed the treatment options for breast cancer and prostate cancer and all sorts of surgeries. They then were going broke,” said Bennett. “I reviewed this mate-rial … and I struck a deal with Wennberg and Mulley saying I’ll take the commercial property and I’ll give the foundation a royalty.”

Long before ‘Obamacare,’ Bennett says it became clear that private initiative was required to stop ballooning healthcare costs.

Spencer Trask was there to underwrite his plan, which was founded as Health Dialog in 1997.

“Spencer Trask was pivotal,” Bennett says. “There was a moment in time when we needed to raise about $10 million of capital. We were an early stage company that the venture community misun-derstood as being labor-intensive. …

“Everyone else kept telling me how hard it was going to be to raise the money and how expensive it was going to be,” Bennett said, “and (Spencer Trask Chairman) Kevin Kimberlin said, ‘I’ll raise it for X and I’ll do it in this number of weeks.”

Employed primarily by health insurers, Boston-based Health Dia-log now provides its health decision-making aids and coaching to 17 million clients around the world.

“At Health Dialog, we empower people to make the health and healthcare decisions that are right for them. Our mission has not changed since our founding: Improve healthcare quality and re-duce medical cost,” said Dr. Robert Mandel, who in January be-came CEO of Health Dialog.

“Dr. Wennberg showed that there is a significant variation in the delivery of medical care across providers and that much of this variation is unwarranted by medical evidence,” Mandel said. “This work provided the foundation for Shared Decision Making, Health Dialog’s approach to care that seeks to fully inform patients about the risk and benefits of available treatments, engage them in the decision-making process, and ultimately help make the best choice for their own individual health and health care.” A study of 174,000 patients published in the February issue of the journal Health Affairs showed that providing Shared Decision Mak-ing-based health coaching for patients reduced their overall costs 5.3 percent. That included 12.5 percent fewer hospital admissions and 9.9 percent fewer “preference-sensitive” surgeries, including 20.9 percent fewer preference-sensitive heart surgeries.

In 2008, Health Dialog was acquired by Bupa, a London-based global health and care company, for more than $775 million. Bupa is a huge international nonprofit dedicated to improving health care and, Bennett says, Health Dialog couldn’t be in a better posi-tion to continue spreading its ideas now.

“We are proud to say that the work of Dr. Jack Wennberg and his groundbreaking research at Dartmouth continues to be put into practice every day across our company,” Mandel said.

And now the time is right to honor Wennberg with a Dartmouth chair named for him, Bennett says.

“We raised about $30 million (to start Health Dialog), and we turned back about $775 million,” Bennett said, “So Kevin and I have the opinion that there are people in that group (of investors) who would be honored to help Jack get a chair, because his in-tellectual property was the large part of what we used in order to build the firm.”

CEO MANDEL

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Cincinnati software solution scours the webto ‘find out what the rest of the world is thinking’

CONNECTING THE DOTS

By JEFF WALLNERPhotos by TONY TRIBBLE

CINCINNATI – Proctor & Gamble, one of the world’s leading con-sumer products companies, stands just a few blocks away from inno360’s cozy eighth-floor offices in Downtown Cincinnati. But philosophy more than geography made for a perfect marriage of these firms.

“P&G was key to our initial efforts,” said Doug Schaedler, chief executive officer at inno360 (www.inno-360.com). “They are the poster child for dollars spent within R&D.” And since its founding five years ago, inno360 has sprinted toward the industry lead in enterprise innovation management.

Dave Theus, vice president of innovation solutions at inno360, often quotes his company’s largest client when asked to explain the genesis of its state-of-the-art approach. “P&G has a really great quote: ‘For every smart person in my R&D department, there’s a ratio of 200 globally that have the same expertise or

better’,” Theus says. “We’re now finding those 200, in a way that allows them to have 10,000 R&D people but expand that footprint to 2 million.”

Spencer Trask helped get inno360 off the ground when it was founded in 2008 by Larry Huston, who remains at inno360 as a board member. “Early on in our company’s history, they brought in critical investment dollars for us,” said Schaedler of Spencer Trask. “They know the innovation space well. They know what will excite investors. They were also helpful initially in finding technology and software partners for us.”

Now, inno360, coming off its best year in company history, is standing on its own two feet while helping to revolutionize the practical use of Open Innovation. In April 2011, inno360 was named Gold Medal Winner at the Edison Awards Banquet in New York for excellence in innovation. Its award-winning soft-

Inno360 CEO Doug Schaedler, CFO Doug Dennis and VP Dave Theus, from left, demonstrate some of what an innovation search can return. The software leverages deep web to allow clients to build and collaborate within their own networks.



ware solution enables its clients to build, manage and collab-orate within their own proprietary innovation ecosystems while harnessing the collective power of internal and external R&D teams with the goal of building a global network of innovators, researchers and trusted suppliers to drive a high return on in-vestment.

“It’s enhancing the capabilities of their R&D teams,” said Schaedler. “Under tight deadlines, it’s more cost-effective to purchase a piece of technology that already exists than it is to bring in six Ph.Ds to work on a solution and write a patent. All that takes time. We automate the matchmaking to give compa-nies a repeatable process around improving innovation capabil-ities that are core to their organization.”

Inno360’s founding partners included major players P&G, Gen-eral Mills, and the United States Air Force. “We worked with them to build in best practices,” said Schaedler, who said seven

of inno360’s clients currently rank at the top of their respective industries.

Schaedler projected that inno360 will achieve new company highs for revenue in 2013, and the firm last year tripled the num-ber of clients under three-year licensing contracts. “That’s diffi-cult to get for a company our size,” Schaedler said. “It means we’re a core part of the growth of their business.”

Around 95 percent of inno360’s revenues are derived from li-censes, which are subscription-based according to the number of internal desktop and mobile users. This makes it easier for inno360 to budget ahead. “It’s a long-term buy for our clients, and a nice high margin,” Schaedler said. “We want to be sure we continue to exceed their expectations for what we deliver.”

With powerful alpha partners such as P&G, inno360 has no in-tention of looking over its shoulder at an expanding market-

inno360 delivers deep web: the rest of the Internet

Academia

Private research

Deep content

14% of online content available through search engines(Google, Bing, Yahoo)

place. But Schaedler knows it’s coming. “We believe there will be some entrants into the market,” he admitted. “But we be-lieve we have an 18- to 24-month head start on them. We’re more nimble (than our competitors). We’ve defined this market by carving out a niche.”

Inno360’s Connected Innovation Management™ cloud-based application is scalable beyond just finding an inventor to create the next great shampoo or military vehicle. “We start with the definition of a problem,” Theus said. “We call out that need, then search patents, literature, the web and deep web, internal and external sources, and social media.”

Theus demonstrates to clients how the software’s search capa-bilities can uncover competitive intelligence, provide consumer marketing insight, and peer into both internal and external in-novation sources. It can capture information that lies within the Deep Web, which refers to Internet content not accessible on the surface by standard search engines such as Google or Bing.

Theus showed P&G recently how it can search internal sources to identify areas of expertise and ongoing projects occurring just “down the hall.” “That part of the product just blew them away,” Theus said. “I could’ve stopped right there. ”

“Since we were an alpha partner in the development of the inno360 tool, we were very involved in how it turned out. As of to-day, it’s a very good innovation landscaping platform, and we use it for this purpose,” said Dr. Bart Barthelemy, founder and director of the Air Force Research Laboratory, Wright Brothers Institute.

“We have used it in our collaborative innovation workshops and are currently transitioning it to a pilot group in our primary client, the Air Force Research Laboratory. That group will utilize the tool to help with innovation landscaping and collaboration on actual Air Force problems.”

At its essence, Inno360’s software platform solves problems by tapping into expertise around the world. It also can, as Theus explained, find out what the rest of the world is thinking, by searching geographically to allow clients to find needed exper-tise or intelligence in locations such as China or Australia, or by year, to find the most recent activity in an area of expertise.

“It’s really a R&D dashboard to communicate internally about a product or tap external sources, which is very powerful,” Schaedler said.

Inno360’s clients agree. Givaudan Flavors, a global leader in fra-grance and flavors based in Cincinnati, has been a client for two years. “The inno360 platform enables our scientists to better as-semble, analyze and visualize information from patents, scientific literature and the web,” said Chris Thoen, senior VP global head of science and technology.

So what’s the future hold for inno360? “We have a product that we believe can be the standard in the marketplace,” said Schaedler. “We expect to continue to see growth.”

(Inno360) can uncover competitive intelligence ... and content not accessible by standard search engines.“

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SAN DIEGO – Replacement parts for humans. That’s the finish line.

It promises to be a long, complicated journey, but Organovo, a San Diego-based regenerative medicine company using 3-D printing technology with human cells as ink, continues to run toward its ultimate goal of using stem cells to create new skin, lung, liver and kidneys.

Until only a few years ago, this work was the science fiction of

hopeful scientists. Today, Sharon Collins Presnell, Organovo’s chief technology officer, gets goose bumps thinking about how far the field has come during her career.

Organovo already has bioprinted blood vessels, lung tis-sue and re-created tumors. Its NovoGen MMX bioprinter, developed with the Australia-based Invetech, is the only commercial bioprinter creating 3-D living tissue samples for pharmaceutical partners, including Pfizer, to use to test new drugs.

Although Presnell holds onto the vision of printing organs, the more short-term possibility for the technology, she said, may be helping people with chronic degenerative disease, such as Type 1 diabetes. By the time one of these patients gets in serious medical trouble, their organ function is at about 10 percent or less.

Printing the book of LIFEOrganovo scientists work to perfect 3-D human tissue

By TERRI SOMERS


“ Maybe we’re not so far from making a lobe or segment or tissue patch that ... (patients) don’t need dialysis or a transplant.’ ORGANOVO CTO SHARON COLLINS PRESNELL

“That gives us a clue that what may be necessary to improve and save lives is to focus on creating 10 to 15 to 20 percent of organ function, which is a long way from printing an entire liver, or lung. Maybe we’re not so far from making a lobe or seg-ment or tissue patch that would bring enough function to someone that they don’t need dialysis or a trans-plant,” Presnell said.

Organovo’s process begins by grow-ing many different cell types in cul-ture. The cells are then fed in large clusters of multiple cell types into the 3-D bioprinter. Using a computer pro-gram that guides it to make the de-sired shape, the printer puts down lay-er upon layer of these cellular building blocks to form what is essentially the template of living human tissue.

Once the desired architecture is formed, the printed tissue is placed in a nutrient-filled bioreactor and biolo-gy takes over. The cells communicate with each other within the framework and develop the fine structure of hu-man tissue. Microvascular networks to handle waste and bring nutrients into the cells are formed. “We let it do the things we couldn’t engineer in the lab,” Presnell said.

The result is a 3-D piece of living hu-man tissue. Ultimately a patient’s own stem cells could be harvested from bone marrow or fat to create a supply of cells for the printer that will make an organ that would not cause rejec-tion issues if implanted. Organovo’s techniques do not introduce any syn-thetic materials into the tissue, which also staves off rejection.

Tissue printing could save Big Phar-ma big bucks, said Shaochen Chen, a professor of nano-engineering at University of California, San Diego. Drug testing typically occurs in an-imal models or 2-D sheets of cells. “Neither of those models provides a true picture of how cells would react

in the natural 3-D human environ-ment,” Chen said.

Using 3-D tissue for testing enables the collection of more reliable data earlier and prevents later-stage fail-ures that lead to the scrapping of a drug after years of work and invest-ing millions of dollars, said Chen, who uses bioprinting in his regenera-tive medicine research.

At a conference in Boston this April, Organovo will present what CEO Keith Murphy said is its “game-chang-ing work” in liver cells, a cell type cru-cial in understanding drug toxicity. Liver cells die after 48 hours in a petri dish, halting a thorough collection of


toxicity data, Murphy said. As a result, pharmaceutical companies lose bil-lions of dollars when they have to stop a clinical trial for unforeseen toxicity problems, he said. “This is a good ex-ample of an area where 3-D is neces-sary and badly needed,” he said.

Continuing to advance the technolo-gy and overcome hurdles to printing entire organs will require an array of expertise, from biology, to chemistry to engineering and mechanics, Chen said. Organs and tissue are complex, and scientists from different disci-plines bring unique skills, expertise and views to the problems that must be solved in the lab. Organovo’s ex-ecutives agree.

Multidisciplinary collaboration is at the core the Organovo’s technology de-veloped at the University of Missouri by Professor Gabor Forgacs. A theo-retical physicist, Forgacs went back to school mid-career to study biology at Princeton, Murphy said. He then incor-porated biophysics and the physics of molecular and cellular movement into his research. To achieve 3-D bioprint-ing, Forgacs collaborated with experts in electrical engineering, software, chemistry, cell biology and molecular biology, Murphy said.

Founded in 2007 on that science and with Murphy, a former Amgen direc-tor, at the helm, Organovo retained and built on Forgacs’ multidisciplinary philosophy. “While we have a great platform, we are limited in the num-ber of people we have—30 full-time employees—and the best way to evolve this technology is to get it in other people’s hands,” Murphy said.

Since building its first printer in 2010, Organovo has partnered broadly with academics. Researchers ben-efit from use of the manufactured tissue, Organovo taps the expertise of research institute staff, while fed-eral grants help cover costs. Partners include Harvard Medical School and the Sanford Consortium for Regen-erative Medicine, a project under which the top research institutes in San Diego share resources and multi-disciplinary expertise in stem cell re-search. Under a partnership with the Knight Cancer Institute at Oregon Health & Science University, Organo- ST

vo will create cancer models.

In February, Organovo announced a partnership ZenBio, a Research Tri-

angle com-pany with expertise in p r o v i d i n g unique val-idated cells to be used as bioprint-er ink. And in late 2012, O r g a n o v o announced it was work-ing with A u t o d e s k ,

Inc., a cloud-based design and engi-neering software company, to design software for bioprinting. The deal is expected to open up bioprinting to a number of additional users.

With annual R&D costs around $8 million and $1 million-a-year revenue

stream coming from its pharmaceu-tical partners, Organovo’s leaders hope to build a faster route to prof-itability by creating products that could generate additional licensing fees, as well as royalty and milestone payments as drugs move closer to market, Murphy said.

Talk of the future and profitability steers conversation back to more pos-sibilities for Organovo technology: Printing tissue patches to replace heart muscle damaged by heart attack. Us-ing genetic sequencing technology to create tissue with specific genotypes for use in drug testing. Printing tissue that carries genes linked to a poorly understood disease to help research.

“It’s fun thinking all the ways we can deploy our technology,” said Presnell. “It’s an exciting path to be marching toward the vision of a kid-ney in a box or a lung in a box. But there are lots of meaningful things we can do well ahead of that.”

Cells are fed into the 3-D bioprinter, a computer program guides it to make the desired shape, then the printer layers cellular building blocks to form the template of living human tissue.

CTO PRESNELL

Fastcase app puts freedom of information in the hands of those who need it

LAYING DOWN THE LAW

By EMMA JOHNSONPhotos by ROD LAMKEY JR.


WASHINGTON, D.C. — When Ed Walters founded Fastcase in 1999, he had two goals: “One, we aimed to democratize the law,” Walters says. “And two, we wanted to make legal research less stupid.”

According to many who use its product, the legal research software firm also has produced a smarter, faster and far less expensive version of the behemoth stalwarts that have monop-olized the sector for decades: Westlaw and LexisNexis.

“We realized that most people were getting access to the law through two conglomerates that were charging ridiculous pric-es—and that duopoly was not sustainable,” says Walters.

Walters says that the prices charged by Westlaw and LexisNexis are so high that small law firms simply cannot compete in the legal process with large firms that can afford premium research services. “Cases are won and lost every day based on who can afford the most expensive database,” Walters says. “The very heart of our justice system is based on who has the law on their side—not who not who has money on their side.” Westlaw, for example, charges around $300 monthly for individuals or small law firms, while premium services can cost thousands of dollars per hour in extra fees. Large firms can pay in the millions of dollars annually for research services. Fast-case, meanwhile, charges individuals and small firms $95 per month, or $995 annually, for unlimited access, and larger firms pay rates ranging from $20,000 to $75,000 per year.

There is also a free Fastcase app for mobile devices—software that Walters describes as “Fastcase light.” Nationwide, 22 bar associations provide the service free to its members and more than 500,000 lawyers use at least one of Fastcase’s services.

Walters says that his aim is “not to make the Kia of legal re-search,” referring to the maker of inexpensive cars. “We want to make the Tesla of legal research that can beat the Rolls-Roy-ces off the assembly line every time.”

Fastcase’s product is indeed very different than the big boys of legal research, most notably in the way the app presents data. While most lawyers are accustomed to digital information being returned in flat lists of many, many randomly listed cases, Fastcase users can search by 12 criteria, and the results are presented in four-dimensional format displayed in user-friendly graphics that highlight cases by relevance or most-cited.

“When compared with other services, Fastcase’s results are faster, more accurate and more beautiful,” Walters says. “It can save you hours or days of research.” The company calls itself “The Google of legal research.”

Morghan Richardson, managing partner of a small New York City family law firm, regularly relies on Fastcase. “In my experi-ence, the buzz about Fastcase that it can intuit searches more easily and quickly is true,” Richardson says. “It’s far more af-fordable, relevant and targeted than the competition. But more than that, it cuts my research time in half, which was a direct benefit to my clients. I regularly use it on my iPad for last-min-ute searches in court.”

Legal research is a $6 billion industry, Walters says. Fastcase (www.fastcase.com) became profitable in 2005, and has grown at a rate of 25 percent annually to be a $10 million company today. Walters says that his goal is not to compete with the incumbent market leaders, but rather be more of an Apple of its industry—a small but innovative trend-setter that constitutes 15 percent of the marketplace. He expects that his affordable model will help shrink the spend on legal research nationwide to $4 billion. The firm has 90 employees worldwide.

Walters points out that his company has thrived through two economic downturns—including the dot-com crash—thanks to capital investment from Spencer Trask. “Spencer Trask was gutsy to make an investment in a software firm at a time when every other venture capital firm was curled up in the fetal posi-tion, cowering after the 2001 collapse,” Walters says.

In addition to the subscription service, Walters says that its ebook business is booming. These titles, he says, aim “to replace those walls of books lawyers pose in front of in their offices.” Since 2012, Fastcase has published 1,000 titles available on Amazon and iTunes. Walters also expects future revenue from licensing his patent-pending technology to other legal research companies.

Fastcase’s technical facilities would seem to satisfy the “less stupid legal research” goal. But to satisfy the other goal— democratize the law—in 2008, they launched The Public Library

Fastcase co-founder Phil Rosenthal works the phone in his Washington, D.C. office.


of Law (www.plol.org), which provides a limited and straightfor-ward version of Fastcase. Walters knew there was a demand for this service when, as part of a promotion for launching the new app in 2003, Fastcase offered a free 30-day trial. Four out of five subscribers were not lawyers, but students, small business owners or everyday citizens with legal questions or issues.

This supported his belief that affordable legal information is a critical part of democracy—not just in the United States, but worldwide, as many developing nations look to U.S. case law for guidance.

“In America, the ignorance of law is no excuse, since we’re pre-sumed to understand laws subject to,” Walters says. “If those laws are behind pay walls, that is unacceptable.”

Chris Balch is an Atlanta-based human rights lawyer who uses Fastcase, and he believes that this and other affordable legal research software will be a turning point in human rights issues worldwide. He points to the “Arab Spring,” the series of upris-ings in the Arab world coordinated through texts, tweets and

From left, Rupesh Boorugu, Balazs Czifra and Keith Leonard work on development at Fastcase.

ST


“ The very heart of our justice system is based on who has the law on their side — not who has the money on their side.’ FASTCASE FOUNDER ED WALTERS

Facebook posts, as an example of a human rights revolution rooted in public access to free information. “The more infor-mation that is available through new channels like Fastcase, and people have an increased number of ways to express themselves, you have by definition a greater democratic pro-cess for the masses,” Balch says.

SPOTLIGHT ON STARTUPS

BIOPHARMACEUTICAL/ BIOTECH

Venture Portfolio reserves the right to refuse any advertising order. Only publication of an advertisement shall constitute final accep-tance of an order. Publication does not constitute an agreement for continued publication. All orders are subject to applicable rate card, copies of which are available upon request sent to address provided. Venture Portfolio, 61 Phillips Beach Ave., Swampscott, MA 01907

BIG PROBLEM: Diabetes sufferers submit to 4-6 injections a day and constant finger pricks to moni-tor blood sugar, and are always worried about what they eat. Sensulin solves all three problems with a true once-a-day insulin.

FUNDING: In Feb. 2013, Sensulin received seed investment of $330,000 from Trailblazer Capital. The company is currently seeking partners to com-mercialize its insulin platform and also its stimu-lus-responsive drug delivery system.

FOUNDERS: Mike Moradi, serial entrepreneur, co-founder and CEO, has founded or been prin-cipal in several successful nanotech/biopharma startups. One was No. 264 fastest growing pri-vate company in the 2009 Inc. 500. Another was acquired in 2011 for $145M by a publicly traded South Korean company. Third was acquired by DuPont in 2002 - widely considered the first major liquidity event in nanotech.

Moradi is chairman of Prevent Blindness Oklaho-ma, past chairman of the BioScience Roundtable, trustee of the $7 billion Oklahoma Pension Em-ployees Retirement System (OPERS), member of the National Science Foundation’s (Directorate for Engineering) Committee of Visitors, director of the Oklahoma City University Meinders School of Business, director of Creative Oklahoma, Inc. (host of the 2010 World Creativity Forum), and former director of OKBio. Earned Bachelor of Science in biochemistry from the U. of Oklahoma.

Dr. Ananth Annapragada, co-founder and CSO, is Professor of Radiology, and Director of Basic Research in the Edward B. Singleton Department of Pediatric Radiology, at Texas Children’s Hospital. Previously, he was the Robert Graham Professor of Entrepreneurial Biomedical Informatics and Bioen-gineering at the School of Biomedical Informatics at the University of Texas, Health Sciences Center at Houston. He holds additional positions at the Graduate School of Biomedical Sciences, the Keck

Sensulin offers once-a-day insulin solution

TRACTION

Named finalist in Innovator of the Year, Feb. 2013

Won DeBakey Award, March 2013

Spoke at TedMED, April 2013

Named MassChallenge finalist, May 2013

Appointed its Advisory Board, July 2013

Received U.S. patent for propri-etary drug delivery platform, one US/PCT patent application pending

Partnered with Cleveland State Uni-versity, University of Texas Medical School, Baylor College of Medicine and Texas Children’s Hospital

Institute for Computational and Structural Biology, The University of Houston, Rice University and the University of Texas at Austin.

CONTACT: 650-479-6453, [email protected], www.sensulin.com

Venture Scout Bill Starr analyzes startups participating in global competitions and incubators. The Watch List represents his indi-vidual assessment of startups that meet his criteria for success. Do they solve a big problem? Is there solution innovative and unique? Can they scale into a profitable business? Do they have enough traction to be fundable?

One of the most exciting moments for a young athlete is to be drafted by a pro-sports team. For startups, the equivalent is to be funded by a Venture Capitalist and become one of their portfolio companies.

Prior to selection, both the athlete and the startup reach certain milestones that help to establish their potential for success. The athlete selection process involves an active media that provides rankings and analysis of each draft-eligible player. “His deter-mination along with his skill allows him to impact the game and to do so at the most important times ...”

Can we assess high-impact startups the same way and get an early gauge on emerging companies by tracking mile-stones and achievements as they position themselves to be investment-ready? The answer is yes, and it’s even more important now, given the proliferation of emerging companies that will become investment- eligible with the implementation of the Jobs Act crowdfunding provisions.

We begin our scouting with an early as-sessment of this year’s 128 MassChallenge startup finalists. MassChallenge (www.masschallenge.org) is the world’s largest startup accelerator, with startups partici-pating in a three-month summer program culminating in more than $1M in cash

prizes awarded to the winners on Oct. 30, 2013. Keep an eye out for these compa-nies in the future.

MassChallenge 2013 VP Mag Watch List:

3-Spark is commercializing new 3-D print-ing technology. This Northeastern Univer-sity spin-off has a patented technology with $500k-plus in funding to-date.B.B.R. Medical Innovations has technolo-gy that prevents potentially lethal hospital infections, which costs $10 billion per year in treatment and litigation.Continuous Pharmaceuticals’ ICM technol-ogy will produce medicine at significantly reduced costs. This spin-off of the Novar-tis-MIT Center for Continuous Manufacturing is also a TechConnect 2013 Award winner.LifeGuard Games builds fun apps to teach and motivate kids to manage healthconditions. The founder is on a leave of absence from Harvard Medical School.

Monkey in the Middle Apps replaces paper worksheets with fun, educational apps for middle school students. More than 400,000 students have used the apps.NoMos’ technology is based on a patent-ed formulation that safely solves the glob-al economic impact of mosquito-borne diseases, estimated at $30 billion.Plexx is a mobile skill-building market-place that focuses on the 21 percent of 15- to 24-year-olds around the world, (225M), that are un- or underemployed.Sensulin is developing the first once-a-day insulin, set to disrupt this billion-dollar industry. DeBakey Award Winner 2013.WaveGuide makes a handheld nuclear magnetic resonance spectrometer for the low-cost rapid detection of diseases, a billion-dollar market. Wedubox, the revolution of online edu-cation in Spanish, has found great traction engaging 1,800 professors in three months.

With 20 years of international experience as a startup founder, investor and service provider, Mr. Starr, a CPA, brings unique perspective to assessing emerging com-panies.

VENTURE SCOUTBill Starr

Tracking the problem-solvers


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Documents

VPmag summer 2013