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Seeing medtech as an undercapitalized sector with few specialized venture capital and growth equity firms, Justin Klein, M.D., J.D., and Kirk Nielsen have drawn on their industry experience to launch Vensana Capital.
“With both of us coming from the medtech investment space, we had a good foundation for continuing to invest successfully in medtech companies,” Klein said. “In starting Vensana, we aim to be a great partner to the whole medtech ecosystem including startup companies, as well as their investors and corporates.”
Nielsen also thinks that the startup nature of Vensana is attractive to potential clients.
“Fundraising and going through the launch process of this firm really does create empathy with entrepreneurs,” he said. “It’s one thing for VCs to be telling teams what to do, but it’s another to be doing it yourself. It causes you to think hard about what our CEOs and teams go through, and that’s been a real benefit.”
The firm announced the closing of its inaugural fund of $225 million in September and plans to build a portfolio of 10 to 12 companies. So far, the firm has invested outside of orthopedics, but they see potential for investments in the sector.
Klein and Nielsen have previously invested in Cartiva, Ceterix Orthopaedics, Relievant Medsystems, Vertiflex and Zyga Technology with previous firms.
Fund Focus
The mandate for the first fund is broad, Klein said. The pair would consider any global company in the medtech category outside of drugs—those offering a technology, service or product.
“With regard to clinical areas, we’re really open-minded but will, of course, focus on large markets with significant unmet needs and potential for meaningful growth,” Klein said. “That certainly includes orthopedics, spine, interventional pain and related fields.”
Vensana seeks to “partner with entrepreneurs who seek to transform healthcare with breakthrough innovations.” Klein said that FDA uses the term “breakthrough” to designate devices eligible for expedited development, assessment and review to provide patients and health care providers with timely access. While FDA has its criteria for breakthrough innovations, Klein said Vensana looks for those that truly respond to an unmet need in a way nothing has before.
“Such expedited pathways really help reduce capital requirements and timelines to get an innovation to market,” he said. “Patented breakthrough innovations are also more protectable, more easily demonstrate clinical and health economic value and present the opportunity to move the needle in terms of clinical outcomes, which is what we’d ultimately like to do for patients, clinicians and surgeons.”
Orthopedic Opportunities
Klein sees opportunity in technologies that enable better procedures to address chronic disease in a cost-effective way that drugs or long-term medical therapy cannot.
Specific to orthopedics, Vensana wishes to pursue opportunities that can bring growth to the space include robotics, navigation or other technology that enables less-invasive approaches and can be used in an outpatient setting.
”I find the orthopedic and spine market really interesting, because there are large legacy blockbuster businesses built around areas like reconstruction and implants,” Klein said. “Over the last decade or so, their organic growth has slowed. These are still large markets with high-volume procedures and outcomes that matter tremendously to suffering patients in terms of cost and quality of life. But they’ve been more difficult spaces in which to innovate, given the nature of the competition and sometimes regulatory barriers.”
Kathie Zipp is an ORTHOWORLD Contributor.
