Three men who previously ran their own medical technology companies and have spent the last 15 years investing together as angels are aiming for something new – filling the coffers of their new $60 million private equity fund.
Their goal, after having founded Ovum Ventures five months ago in Melbourne, Fla., is to raise $20 million from institutional limited partners and high net worth individuals. Once that’s done, the plan is to secure an SBIC grant to give the fund $60 million in investment capital. The three general partners – Frank Groenewegen, Rudy Mazzocchi and David Thompson – are also planning to invest up to $2 million of their own into the fund.
Mazzocchi is the former president and CEO of Image Guided Neurologics Inc., a Melbourne, Fla.-based company that raised $7 million in venture capital before going public in 1996. Groenewegen and Thompson are the founders of Cardiologic GmbH, a Munich-based medical device distributor acquired by Boston Scientific in 2001.
Together, the team has invested in 18 seed-stage deals as angels since 1989. Nine of those investments have been sold or gone public, eight are still operating and one has gone under.
Under Ovum, they will continue to invest in the areas where they have the most expertise – medical device companies targeting the cardiovascular and central nervous systems and other medical technologies. Once fully invested, the fund will have between eight and 12 companies in its portfolio. It plans to invest up to $6 million in each portfolio company.
Ovum is trying to carve out a name for itself in a state known more for citrus and tourism and sports teams than it is for private equity investors making bets in biotechnology.
In 2003, 12 medical and biotech companies in Florida raised venture capital, in rounds totaling $58.3 million, according to Thomson Venture Economics (publisher of PE Week). Five of those were seed- and early-stage companies.
In 2002, only seven health care and medical device companies in the Sunshine State reported raising $66 million from venture capitalists. Only two of those were seed and early-stage companies.
“Few folks know how to evaluate and identify good investment opportunities in the Southeast, so there’s few sources of institutional early-stage capital,” says Brendan Fitzgerald, a partner in the fund.
Ovum joins Advantage Capital Partners, Boston Scientific Corp., Crossbow Ventures, Mayo Medical Ventures, Noro-Moseley Partners and New Enterprise Associates as the state’s most active health care investors.
Ovum, however, isn’t limiting its scope to the Sunshine State, Fitzgerald says.
“The world is a very small place these days with the Internet, so we’re looking along the East Coast, through the Southeast and the Twin Cities,” he says.
From their offices in Germany, Groenewegen and Thompson will also scout deals across the Atlantic.
The fund has not yet made an investment. Ovum plans to hold a first close of its fund at the end of the first quarter.