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Triathalon Runs on Senmed’s Ashes

Corporate venture capital unit Senmed Medical Ventures is being shut down by its parent company, Sentron Medical. The firm recently sent word to potential limited partners that it was withdrawing its offering of Senmed Medical Venture Fund I. Targeted at $50 million, this would have been the first fund that Sentron Medical raised from outside investors.

Prior to trying to raise its own fund, Senmed Medical Ventures’ portfolio companies included Athersys, a Cleveland-based developer of therapeutic products for disease treatment; Biosite Diagnostics (NASDAQ: BSTE), a San Diego-based developer of drug-testing devices; Cell Pathways (NASDAQ: CLPA), a Horsham, Pa.-based provider cancer treatment of pharmaceutical products and OptoSonics, an Indianapolis-based medical device company.

Senmed Medical Ventures may be no longer, but Triathlon Medical Ventures is already looking to fill the hole. Dennis Costello, Suzette Dutch and John Rice, former investment directors with Senmed Medical Ventures, have started a new venture capital fund, which is raising a fund targeted for between $30 million and $60 million. Triathlon’s fund will be a standard venture fund with a 10-year life cycle and an investment life of four or five years, depending on the market. The new firm has been speaking with the five limited partners that committed to Senmed’s fund and so far has secured the backing of the University of Cincinnati.

Last year, Cincinnati’s Tri-State Growth Capital Fund announced its commitment to Senmed Medical Ventures I. The fund seems likely to invest in the new firm. Fort Washington Investment Advisors, which manages the Tri State Growth Capital Fund, announced that it had closed on $40 million for the inaugural fund. The fund invests in both national and regional firms that invest in the greater Cincinnati area. Investors in the fund include Ashland Inc., GE Aircraft Engines, Convergys Corp. and Procter & Gamble.

“We’re currently in discussions with the new management team and are so far optimistic,” says Stephen Baker, vice president of private equity direct investments wth Fort Washington Investment Advisors.

“We were pretty far along in our fund-raising under the auspices of the Senmed Fund,” says Dutch, who says that Triathlon will be based in Cincinnati and have the exact same investment strategy as Senmed, which invested $2 million or more in each portfolio company in various rounds of fund-raising. According to Dutch, Sentron’s departure from the venture business was due to its expansion into more tangential areas of growth and the lack of common strategic gain between the company and its venture unit. “It was really a recognition that there was no connection to the base business and no competitive advantage of either side. Early LPs recognized that as well,” says Dutch.

Dutch cites Senmed’s investment diversity within the medical field as a source of strength for Triathlon. “Until all human health-care needs are filled, the demographics and the science mean that good companies and good technology are needed.”

Sedmed will lay off 10 of its investment professionals and keep a skeletal staff on to manage the group’s portfolio companies.

Email Matthew Sheahan