A San Antonio venture capital firm that recently created a biotech and medical device incubator is raising additional funding and may make investments in the coming months, according to managing partner Brian Kieser.
Fountainhead Investment Partners has about $3 million committed to its FIP Venture Fund and plans to invest in biotech and medical device companies as soon as early 2017, Kieser says. The firm is actively engaged in fundraising, he says.
Fountainhead was founded in 2014 as an angel fund before it began pursuing venture capital investing the next year. In September 2015, the San Antonio Express-News reported the fund had $1 million committed and was seeking to raise $10 million total.
Finding new investments is one reason Fountainhead created Watershed Idea Foundry, a life sciences incubator it announced in September. The operation offers nascent startups services such as proof-of-concept testing and prototype manufacturing, which they might not be able to access or afford because they’re too early in development, in exchange for equity.
A lot of entrepreneurs are coming up with potentially valuable medical devices, but don’t have the training, knowledge, or financial runway to land a venture investor, Kieser says. That’s what Watershed aims to help with.
“They just don’t really know how to get the commercialization pathway down,” Kieser says. “People come in, incubate their ideas, and can be exposed to our resources, which they normally don’t have access to without paying a bunch of money.”
Watershed also has paying customers—later-stage businesses with cash flow to whom it sells its regulatory, legal, and prototype design services on a contract basis, Kieser says. The group has seven employees, including intellectual property and patent lawyers, design and mechanical engineers, regulatory experts, and academic researchers, he says.
Watershed currently has paying contracts with six companies and is incubating five early stage businesses, he says. Kieser declined to name them, but said three of the incubator startups are in biotech, including one stem cell company, and the two others work in 3D printing.
The incubator is a clear pipeline for Fountainhead, the venture capital firm, which may lead investments in companies that successfully roll out of Watershed or find other investors, Kieser says.
Fountainhead got its start when Kieser, who is also the founder of a San Antonio medical device company called Nvision Biomedical Technologies, began looking for companies that had products that could be used with Nvision’s.
Nvision, founded in 2013, sells implants for spinal surgery. Kieser came across Gainsville, FL-based AmnioLife, which sells biologic-based collagens and fluids that can be used in surgery, and felt it was a match.
He liked the company enough that he decided to invest along with a few other angels—first $750,000 in 2014 and then another $689,000 in late 2015. That’s when he decided to make a go at finding other investors to run Fountainhead as a venture capital fund.
“We had such a good time doing it, and we thought, well, there are other technologies we want to invest in—things we’ve seen in the course of running our companies,” Kieser says.
While Watershed is broadly focused on biotech and medical device companies, Kieser says he believes there is opportunity in regenerative medicine products that heal or replace damaged tissue. In any case, look for some biomedical investments coming from Fountainhead in the coming year.
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