Talent is the key to building a vibrant entrepreneurial health care community in Cleveland, which can facilitate more robust deal activity.
“It's going to be a combination of technology spinning out of institutions and innovation by entrepreneurs,” says BioEnterprise President and CEO Aram Nerpouni. “But a limiting factor in most communities, and certainly in Cleveland in terms of growing beyond where we are right now, is around talent. Fundamentally, capital is investing in cool ideas. What allows investors to make decisions and put money to work is driven by the leadership and the team around that idea.”
There are reasons for optimism. Earlier this year, the Midwest Healthcare Growth Capital Report found that nearly $294 million was invested in 71 Northeast Ohio companies in 2018. That amount is the second-largest in the history of the report, and the number of companies that received investment was the largest.
The report details investment in three biomedical sectors: medical device; biotechnology and pharmaceuticals, and health care IT software and services.
“We’ve got to keep working to make sure that smart, innovative entrepreneurial people find that this is not only a wonderful place to live, but that there are these platforms in place that give them access to great ideas, that give them access to capital,” Nerpouni says. “All that is important. But if you ask me to put a dollar down on one thing, talent is going to be the limiting factor in growing as big as we potentially can be.”
Activity remains steady
Nerpouni points to deals such as the 2017 acquisition of Cleveland HeartLab by New Jersey-based Quest Diagnostics, as well as the growth of the Health Tech Corridor, as positive developments for Northeast Ohio’s health care community. Since 2002, BioEnterprise and its partners have created, recruited and accelerated more than 350 health IT, medical device and biopharmaceutical companies and have helped them raise more than $3 billion in new funding, according to the Global Center for Health Innovation.
“I’m sitting in the Global Center now, and there are all kinds of wonderful stories in the building,” he says. “It’s not only investment transactions but acquisitions, as well, that have been very active over the last couple years.”
Things will be changing a bit in 2020. BioEnterprise recently announced that it will end its pilot program at the Global Center at the end of this year and return to its base of operations in University Circle.
“In no way does this move deter BioEnterprise from following the mission we’ve pursued since 2002 — to make Northeast Ohio a globally recognized hub for health care innovation and grow the bioscience industry in Cleveland,” Nerpouni says. “The Global Center is a unique community asset, and we are very proud of what we’ve been able to accomplish over this two-year pilot.”
Solve problems, get funding
Going forward, BioEnterprise will continue playing a role in helping companies like TPA Stream, Quality Electrodynamics and MedPilot, just to name a few, maximize their potential. One of the big challenges that health care institutions are trying to solve for currently is how to drive better outcomes in a way that is more cost effective. It’s an issue that has dealmaking implications.
“That’s where a company like MedPilot plays in a really fascinating space,” Nerpouni says. “If you can find a way to make that process more efficient, that allows these clinical institutions to invest more into the delivery side of things or on the outcome side of the business than on the payment side. That’s one area where you’re seeing a lot of activity nationally.”
The key to taking advantage of these opportunities and facilitating investment and dealmaking is talent.
“How can we find a way to bring that entrepreneurial problem-solving into the health care setting in a way that patients, providers and payers all benefit from the collaboration?” Nerpouni says. “For MedPilot, it’s access to computer programmers and data scientists that drives the engine that is allowing them to do what they do.”
