University of Michigan’s Social Venture Fund Announces Investment in Querium

Student-led impact investing fund to provide bridge financing for edtech company

Social Venture Fund Investment QueriumThe Social Venture Fund, a student-led venture fund within the Samuel Zell & Robert H. Lurie Institute for Entrepreneurial Studies at the University of Michigan’s Stephen M. Ross School of Business, today announced that it has participated in the early-stage bridge round for Austin, Texas.-based Querium, an edtech company that uses artificial intelligence to provide students with step-by-step coaching for math, science and engineering. The Social Venture Fund contributed $50,000 towards a total $720,000 convertible note round and was one of approximately 10 investors.

The Social Venture Fund, the nation’s first student-led impact investing fund, invests in and supports innovative, for-profit companies that place social and environmental impact at the heart of their business model. The Fund is managed by a team of approximately 40 MBA and BBA students – many of whom are pursuing dual-degrees with education, environment, health, law and public policy – along with faculty advisor Uday Rajan, the Chair of the Finance Department at the Ross School of Business. The Fund focuses its investments in four key industry verticals: education, healthcare, food systems and environment and urban revitalization.

“As an institution whose mission it is to improve lives through learning, we understand the potential Querium has to change the world through education,” said Stewart Thornhill, executive director of the Zell Lurie Institute, which houses the Social Venture Fund. “The Social Venture Fund has done an excellent job of selecting a company with a bright future and the capacity to expand its place in the market.”

University of Michigan Social Venture Fund Investment Querium
Querium
, the Fund’s third direct investment in the education space, helps teens and adult learners master critical STEM skills at their own pace. Recently named by Fast Company as one of “The Most Innovative Companies of 2016: Education,” Querium’s unique Virtual Tutor evaluates student work step-by-step to provide instant feedback and assist in the development of cognitive skills. Students receive real-time grading and coaching that mimic a live tutoring experience through smartphones and tablets as well as PCs, opening up access for students who may not have home computers. Querium collects 20 pieces of data including types of errors made from every step a student enters, enabling teachers to understand exactly where and why students make mistakes so that they may better tailor their lesson plans to provide differentiated instruction. Ultimately, Querium drives significant social impact by improving high school test scores and helping community college students avoid exceptionally costly and burdensome remedial STEM courses.

A team of seven students, led by Wiles Kase, MBA/MS ’18, sourced the deal and conducted in-depth due diligence on the company. The Fund’s rigorous deal sourcing process began with consideration of applications for funding from more than 150 companies; companies selected for due diligence then participated in the fund’s months-long process, which included analysis of their products’ effectiveness, markets, financials and social impact. “Leading a team of talented, experienced peers was an invaluable learning opportunity; the due diligence team challenged my analytical assumptions and forced me to evolve as a leader, and I emerged stronger for it,” said Kase. “I also learned what it takes to fully understand every inch of a young company—what questions require answers, what questions can’t be answered and where an investor can and cannot work with ambiguity.”

The team determined Querium would be a strong investment for the Fund due to the company’s impressive technology, dynamic management team, and potential to improve test scores and minimize the burden of remedial STEM coursework. “Founder Kent Fuka and his team bring an impressive more than 40 years of experience in the education space, disruptive energy to challenge traditional STEM education, and a passion to work with the students on Michigan’s Social Venture Fund. Querium is an ideal investment for the Fund,” said Aysha Malik, MBA ’17, part of the due diligence team.

“Given Social Venture Fund’s mission, this investment is a strong validation of the work Querium is doing to help students hit their STEM education milestones and start college on the right foot,” said Kent Fuka, founder and CEO, Querium. “We’re proud to have been selected for investment and are looking forward to working with the Social Venture Fund team and helping more students find success as we grow our company.”

About the Social Venture Fund
The Social Venture Fund is a leader in university-based impact investing, with several active investments. The Fund’s previous investments include Conversa Health, Powerhouse Dynamics, LearnZillion, Mytonomy, Loveland Technologies, and Jack and Jake’s.  To learn more, visit www.umsocialventure.com.

About the Samuel Zell & Robert H. Lurie Institute for Entrepreneurial Studies
The Institute and its Center for Venture Capital and Private Equity Finance bring together an impactful combination of deep-seated knowledge, enriching experiences and strategic opportunities from the front lines of entrepreneurship and alternative investment. Students’ learning experiences are further enhanced through internships, entrepreneurial clubs, business competitions and campus-wide events that foster valuable networking and engage the business community. The School’s four student-led investment funds, with over $7M under management, immerse students in the entrepreneurial business sourcing, assessment and investment process. Founding Zell Lurie advisory board members include Samuel Zell, chairman of Equity Group Investments, and Eugene Applebaum, founder of Arbor Drugs Inc. For more information, visit the Institute’s website at www.zli.bus.umich.edu.

About Querium Corp
Querium was founded in January 2013 to help teens and adult learners master critical STEM skills, enabling them to achieve their college and career goals. Designed for digital natives, our patented products  deliver personalized, bite-sized lessons with expert system, step-by-step tutoring assistance that motivate learners to succeed.  Users write math steps by hand on mobile devices for instant feedback 24/7. Querium licenses its cloud-hosted, artificial-intelligence (A.I.) software products to online learning solution providers. www.querium.com.

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Three Newcomers Join This Year’s University Research Track at MGCS

The University Research Track, now in its third year at the Michigan Growth Capital Symposium, showcased promising research projects and spinout companies emerging from seven leading Midwestern research universities. This year’s cohort included three newcomers ─ Medical College of Wisconsin, Purdue Research Foundation and Wayne State University ─ along with four returning schools ─ Notre Dame, University of Minnesota, Michigan State University and the University of Michigan.

University of Michigan ResearchTechnology-transfer and commercialization officials from each participating university outlined the research facilities, spending and sector focus at their respective institutions. They also highlighted innovative spinouts that have licensed intellectual property originating at their schools. “There are real bargains in the Midwest,” remarked Dan Hasler, president of the Purdue Research Foundation. He said corporations and venture capitalists visit Purdue’s Discovery Park, a 40-acre interdisciplinary and multidisciplinary research park located in the West Lafayette campus, to scope out research for commercialization and investment.

“Smart money invests in our innovations,” stated Kalpa Vithalani, licensing manager at Medical College of Wisconsin. “We have promising early-stage companies and success stories.” As an example, Gen-Probe (Nasdaq: GPRO) acquired Medical College spinout company Prodesse Inc., a leader in molecular testing for influenza and other infectious diseases, for approximately $60 million in cash in October 2009. In January last year, Roche disclosed it was paying up to $625 million for non-invasive prenatal testing firm Ariosa Diagnostics, another Wisconsin spinout. “Our goal is to advance community health through innovation,” Vithalani added. “We want to turn IP into useful products.”

Gaylene Anderson, senior innovations officer at Notre Dame, predicted nanomedicine will be the next hot biotech market, with sales expected to triple in five years. “We use a service-based business model,” she explained. “Our go-to-market strategy is to target a big pharma with toxicity issues or patent expirations.” For example, Notre Dame spinout Certus, which offers a nanoparticle drug delivery platform known as Lypos, will do the bioengineering and give formulations to another company to take to market.

The University of Michigan spun out 19 startups in 2015 and is on track to do 12 this year, reported Jack Miner, director of the U-M Venture Center. Among the standouts are RPNI, a team developing nerve interface to give amputees fine motor control of prosthetic upper limbs, and Xondas, which is developing a way to charge batteries remotely in implantable devices.

To learn more about MGCS visit www.Michigan-GCS.com. Follow conversations surrounding the symposium through #MGCS2016 on Twitter.

Reinventing Investment: The Future of Healthcare VC

Investment Opportunities in Healthcare Look Much Improved, Says MGCS Keynote Speaker James Flynn

JamesFlynn_0690Healthcare is going to reinvent itself over the next decade in terms of the therapeutic options available and how health care is delivered, predicted James Flynn, managing partner at Deerfield Management Company, during his keynote remarks on May 18 at the Michigan Growth Capital Symposium. That’s good news for healthcare investors seeking opportunities in the sector.

Historically, returns on investment in life science have disappointed venture capital investors, Flynn said. Between 1998 and 2008, the average rate of return was 2.7%. The successful sequencing of the human genome in 2003 rekindled investor interest. Big pharma, biotech and venture capital poured millions of dollars into the development of promising new drugs, hoping to reap big returns. However, medical researchers did not fully understand the underlying diseases they were trying to treat, and the drug-development process was far from perfect. “We ended up with 1,600 drugs approved that either didn’t work or didn’t work so well,” Flynn explained. “Off-target effects (side effects) were another problem in drug development.”

Since then, things have changed dramatically. “We now have a fundamental grasp of the biological mechanisms and pathways of many diseases,” Flynn reported. “In parallel, tools have been developed to try to target that biology more exactly.” The Internet also has come into play, he added. “Now a lot of academic institutions are putting their research online immediately, so people all over the world who are studying the same thing can gain access to it. That has led to an eight-fold increase in the generation of knowledge.”

The regulatory landscape, which historically has been challenging for the life science industry, also has changed significantly. “During the 1990s and 2000s, the FDA was a watchdog agency,” Flynn said. “The FDA removed drugs from the market because of their side effects, and required long, intensive, extensive clinical trials.” Greater understanding of diseases and targeted biological pathways has recalibrated the regulatory process. As a consequence, the FDA has developed four approaches to expedite the development and review of drugs that treat serious diseases.

The bottom line is that the investment prospects for healthcare investors in therapeutics, particularly drug development, look much improved, according to Flynn. “By knowing the biological pathways, you have a higher probability of success. By targeting the drug better, you have a lower probability of side effects. If the drug treats something with significant unmet need and you have a biomarker, the regulatory pathway is quicker and less expensive.

“That all adds up to a much more favorable equation than I have seen in any period over the last 20 years,” Flynn concluded.

To learn more about MGCS visit www.Michigan-GCS.com. Follow conversations surrounding the symposium through #MGCS2016 on Twitter.

MGCS Founder and Director David Brophy Receives Leaders and Best Award

David J. Brophy was recognized for 35 Years of Visionary Leadership at MGCS 2016

David Brophy, Zell Lurie Institute University of Michigan RossUniversity of Michigan Finance Professor David Brophy, the founder and director of the Michigan Growth Capital Symposium, received the Leaders and Best Award today in recognition of the visionary leadership he has brought to the symposium for more than three decades.

“Dave has been the guiding light of this event for 35 years,” said Ken Nisbet, executive director of U-M Tech Transfer, who presented the coveted award during a ceremony on the second day of the 2016 MGCS. “He also has been a wonderful teacher, adviser, mentor and friend to all of us, and has launched countless students into careers in venture capital and private equity finance and investment. In addition, Dave has been an active participant and supporter of economic development in Ann Arbor and the state of Michigan.”

In accepting the award, which he characterized as the equivalent of the Nobel Prize, Brophy said: “This is the love of my life. When (venture capital investor) Ian Bund, (business leader and philanthropist) Ted Doan and others began to talk about launching the first venture fair, it seemed like a good idea and a short-term solution to the economic situation in Michigan.” The University’s Institute for Social Research sponsored the event for a number of years. Later, the Center for Venture Capital and Private Equity Finance, which Brophy founded in 1994, and the Zell Lurie Institute, launched in 1999, lent their support to the symposium.

Brophy extended special thanks to Mary Nickson, manager of the symposium, for her tireless efforts to expand the reach, scope and quality of the event. This year, 450 individuals, including in-state and out-state venture investors, entrepreneurs, startup company CEOs, university commercialization experts and others drawn from the entrepreneurial ecosystem, both locally and nationally, attended the symposium.

“Looking forward, we want to expand and deepen the symposium and improve its quality every year,” Brophy said.  “It’s been my pleasure to be here with you, and I hope we can continue what we started so many years ago.”

To learn more about MGCS visit www.Michigan-GCS.com. Follow conversations surrounding the 2016 symposium through #MGCS2016 on Twitter.

 

University of Michigan Student Startups Excel at World’s Largest Business Plan Competition

More than $400,000 in Prize Money Awarded to Promising Young Companies in IT & Biotech Sectors

Ann Arbor, Mich. – April 18, 2016 – The Samuel Zell & Robert H. Lurie Institute for Entrepreneurial Studies at the University of Michigan’s Ross School of Business today announced that two University of Michigan student-run startups have been awarded substantial prizes at this year’s Rice Business Plan Competition (RBPC), the world’s largest and richest graduate-level business plan competition. Neurable and PreDxion Bio, the two winning teams, both started their successful business plan competition seasons at the Zell Lurie Institute’s Michigan Business Challenge, and together took home $430,000 in total cash prizes and investment dollars at RBPC, which took place April 14-16, 2016.

University Michigan Ross Rice Business Plan Competition Win Zell Lurie InstituteBeating out more than 400 original business plan submissions and 40 competing teams, Neurable took second place in the competition, earning the $50,000 Second Place Prize, as well as the OWL Investment Prize of up to $280,000. Co-founded by Ramses Alcaide (PhD Neuroscience ’16) and Michael Thompson (MBA ’17), Neurable has created the first non-invasive brain-computer interface (BCI) that allows for real-time control of software and physical objects. Neurable’s fully functional prototype incorporates proprietary, patent-protected technology developed at the University of Michigan’s Direct Brain Interface Lab. Neurable’s technology has already allowed people to control wheelchairs, robots and even a full-sized car in real time with no training and at a significantly lower cost than existing BCI technologies.

University of Michigan Ross PreDxion Bio Zell Lurie Institute Rice Business Plan CompetitionPreDxion Bio took home the $100,000 TiE Boston Angel Investment Prize. Co-founded by Walker McHugh (MSE Biomedical/Medical Engineering ’17) and Caroline Landau (MBA ’16) PreDxion Bio™ is a precision medicine diagnostics company with a beachhead product called MicroKine™, a patent-pending near-bedside diagnostic device that measures proteins in the blood of critically ill patients. MicroKine delivers this information in less than 30 minutes–ten times faster than that of any existing technology on the market–from a single drop of blood, providing physicians with the information to precisely tailor treatments to a specific patient’s immune response.

“The Rice competition is one of the largest and toughest competitions in the nation. Having two Michigan teams rise to the top of this very competitive field validates the notable talent and innovative technology coming out of our university,” said Stewart Thornhill, executive director, Zell Lurie Institute for Entrepreneurial Studies. “The funding they’ve received from this competition, in addition to the feedback they’ve gathered and the network connections they’ve made, will significantly help both teams advance their ventures.”

University of Michigan Ross Neurable Zell Lurie Institute Rice Business Plan CompetitionIn the spirit of the Institute’s action-based approach to learning, intercollegiate competitions provide further opportunities for students to refine their plans, expand their networks, receive funding and learn about other aspects of their startup. Student teams from across the university receive in-depth training and support from the faculty and staff at the Zell Lurie Institute, including business development, refinement and presentation sessions. This guidance ensures students from multiple disciplines have the solid business foundation necessary to commercialize a great idea.

“The recognition and funding from a competition the scale of Rice is an amazing achievement for our team and for the growth of Neurable,” said Alcaide. “Everyone at the Zell Lurie Institute and the Office of Technology Transfer has provided invaluable support and expertise since day one, coaching and guiding us to a place where the judges and potential investors could fully recognize the promise of our technology. The additional mentorship and support from TechArb and the Center for Entrepreneurship set us up for success.”

“The entire PreDxion Bio team is overwhelmed by the show of support we received at Rice. The $100,000 we are taking home will be allocated to funding manufacturing devices that will revolutionize the way we treat and manage critically-ill patients,” said McHugh. “Our time at RBPC has shown us what an incredible place the University of Michigan is to start a student-run venture. The support we have received from the Zell Lurie Institute, Fast Forward Medical Innovations/MTRAC, the UM Coulter Program, the Center for Entrepreneurship and the Law School Entrepreneurship clinic has been exceptional and a definite driver of our success.”

Neurable and PreDxion Bio are among the many successes for University of Michigan teams on this year’s business plan competition circuit. Earlier this year, PreDxion Bio took home the Pryor-Hale Award for best business for $25,000 and the Williamson Award for $5,000 for the most outstanding business and engineering team at the Michigan Business Challenge, and Neurable was a finalist in both the Michigan Business Challenge and the Startup Competition at the University of Michigan. Student teams have also competed at the Thought for Food Global Summit in Zurich, the Venture Capital Investment Competition at the University of Colorado Boulder, the Undergraduate Venture Capital Investment Competition Global Finals at the University of North Carolina-Chapel Hill, the Cardinal Challenge at the University of Louisville and the Accelerate Michigan Innovation Competition. The RBPC ends the season for intercollegiate competitions, and the strong showing by Neurable and PreDxion Bio capped it off well for the University of Michigan.

For more information on the Michigan Business Challenge or related entrepreneurial student competitions, please visit http://www.zli.bus.umich.edu.

Two student teams from the University of Michigan selected to vie for more than $1M in prizes at Rice Business Plan Competition

World’s richest and largest student startup competition launches new People’s Choice Competition

Chosen from nearly 400 entrants, two University of Michiganstudent teams, Neurable and PreDxion Bio, will compete with some of the world’s top universities for more than $1 million in prizes at the 16th annual Rice Business Plan Competition at Rice UniversityApril 14-16.

This year, teams will compete for $5,000 online in the People’s Choice Competition that challenges the spirit of each university. Team members, fellow students, alumni, family and friends can vote for their favorite team via a Facebook survey. People can participate by going to https://apps.facebook.com/rbpc-polls/form/rbpc2016.

Neurable, co-founded by Ramses Alcaide (PhD Neuroscience ’16) and Michael Thompson (MBA ’17), has created the first non-invasive brain-computer interface (BCI) that allows for real-time control of software and physical objects. Neurable’s fully functional prototype incorporates proprietary, patent-protected technology developed at the University of Michigan’s Direct Brain Interface Lab. Neurable’s technology has already allowed people to control wheelchairs, robots and even a full sized car in real-time with no training and a significantly lower cost than existing BCI technologies. Neurable was a finalist in the 2016 Michigan Business Challenge (MBC).

University of Michigan Ross School of Business Startup PreDxionCo-founded by Walker McHugh (MSE Biomedical/Medical Engineering ’17) and Caroline Landau (MBA ’16), PreDxion Bio is a precision medicine diagnostics company with a beachhead product called MicroKine, a patent-pending near-bedside diagnostic device that measures certain proteins (“cytokines”) in the blood of critically-ill patients.  MicroKine delivers this information at the bedside, in less than 30 minutes, from a single drop of blood, providing physicians with the information to precisely tailor treatments to a specific patient’s immune response. Earlier this year, PreDxion took home the Pryor-Hale award for best business for $25,000, and the Williamson Award for $5,000 for the most outstanding business and engineering team at MBC.

“The true measure of success for the Rice Business Plan Competition is the number of teams that launch, raise funding and go on to succeed in their business,” said Brad Burke, managing director of the Rice Alliance for Technology and Entrepreneurship at Rice University, which hosts the event. “The competition has served as the launch pad for a great number of successful entrepreneurial ventures, and the success rate exceeds the national average.”

University of Michigan Ross School of Business Startup NeurableThe winner of the Rice Business Plan Competition will take home a grand prize valued at more than $450,000, including seed funding and the opportunity to ring the closing bell at NASDAQ Marketsite. Judges select the winner based on the company that represents the best investment opportunity.

“Events like the Rice Business Plan Competition allow University of Michigan students to showcase their ventures, commercializing technologies developed at the university,” said Stewart Thornhill, executive director of the Samuel Zell & Robert H. Lurie Institute for Entrepreneurial Studies. “These opportunities allow students to raise funding and gain traction in front of a wider community of investors and business leaders. We are proud of the tremendous entrepreneurial spirit and drive shown by PreDxion and Neurable, and are confident that the resources they’ve received from the Zell Lurie Institute will help them achieve even greater success.”

More than 140 corporate and private sponsors support the business plan competition, which includes 275 judges from the investment sector and awards more than $1 million in prizes. Top prizes include the $250,000 Investment Grand Prize from The GOOSE Society of Texas, two OWL Investment Prizes totaling at nearly $250,000 and the $100,000 Mercury Fund Tech Transfer Investment Prize.

For more information on the 2016 Rice Business Plan Competition, visit http://alliance.rice.edu/rbpc.aspx.

MGCS Industry Insights – Inventiveness Paves the Way to Success for Neuvokas Corp.

Join us for the 35th annual Michigan Growth Capital Symposium (MGCS) to take place on May 17 & 18 at the Marriott Resort in Ann Arbor/Ypsilanti. In addition to providing a platform for Midwest startups to pitch investors; the two-day conference will feature two keynote speakers, several panel discussions, a technology transfer pitch session and ample networking opportunities. More than 450 investors, entrepreneurs and related stakeholders are expected, with nearly 75 investment firms represented. The deadline for presenting company applications is Thursday, March 10. Apply online. Register to attend at www.MichiganGCS.com.

Michigan Growth Capital Symposium Zell Lurie Institute Ross School University of Michigan“Inventiveness” or “resourcefulness” constitutes a key building block for entrepreneurial ventures, and the Finnish translation, “Neuvokas,” is the moniker of an advanced-materials company from the far reaches of Michigan’s Upper Peninsula. For founders Erik Kiilunen and Ken Keranen, inventiveness inspired a breakthrough product that gave them a promising foothold in the $140 billion annual global market for rebar, a ubiquitous and generic construction industry material.

In 2009, Kiilunen, a Michigan U.P. native, launched a precursor company EcoStud, which manufactured, distributed and installed green building materials. Three years later, his efforts to develop a second-generation product and manufacturing process led to the development of a low-cost method of producing fiber-based rebar and the launch of a new company with the potential to transform the reinforced-concrete building materials market.

“Fiber reinforced polymer rebar (FRP) has been around for more than 30 years ─ but it has been too expensive for nonspecialized uses,” Kiilunen explains. “We created a high-speed processing technology that takes the manufacturing cost out of the equation. We are able to price our product at parity with conventional steel rebar and maintain very healthy margins.”

In the past couple of years, Kiilunen has purchased and refitted a scuttled turn-of-the-century, 32,000-square-foot mining building in Ahmeek, Michigan, to house Neuvokas’ FRP rebar manufacturing line. The Neuvokas team has boosted its production rate from 30 feet to 75 feet of rebar per minute ─ more than 10 times faster than the nearest competitor.

“We now have a saleable product and a manufacturing process that is bullet-proof,” Kiilunen says. “Our factory is located in Michigan’s Keewenaw Peninsula and sits on a ridge of basalt that was mined from the late 1800s to the 1970s.  We plan on using existing mine waste as a feedstock to produce basalt fiber, a key component of our FRP rebar. This vertical integration not only will allow us to drop our price below that of steel rebar, but also will help to remediate prior environmental damage and promote economic development in the region.”

Neuvokas’ FRP rebar offers labor, transport and insurance savings while providing superior performance at the same cost as untreated steel rebar. In addition, it is lighter, rust-proof and more eco-friendly compared to steel.

In 2013, Kiilunen landed the company’s first customer, Stahl Concrete in Door County, Wisconsin, after trailing a semi-trailer truck carrying steel rebar for two hours to the concrete contractor’s facility. The intrigued facility owner introduced Kiilunen to a local businessman looking for an opportunity to invest the proceeds of a recent exit. One month later, Neuvokas received the first tranche of a $1.2 million investment from that high-net-worth investor and a tag-along investor.

In late September, Neuvokas began selling in its target market, Houston, where its FRP rebar is being used for slab-on-pavement applications, such as parking lots, private roads and home patios. Kiilunen estimates the company’s revenues in the fast-growing Houston alone could reach $40 million over the next four years.

Neuvokas’s ability to scale more quickly depends in large part upon fundraising. To date the company has raised $2.2 million in angel capital, $1.45 million in grants and $350,000 in unsecured debt. Kiilunen met with investors last May at the Michigan Growth Capital Symposium in an effort to drum up support to fill out the remaining $1 million of a $2 million Series B round.  “We will reach profitability in November 2016, if we raise enough capital to put the proper people and processes in place,” Kiilunen predicts.

Register to attend MGCS 2016, visit www.michigangcs.com. Follow conversations about the Symposium through the hashtag #MGCS2016 on Twitter.