Published in Health Care
Spectrum Health venture capital arm adds ‘buy local’ focus COURTESY PHOTO

Spectrum Health venture capital arm adds ‘buy local’ focus

BY Sunday, March 15, 2020 05:45pm

GRAND RAPIDS — Spectrum Health Ventures LLC’s latest investment follows a new corporate strategy from its parent health system to buy locally more often.

To the corporate venture capital arm of Grand Rapids-based Spectrum Health, that means giving more attention to investment prospects in Michigan when scouting for deals. While Spectrum Health Ventures will still pursue deals nationally, managers have added a “buy local” element to their focus.

“We will be more deliberate about looking for investments in Michigan, and specifically in West Michigan,” said Spectrum Health Ventures Executive Director Scott McLean. “I’ve been purposeful in trying to find new avenues to find deal flow that is specific to West Michigan.”

Spectrum Health Ventures’ investment in eVideon Inc. fits into that added focus. A Grand Rapids tech company that provides an in-room, interactive platform to give information to hospitalized patients, eVideon was the first Michigan-based investment for Spectrum Health Ventures.

Formed in 2017 with a $100 million commitment from the health system, Spectrum Health Ventures has invested $20 million across 24 deals. That includes investments made directly in companies, plus deals made through investment syndicates and strategic partnerships, McLean said.

Since forming, Spectrum Health Ventures has received 739 investment pitches from prospects. Of those, only about a dozen made it into the deal pipeline, and “historically when we looked at those, we never really gave much consideration if they were Michigan-based,” McLean said.

Spectrum Health Ventures at any given time has an active pipeline of 10 to 20 companies under consideration for an investment. Historically, maybe “one or less” of those prospects was based in Michigan, McLean said. In one sign of the added focus, the current prospect pipeline of 13 companies has three Michigan-based businesses, McLean said.

“By virtue of what rocks we’re looking under, we’re just finding more Michigan-based (companies),” he said.

That look by the venture capital arm comes as parent company Spectrum Health pursues a new corporate strategy that places a higher emphasis on buying goods and services from Michigan firms. 

“Any time we can create a new company that’s going to create new jobs, specifically aligned with health care, we’re interested in learning more and making investments in it,” said Matt Cox, CFO at Spectrum Health. “Investing locally and growing businesses locally is a differentiator for Grand Rapids.”

Spectrum will be a “significant part” of the New Community Transition Fund, a new venture capital fund in Grand Rapids organized by The Right Place Inc. to invest in minority-owned enterprises, Cox said.

‘Uncovered gem’

Spectrum Health has been a customer of eVideon for several years. The company’s platform provides entertainment and information to patients via a bedside video screen or TV.

The platform offers an array of content such as post-discharge instructions, videos on how to rebandage and care for a wound or incision from surgery, movement limitations following joint replacement surgery, or how-tos on using crutches properly. The platform can also help hospital staff with workflows.

McLean said eVideon stood out as Spectrum Health Ventures reviewed and analyzed the health system’s supply chain for potential investment prospects.

“It was just kind of an uncovered gem. We jumped at the opportunity,” he said. “It intersects very well with some of our priorities and goals. We want to focus on buying local, we want to focus on boosting the local economy, and this is a great reflection of that.”

Terms of the investment in eVideon were undisclosed, but “it’s definitely seven figures,” McLean said.

Spectrum Health Ventures invests in health care companies that have developed and brought an innovation to market that can improve the cost and quality of care. Investments are geared for B or C capital rounds with companies that need growth capital, have market traction and revenues of $3 million to $4 million or more, and have reached profitability or “have clear line of sight to it,” McLean said.

The investment from Spectrum Health Ventures comes as eVideon prepares to launch a new suite of products known as Smart Room. They include a digital display mounted just outside of hospital rooms that shows patient precautions and requests, and an in-room electronic white board that can replace dry erase boards and integrate with medical records.

“This funding will significantly impact our ability to innovate and serve our hospital partners with cutting edge technology like the Smart Room,” eVideon CEO Jeff Fallon said in a statement.

A representative from Spectrum Health Ventures will join eVideon’s advisory board and board of directors, providing insights that will allow the company to “more meaningfully evolve our offerings and continue to address the needs of patients and providers alike,” Fallon said.

New investments

The deal with eVideon was one of two recent investments for Spectrum Health Ventures, which brought together a coalition to lead an investment round in Tampa, Fla.-based Professional Credentials Exchange LLC. The company works to simplify the process involved in health care practitioner credentialing, reducing the time and effort required.

Professional Credentials Exchange plans to initially launch a statewide pilot in Michigan and has several additional regional markets it plans to open later in the year, according to an announcement on the investment.

As it looks for further deals in Michigan, Spectrum Health Ventures intends to do more as well to lead capital rounds and bring together investment syndicates that focus on health care.

“There’s a lot of good investors that we intersect with,” McLean said. “If we’re going to be looking at deals in Michigan, it’d be natural for us to take more of a leadership role, and assuming we take more that leadership role, absolutely we’ll be planning to pull in others from around the country.”

Read 2370 times