*NEWS from OCTANe’s Ophthalmology Technology Summit: Second Ophthalmology Fund Will Be Launched
An OC-based fund dedicated to ophthalmology ventures has been a success for investors and a sequel fund will be launched.
That’s the news relayed Friday by Visionary Ventures Fund LP Managing Partner Jeffry Weinhuff. He announced the news at OCTANe’s annual Ophthalmology Technology Summit. OCTANe is a life sciences and tech accelerator in Aliso Viejo.
The first fund started raising money two years ago. It’s independent of OCTANe, although OCTANe has an undisclosed partnership interest in it.
Although originally announced as a $50 million fund, it’s expected to invest $30 million, Weinhuff said. He qualified it as a success based on its return of more than 25%.
Seventy-five percent of the fund has been invested in a portfolio of nine startups. Some of those investments have been in conjunction with prominent VC firms such as Sequoia Capital, a VC firm in Menlo Park.
The second Visionary Ventures fund- the amount of which has not been disclosed – is one of a few new funds OCTANe plans to launch in 2019 and beyond, OCTANe CEO Bill Carpou told OC Startups Now.
Carpou confirmed the potential of an aesthetics VC fund to accompany the planned launch of its first aesthetics conference in 2019.
The first ophthalmology fund started as a proof-of-concept, Weinhuff said. It was inspired by Bill Link and Dick Lindstrom, who serve as informal advisors.
Link is the co-founder and managing director of Versant Ventures, a healthcare investment firm in San Francisco that does early-stage investments in medical device companies. Before that, he was a general partner at Brentwood Venture Capital. He has more than two decades of operations experience in the healthcare industry, with extensive knowledge of medical devices, particularly in ophthalmology.
Lindstrom is an ophthalmologist who specializes in corneal, cataract and refractive surgery. He’s the founder and attending surgeon of Minnesota Eye Consultants. He holds 30 patents for the design of ophthalmic devices and instruments used in clinical practices worldwide.
The expertise of Link and Lindstrom has been “extraordinary for us,” Weinhuff said. “They’ve enabled us to make our investments more wisely and less risky.”
OC has five times the concentration of ophthalmology companies as any other region in the country, Weinhuff said. Approximately 80 companies here contribute $13 billion to the state’s economy, he added.
“We not only talk to our key opinion leader partners, but also to people in our knowledge base who help us through the whole process – successful executives and scientists who help us refine our due diligence,” he said. “It’s a great business model.”
Partners include Allergan, a multinational pharma company with a large presence in OC; Alcon, a global medical device company with a presence in Lake Forest; J&J Vision, which primarily makes medical devices with a presence in Santa Ana, and part of Johnson & Johnson, a multinational manufacturing company that makes medical devices; Carl Zeiss Meditec AG, parent company of the med-tech company, Carl Zeiss Meditec Group; and Bausch + Lomb, an eye care products company.
In the last few years, these behemoths acquired other companies totaling $17 billion in “de-risked assets,” Weinhuff said.
“We try and partner with them to bring them the opportunities that are ready to go, for their portfolios,” he said. “They’re acquisitive and smart and know what they’re looking for.”
Beyond OC, the global ophthalmology market is north of $40 billion, Weinhuff said.
The fund’s criteria for investing includes a good management team, knowledge of how to get past the regulatory finish line and IP that works, Weinhuff said.
Statistics of First Visionary Venture Fund:
– 72 investors took part in the fund; half of those included some of the leading ophthalmologists in the country
– 2/3 of the investments have gone to medical devices and 1/3 to pharma, the inverse of the dominance of pharma in the ophthalmology market. For medical devices, the fund looks for those nearing commercialization. For treatments, the fund targets those near the end of phase II clinical trials.
“We found that we started with devices because we had a better understanding there,” Weinhuff said. “But we’re building our knowledge base of pharma.”
– The fund performs in the top decile of funds in the country, according to Crunchbase
– The fund makes more investments than any other ophthalmology fund in the country, Carpou said. In Q2 of 2017, it ranked No. 3 overall for healthcare investments by PwC.
One of the most recent investments was announced in June: The fund combined with Bluestem Capital, a VC firm in South Dakota, to lead an $8.5 million Series B preferred stock funding for Tear Film Innovations, with HQ in Carlsbad, according to news reports.
That followed the fund joining with Tigris Ventures last November in a $9 million series A preferred stock investment for Tear Film. Tigris is a seed-stage investment firm and incubator in San Diego.
Tear Film created the iLux system, a portable hand-held device that uses light energy to warm certain glands, with the end goal of preventing tears from evaporating.
CEO Rob Thornill spoke at the conference Friday. He said the fund’s investments are helping the company provide a cost-effective treatment for patients.
Second Ophthalmology Fund
Weinhuff said he believes demand by investors to get in on the new fund will be high. Many individuals who did not invest in the first fund are expected to join the second fund, along with existing investors.
Under SEC guidelines, only 100 investors can join each fund. Existing Visionary Ventures fund partners will receive first priority for the sequel fund.