An Indianapolis angel investment firm focused on life science startups has tapped into the backbone of the state’s orthopedics products industry.
StepStone Business Partners LLC's new chapter in Warsaw is its third after establishing a presence earlier this year at the Flagship Enterprise Center in Anderson.
Warsaw has been dubbed the “Orthopedic Capital of the World.” The northern Indiana city is home of industry giants Biomet, DePuy and Zimmer—along with numerous smaller life sciences firms.
StepStone established its first chapter, consisting of about 20 investors, in Indianapolis, about three years ago. The membership-based group brings together wealthy investors willing to chip in at least $100,000 and help evaluate promising firms.
Angel investment generally bridges the gap between the so-called friends-and-family initial funding and later stages of venture funding.
“These companies are very early-stage. They have minimum management teams. They basically have what they need and what they can afford,” said Oscar Moralez, managing partner and co-founder of StepStone. (Moralez expands on the firm's plans in the video below.)
Moralez is also known locally for founding BioStorage Technologies Inc., one of the largest privately funded biorepositories.
StepStone’s investors have a stake in five companies, including Indianapolis-based endotracheal tube-monitoring device maker SonarMed Inc., and Symbios Medical Products LLC, a northwest-side firm that makes infusion pumps for post-op pain relief.
The angel fund also has invested in OrthoPediatrics Corp., a Warsaw-based firm that makes implants for children. Another is 3DR Laboratories, a Louisville-based maker of medical imaging devices.
StepStone recently completed another investment. Moralez declined to elaborate but said it involved a medical device company whose technology spun out of a local university.
Moralez envisions building a statewide angel network. He’s looking at adding two or three more chapters by mid-2012.
“The great thing we’re going to be able to offer investors and entrepreneurs is visibility and access," he said. "The investors will have access to deal flow that comes from across the state in a structured way. The entrepreneurs will have the opportunity to have visibility to a number of angels that will not only bring capital to the table eventually, but also bring that value-added that the investor might be able to bring.”
Moralez says he encourages investors to consider taking an active role in portfolio companies, such as becoming an advisor or board member or by introducing some of their own contacts who could help the company. “That translates into better investment decisions on our part,” he said.
StepStone was founded by Moralez and by Steven Isenberg, an Indianapolis physician and an assistant professor of otolaryngology/head and neck surgery at the Indiana University School of Medicine.
Greater availability of angel capital was among needs identified in a recent report on the state’s life sciences industry, commissioned by industry initiative BioCrossroads.
The report, “Indiana’s Life Sciences Industry: 2002-2010,” identified 220 life sciences startups occurring over a six year period—or roughly 44 per year.
Indiana has 825 life sciences firms employing about 50,000 people. The largest single sector is medical devices, employing about 20,300.