Velocity has launched a second venture capital fund targeted specifically at early-stage startups involved in health technology
The University of Waterloo's startup incubator Velocity has launched a second venture capital fund targeted specifically at early-stage startups involved in health technology.
The announcement came Thursday evening in Kitchener during Velocity's tri-annual pitch competition.
Companies already competing for $50,000 in pre-seed funding from the Velocity Fund – a venture capital fund created last year by the incubator – were surprised with the news that another $50,000 was on the table through the new Velocity Health Tech Fund.
"Healthcare is a big passion for our entire team, so I think that this fund brings an amazing opportunity here in Waterloo to contribute to the advancing technologies in healthcare specifically and we're excited about it," said Christine Simone, founder of Caribou and one of two companies to be awarded funds through the Velocity Health Tech Fund.
Caribou specializes in arranging personalized medical travel experiences for North Americans who either can't afford treatment in their own country, or who are waiting on long waitlists for care.
The Velocity Health Tech Fund has been accepting investments for four weeks and has already reached $1 million US, meeting its initial fundraising goal. The fund will help early-stage health tech startups with product development, IP strategies and understanding and navigating the regulatory environment associated with the healthcare industry.
"Following the launch of the Velocity Fund last year, it quickly became apparent that there is a significant appetite among individual investors in Canada to get in on early-stage startups," said Adrien Côté, Executive Director of Velocity. "We launched the second fund in part to meet a market demand among investors that we know exists and to address the ongoing challenge that early-stage companies face in attracting investment."
In Waterloo region, there are approximately 130 health tech companies already in operation; 75 of those are fast-growing startups and scale-ups. Solving challenges for human health is becoming an increasingly critical societal need and an ever-larger market opportunity. One-third of the companies that Velocity already supports are focused on health tech; this has given the leadership team at Velocity insight into the unique challenges of starting a business in the health tech sector.
"Health tech startups generally require more capital in their early stages. There are also few early-stage investors that are comfortable with investing in this more complex sector. These issues, and the fact that 38 per cent of the companies we have in our incubator already operate in this space, meant that it was a no-brainer for us when it came to the focus of the Velocity Health Tech Fund," said Côté.
The second winner of $50,000 from the Velocity Health Tech Fund was Life Sciences Key Technologies (LSK) – which aims to bring decentralized diagnostic abilities to the point of need; doctor's offices. LSK also won support from the Velocity Health Tech Fund. The company walked away with $100,000 in pre-seed funding.
Interest in the fund has primarily been from individuals who are currently employed in the health care field. Health care professionals are keen to see innovation in their sector and often have a willingness to invest in such innovations, but rarely have the time to do so on a sustained basis.
"I invested in this fund early because I believe in the impact that startups can have in our health care system, and I am passionate about health," said Dr. Richard Weinstein, an ophthalmologist based in Kitchener, Ontario and Velocity Health Tech Fund investor. "Because my ability to holistically judge the potential of health tech startups is limited, this kind of fund provides me with a more straightforward, vetted way to invest in the sector."
The University's first startup venture fund, the Velocity Fund, was launched in April 2019 and has raised US $1.3 million and awarded $600,000 to 12 startups. The AngelList-powered venture fund gives investors a way to invest in a diversified portfolio of early-stage startups supported by Waterloo's Velocity incubator.
