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Arch Angels puts big bucks behind local med-tech startups

This article first appeared in the St. Louis Beacon, Oct. 2, 2012 - Three cutting-edge companies have received a major infusion of cash from the St. Louis Arch Angels.

Neurolutions, Kypha and CardiaLen are all set to see more than $400,000 in combined funding from the angel group, which has been in operation since 2005 and focuses on life science and IT concerns.

“I would say that in comparison to 2005, the deals are much better, much more sophisticated,” said Bob Calcaterra, president of the Arch Angels. “We’ve got a lot of entrepreneurs who are doing really great work now in creating companies.”

Neurolutions, which picked up $100,000 from the group, is developing a low-cost stroke rehabilitation device to help patients in dealing with paralysis. Kypha, which saw a $180,000 investment, is working on a small blood testing device to assess immune response and inflammation. CardiaLen, which received $138,800, is a cardiac-focused company that is working to treat those suffering from atrial fibrillation, an irregular heartbeat that can cause stroke or blood clots.

The cash represents an initial investment for the first two enterprises but for CardiaLen, it is follow-up funding to nearly half-a-million dollars the company had already received from the angels. Calcaterra is one of the company’s founders from 2008.

“It’s a company that’s pretty far along so we think those human results are going to be pretty exciting,” said Calcaterra in reference to upcoming trials. “We’re working with some very large medical device companies that are helping us out with this.”

He said the technology could eventually be expanded to include massive heart attacks known as ventricular fibrillations.

At Kypha, co-founder Chad Stiening said the incoming capital would go a long way to help his company reach its goals but some members of the angel group also had relevant experience in the field that he found valuable.

“I was very excited to have the angels involved,” said Stiening who thinks the company’s product will gain regulatory clearance by the end of next year. “In addition to the financial capital, they’ve got a very good group there with diverse experience and they bring more to the table than just money.”

Stiening said that he thinks the environment for raising money in St. Louis is friendly.

“I’ve found the investment community to be very receptive to life sciences and biotech,” said Stiening, who created the company with president Paul Olson. “Early stage capital is very much available for good ideas and good projects.”

Tara Butler, interim CEO of Neurolutions, said she was thrilled that the angels had put their backing behind the company and said they were focusing on the clinical trial, which would show proof of concept for the beta prototype of a prosthetic glove controlled by a headset that allows the patient to move by thinking about it.

“I think we have a very unique way of approaching it that should be relevant to the population at large,” she said.

The Arch Angels has poured more than $28 million into 34 companies since its inception. Calcaterra said it continues to close in on the $30 million mark.

“Part of the issue that always comes up with an angel group -- and it occurs all over the country -- is that many of the members that have been in since 2005, including myself, have invested a lot of money,” said Calcaterra, who has been involved in 15 enterprises with the organization. “When you invest in that many deals, you get to a point where you say, ‘Whoa, I have to see some sort of an exit, some sort of big return before I can start reinvesting again.’ Or you just tend to invest a lot less than you were doing before.”

That’s why angel groups need a large pool of members, something the Arch Angels have been working hard to grow. The announcement of the new funding comes in the wake of last month’s merger with the FinServe Tech Angels, a group of 11 investors who specialize in the financial services technology sector. Calcaterra said the Arch Angels are at about 65 members right now.

“We had our meeting this week and I think we had 10 guests who were possible new members,” he said. “The new members haven’t invested yet, so they tend to be a little more willing to take risk at the very beginning.”

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