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Printed from ChicagoBusiness.com

Health care VC funding jumps in Chicago

By Brandon Glenn
Oct. 25, 2006

(Crain’s) — A $57-million investment in Northbrook-based biotech company Nanosphere Inc. spurred venture capital funding in Chicago-area health care startups to more than triple through the first three quarters of 2006 compared with the same period last year, an industry report revealed.

Eleven Chicago-area health care companies attracted a total of about $102 million in venture funding through the first three quarters, according to data from BioEnterprise Corp., a Cleveland non-profit that collects health care data. Nanosphere far outpaced all local recipients with its $57-million investment led by Boston-based Bain Capital LLC. Last year, seven Chicago health care companies attracted a total of $31 million in venture funding through the first three quarters.

Baiju Shah, BioEnterprise’s president, called this year’s spike in funding to Chicago health care companies “a stunning change from ’05.”

The Nanosphere deal by itself eclipsed the full-year totals from 2003, 2004 and 2005 for Chicago-area health care companies, Mr. Shah said.

Other notable local deals so far this year included $19 million to Vernon Hills-based Sorbent Therapeutics Inc. and $12 million to Romeoville-based ATI Physical Therapy. Chicago-based Arch Venture Partners led the investment in Sorbent. Keith Crandell, a managing director with Arch Venture, said he’s observed more venture-worthy health care companies in the Chicago area recently.

Mr. Crandell attributed the increase to two factors — the amount of money invested in research at Illinois institutions such as the University of Chicago and Northwestern University, and the prevalence of talented health care executives in the area because of local companies such as Baxter International Inc. and Abbott Laboratories.

“There’s a great pool of executives” in the Chicago area, he said. “They make great candidates to complement new technologies.”

Don Joseph, Sorbent’s chief executive, worked at Baxter for 34 years. Sorbent, which is working on a therapy for patients who suffer from kidney disease, is based on technology spun out from the Dow Chemical Co. in Michigan.

Among Midwest areas, Chicago health care startups ranked second to the Minneapolis area in venture dollars raised through the year’s first three quarters. Minneapolis-area companies raised a total of $182 million, according to BioEnterprise.

In the Midwest as a whole, health care startups have raised $564 million, a 36% jump from the same period last year.

Sorbent Therapeutics, Inc.
750 Bunker Court
Suite 900
Vernon Hills, IL 60061
Phone: 847-996-1500