The “valley of death” is a term used in the startup community to refer to the dreaded gap between the discovery of promising new technologies and the bringing to market of commercially viable new products based on those technologies. It is the badlands where risky and possibly disruptive tech goes to die.
Put more formally, it’s where basic science research stops, but before equity financing begins, said professor Henry J. Runge, J.D., M.S., associate director of UNeTech, a translational research institute and startup incubator that has developed a model to support high-growth-potential startups and technologies that the private sector might not otherwise fund.
Established in 2015 through an act of the Nebraska unicameral, UNeTech is a grant-funded business development entity of the University of Nebraska Medical Center and the University of Nebraska at Omaha that provides the security, support and infrastructure necessary for entrepreneurs to bring high-risk, high-reward tech to market. The institute focuses on medical technologies, or medtech, but any innovative business or product idea may be considered.
“The idea was to create a space for folks to get a foothold in starting up their business,” said professor Rodney S. Markin, M.D, Ph.D., executive director of UNeTech and associate vice chancellor for business development at UNMC.
In return for the support, startups offer convertible notes and stock options to help sustain the institute.
UNeTech brings the vast research, academic and community resources of the NU system to the table, coordinating opportunities that most startups could not feasibly navigate on their own. For example, UNeTech participants can access Metropolitan Community College’s Center for Advanced and Emerging Technology to develop and test prototypes in order to refine their product long before launch.
“Technology startups need a lot of help, especially in the medical space, where there are a lot of barriers,” Runge said. “They don’t just let you bring an artificial heart to market. You’ve got to prove it works.”
A necessary part of that process: having ideas vetted by actual, day-to-day medical personnel long before product development begins in earnest. Markin said the institute’s location near UNMC allows UNeTech participants to interact frequently with doctors and nurses, who often verbalize the dream technology that would make their jobs easier; likewise, UNeTech participants developing medtech solutions rely on advice and criticism from medical personnel to finetune their technology.
“You want feedback now, not after you’ve launched the product,” Markin said.
Runge cited an example of recent success fostered by UNeTech. After building capacity in the incubator, the Omaha-based biomedical company Centese recently left the institute to stake its own claim on the medtech landscape through a device called Thoraguard. The company’s co-founder and CEO Evan Luxon began his career in research and development as a mechanical engineer, devising technical solutions that included improving the performance of motors used in lunar missions to developing low-cost rainwater harvesting systems, before gaining experience as an entrepreneur.
Thoraguard is an automated, self-clearing chest tube for patients undergoing cardiac or thoracic surgery. Chest tubes are placed between the inner and outer lining of the chest cavity and are necessary to drain fluid and air, said Markin, who is also a renowned professor of pathology at UNMC.
Complications may arise when chest tubes become clogged, which requires the medically invasive replacement of the patient’s chest tube. But the self-irrigating solution that Centese engineered reduces that need, all while providing real-time data to medical personnel and alerting them to potential disruptions to the system. This has the potential to reduce patient risk and improve medical outcomes.
“It’s a great solution,” Markin said. One that likely would not have been possible without UNeTech facilitating access to UNMC research and Luxon’s interactions with intensive care unit nurses.
While Runge and Markin both expressed excitement for Centese’s growth, they admitted that the high-risk nature of the ventures that UNeTech supports means not every business that enters the incubator will succeed; hence, there are some criteria for evaluating how long a business can stay in the incubator.
Markin, who grew up doing farmwork and said his best ideas come while driving a tractor, summarized the criteria in no-nonsense Nebraska terms: “If you’re successful, we kick you out. And if you don’t get anything done in two years, we ask you to exit stage left.”
Harsh? Perhaps. But, some might argue, at least there’s the possibility of failure. Without UNeTech’s support, founders with innovative technology ideas might not even get to that point in the first place.
“People will give you money if you can show them they’ll get a 10x return on their investment in two years—that’s an easy sell,” Runge said. “But if your overnight success is in year three, and it’s going to be year ten before it pays off, that’s a harder thing to sell. That’s one area where a public entity like UNeTech has a really important role, because we can’t expect the private sector to accept the risk of projects immediately after invention.”
“But at the same time,” Runge continued, “we can’t completely de-risk them and build them into companies that are revenue-positive. Not all the time.”
That’s the nature of the game. Thanks to UNeTech, more cutting-edge entrepreneurs with risky solutions are able to play.