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The following article appeared on the My San Antonio website under the same title.

Venture capital shortage limits area

My San Antonio

By David Hendricks
Updated 8:14 p.m., Wednesday, September 5, 2012

A lack of venture capital is keeping San Antonio and Texas from competing with regional biotechnology powerhouses in California and the Northeast. Speaking Wednesday, John Kerr, the former head of the Texas Biomedical Research Institute, said San Antonio otherwise has the entrepreneurial energy and innovative discoveries that could eventually build a life sciences industry similar in scope to that of San Diego Calif.

“Venture capital is the missing component,” Kerr said. He spoke during the fourth San Antonio Emerging Venture Pipeline luncheon at the OmniSan Antonio Hotel, attended by 190 entrepreneurs, investors and industry service providers.

On a smaller scale, the quarterly Emerging Venture Pipeline luncheons are helping link local investors with inventors of new medical devices and drugs.

A total of about $5.5 million in investments was sparked by the previous three luncheons, estimated Randy Goldsmith, president of the Texas Technology Development Center, or T3DC. T3DC is a unit of the Texas Research & Technology Foundation, which holds the luncheons in an effort to expand San Antonio’s life sciences industry.

Kerr, a foundation trustee, said venture investments in technology startup companies have changed in the past four years since the U.S. financial crisis. Venture capital firms no longer are investing in companies with unproven technologies, and biotechnology opportunities are being shunned despite the promise of large profits, he said.

Wealth generated by renewed oil and gas drilling in South Texas’ Eagle Ford Shale is not being invested in new medical devices and drugs developed in San Antonio, Kerr said.

“People who have become wealthy in oil and gas and understand the risk profile of that industry seem to have a hard time accepting the risk profile of early-stage life science companies,” Kerr said, referring to the hit-and-miss nature of investing in both industries.

“On the plus side, San Antonio has made a large commitment to biotechnology,” Kerr said, citing T3DC; Startech Foundation, a nonprofit organization that helps companies prepare to raise investments; and BioMed SA, which markets San Antonio’s biotechnology industry.

One CEO, Dr. Steven Davis of StemBioSys LLC, said his some of company’s early investors attended earlier luncheons and heard his presentation at one of them.

“Biotech has its own parameters and timetables. It’s not intuitive like real estate or oil and gas. It’s a development process that requires expertise and understanding. But investors tend to get excited about these investments, not just from the profits but from the possibility of making a big difference in peoples’ lives,” Davis said after Wednesday’s event.

StemBioSys produces stem cells for researchers.

Two San Antonio startup companies made pitches Wednesday. One, Innovative Trauma Care, received a $300,000 loan from the city of San Antonio last week that can be converted to an equity investment later.

Dr. Dennis Filips, Innovative Trauma Care CEO, said his company has developed a clamp that can stop bleeding quickly and improve survival rates before injured people reach hospitals. The clamp can be used for battlefield, car accident, bullet and knife wounds, Filips said.

Innovative Trauma Care is seeking an additional $12 million in investments and plans to roll out its product by the end of this year. Although the first sales will be to first responders and the military, “We see this becoming a consumer product,” Filips said.

Bexar Medical Inc. CEO Rubén Zamorano seeks to raise $1.1 million as it brings to market a new scalpel for use in gastric bypass surgeries on obese patients. The scalpel is designed to tear less muscle as stomach tissue is removed, which also will reduce healing times.

Bexar Medical also has invented a flexible biopsy needle that, Zamorano said, offers better options for obtaining tissues for biopsies.


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