Proposed River Glen venture fund refocusing on medtech

A proposed Iowa venture capital fund is slimming down its scope after initial attempts to raise capital hit a wall.

River Glen Venture Partners, a fund first announced last year, first planned to invest in three areas: medtech, fintech and ag-tech. Now, the fund’s structure is reorganizing to focus solely on medical technology startups.

RGVP initially hoped to raise between $25 million and $30 million. It received certification as an Iowa “innovation fund” in February 2016, requiring it to raise $15 million within a year.

“We set out to raise money and we raised within the first 90 days a total of $7.5 million in investor commitments and then we stalled,” said Matt Busick, RGVP’s founder and the managing director of River Glen Private Capital in West Des Moines.

Now, RGVP plans to raise between $15 million and $20 million.

On Friday, a request from RGVP for a nine-month extension went before the Iowa Economic Development Authority Board. The board approved a one-year extension, giving RGVP until February 2018 to raise the minimum amount.

Busick said his firm’s first attempts to raise funds would have required institutional investors, but many found his fund’s plan a “mismatch with their investment preferences.”

“We also heard, exasperatingly so, that there wasn’t a lot of confidence that we would find good investable deal flow in Iowa,” Busick said. Similar skepticism, he said, was expressed from investors outside of Iowa.

Despite that, though, Busick said he’s still committed to making the fund a reality.

“We wouldn’t have spent as much time, energy, effort and dollars as we did trying to get this off the ground if we didn’t believe in those three areas of focus and the fact that Iowa can incubate exceptional innovation,” he said.

Busick defined possible medtech startups as those working on data analysis or software, medical devices, diagnostic products and therapeutics, such as vaccines or drugs.

One reason his fund is interested in medtech, he said, is because companies and products in the industry often face regulatory, developmental or other milestones, that present identifiable investment benchmarks.

The fund would invest, although not exclusively, in tech transfer opportunities from Iowa’s universities. How much RGVP would invest per startup or how many deals it plans to make are still to be determined.

RGVP is only the second to receive “innovation fund” certification, meaning investors can receive tax credits worth 25 percent of their investment in Iowa startups.

Next Level Ventures was the first innovation fund while new fund ManchesterStory may seek certification.

Matthew Patane is the managing editor and co-founder of Clay & Milk. Send him an email at mpatane@clayandmilk.com.