Rock Health announced a shift in strategy as it proclaimed the launch of its third and largest seed fund for med tech startups. All Rock Health portfolio companies will now receive $250,000 in funding, instead of $100,000, but the number of companies supported will decrease.
"With our confidence comes a belief that we should be putting more money into each company, and we know that increasing our check size (and selectivity) will be a stronger signal to seed co-investors," the med tech incubator/accelerator said in a blog post announcing the news. The acceptance rate for inclusion into the med tech incubator will decline to 1% to 2%, although the historical rate is already 2% to 3%.
The change helps the incubator achieve its goals of both helping member companies raise money immediately, and making it easier for them to raise money in future rounds. "Even with that type of selectivity we expect that our new fund will allow us to continue to be the most active seed investor in digital health, co-investing alongside leading firms and adding value to companies through our unparalleled services," the blog post says.
The competition for funding is not only among startups, but also among different cities and med tech clusters. Seventy percent of Rock Health companies are in the Bay Area, where it is based.
The new seed fund's lead investor, VC firm Bessemer Venture Partners, hopes its involvement will lead to more Rock Health funding going to the Boston area. "One of the things Boston has done so well is we're really strong in the healthcare sector," said Bessemer partner Stephen Kraus in the Boston Business Journal. "If you look at life sciences and biotech, we've built an unbelievable competitive cluster in that area." Kraus is based in Boston, but the VC fund has a larger office in Silicon Valley as well.
Kaiser Permanente Ventures is the other lead investor in the new fund. KPCB, Montreux Equity Partners, and Great Oaks Ventures also participated, Rock Health said. It did not disclose the size of the fund.
One of Rock Health's successful exits was Lift Labs. Acquirer Google X wrote that company's tremor-canceling spoon "could improve quality of life for millions of people. We're also going to explore how their technology could be used in other ways to improve the understanding and management of neurodegenerative diseases such as Parkinson's disease and essential tremor." Overall, Rock Health member companies have raised $207 million in three years, says VentureBeat, which claims the incubator's portfolio consists of 55 active companies.
In addition to $250,000 in funding, Rock Health companies also receive access to its network of in-house and external partners, like GE Healthcare ($GE), Boehringer Ingelheim, Harvard Medical School and various VC firms.
The incubator was founded by one of FierceMedicalDevices' top women in med tech, Halle Tecco, who describes the firm as "a summer camp for entrepreneurs that want to change healthcare."
- read the Rock Health blog post
- here's the Boston Business Journal article
- here's the VentureBeat article
Special Report: Top women in medical devices 2014 - Halle Tecco, Rock Health