Shadow Health gets $200,000 in seed funding

Published: Thursday, January 30, 2014 at 5:08 p.m.
Last Modified: Thursday, January 30, 2014 at 5:08 p.m.

Gainesville-based Shadow Health this week became the first company to receive equity financing through a state program designed to help bring publicly funded research to market.

The company closed a deal Monday with the Florida Institute for the Commercialization of Public Research worth $200,000 in equity funding, meaning the institute takes an ownership stake.

The institute provides seed funding between $50,000 to $300,000 to Florida companies that are commercializing inventions from state universities or research institutes in the form of loans, having funded 25 companies. The loans require a match in private investment dollars.

The program was created by the state Legislature in 2007 and amended last year to allow more funding flexibility.

To receive equity funding, companies must go through the first round of loan funding and meet certain milestones.

Institute CEO Jamie Grooms said Shadow Health has gone well beyond its milestone requirements by going to market and selling products. The company’s product is required curriculum in 206 nursing schools, CEO David Massias said.

Shadow Health makes interactive digital health care training programs that allow students to conduct virtual patient examinations on an avatar. The company licenses part of its technology from the University of Florida.

The equity funding requires a two-to-one match from private investors. In the case of Shadow Health, an investor provided five times the institute’s amount.

Massias said Shadow Health plans to hire 10 people over the next six months, including instructional designers, computer programmers and national sales reps.

Shadow Health currently has 50 employees and recently doubled its downtown office space to nearly 10,000 square feet.

If the investment pays off, Grooms said the institute would invest the money in more companies. Such investments also carry risk and Grooms said he expects some failures.

Of the 25 companies, all are still alive, though Grooms said he expects a few to fail. The survival rate is already higher than if the institute didn’t exist, he said.

The institute’s investment decisions are made by a volunteer advisory board of professional venture capitalists, Grooms said. In addition to vetting companies, he said the venture capitalists are building relationships with the companies and watching them mature, which could lead to bigger deals in the future.

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