UM health spinoff Fifth Eye nabs $11 million VC round
Fifth Eye Inc., a health care spinoff from the University of Michigan, will announce Monday that it has closed on a Series A venture-capital round of $11.5 million.
The funding was led by two new investors, Ann Arbor-based Arboretum Ventures LLC and St. Louis-based Cultivation Capital LLC. It was joined by Michigan Investment in New Technology Startups (MINTS), a direct investment program of UM's endowment, and by some of those who invested in the company's seed round of $2.5 million last year, including Detroit-based Invest Michigan and 15 angel investors, including some from the Lansing-based Capital Community Angels.
Fifth Eye has developed software that monitors hospital patients for warning signs of post-operative distress before they can become life-threatening, promising to improve patient outcomes, limit hospital stays and lower health care costs.
Jen Baird, the company's CEO, said the company will begin human trials on at least 100 patients at three Michigan hospitals later this month. One will be Michigan Medicine, formerly called the University of Michigan Health System. She said she doesn't have permission to name the other two but that they are major health care systems in the state.
She said she hopes to have trials concluded by the end of fall and, if they are successful, to get approval from the U.S. Food and Drug Administration early next year to go to market.
Fifth Eye, which was founded in 2017 and based on research at UM, uses noninvasive electrocardiograms to continuously monitor post-operative patients for what is called hemodynamic instability, which can be caused by internal bleeding, infection leading to sepsis, pneumonia and other lung conditions.
Hemodynamic instability can lead to sudden low blood pressure, cardiac arrest and heart failure. Currently, by the time such instability is detected, the patient is often on the path to severe decline and expensive follow-up care.
Last November, Circulation, a journal of the American Heart Association, published an abstract by Fifth Eye researchers and founders that detailed the results of analysis of 4,483 hours of ECG data of 22 patients who had required rapid-response team intervention by care givers for a variety of issues, 13 due to hemodynamic instability.
Analyzing ECG date, Fifth Eye software correctly distinguished with 100 percent accuracy which interventions were a result of hemodynamic instability, and detected it with a mean lead time of 7.7 hours over the time it took for health care workers to realize what was happening.
"Despite continued advances in healthcare technology, clinicians do not have adequate tools that allow them to consistently identify patients prior to rapid worsening of their clinical condition," Tom Shehab, a physician and managing partner at Arboretum, told Crain's. "The Fifth Eye technology has the potential to provide early warning of hemodynamic collapse (and) allows clinicians the opportunity to intervene and improve patient outcomes."
"Invest Michigan is honored to have played an integral role in assisting Fifth Eye's early startup, leading to the support of Arboretum and Cultivation Capital," said Charlie Moret, president and CEO of Invest Michigan, which led the seed round. "We have been inspired to see how an experienced and talented entrepreneur is commercializing this innovative technology."
Baird is one of the most successful serial entrepreneurs in Southeast Michigan. Her biggest fundraising success was with Ann Arbor-based Accuri Cytometers Inc., which made desktop instruments for cellular research. She joined the startup as president and CEO in 2004, raising $27 million from angel and venture-capital investors over the years to keep the company alive until it could begin generating revenue. In 2011, it was sold to New Jersey-based Becton, Dickinson & Co. for $205 million.
Baird next was president and CEO at Ann Arbor-based Accio Energy Inc., a company that made wind-power generation systems that didn't use wind turbines. Instead, it pumped water through recycled aluminum tubes as the wind blew, with the flow of water creating a charge that could be stored.
Shortly after joining Accio, she raised a $1.9 million seed round for the company and later raised another round of $750,000. In 2014, the U.S. Department of Energy awarded Accio $4.5 million to develop large-scale offshore generation systems.
In 2015, Crain's named Baird as one of 25 women to watch in technology. In 2016, Crain's named her as one of the state's 100 most influential women.
Baird and company founder Dawn White pulled the plug on Accio in April 2017 following the dramatic decline in costs for competing renewable energy technologies.
Jeff Basch, who was CFO at Accio, is CFO at Fifth Eye.
"The Arboretum team is excited to once again invest in a company founded by Jen Baird," said Shehab, whose company was an investor in Accuri. "She has a keen eye for new technology and does an excellent job of building strong teams and executing operating plans."
"We've talked for a long time, now, about the need for home-grown CEOs capable of leading fast-growing startups, and Jen is the prototype for that. She has become a top-notch CEO. Having Jen at a company gives investors a sense of confidence," said Chris Rizik, CEO of Ann Arbor-based Renaissance Venture Capital Fund, a fund-of-funds that invests both in Michigan VC firms and in out-of-state firms willing to look at deals here.
As for Fifth Eye, Rizik said: "There is an ongoing trend to reduce costs in health care by addressing issues early, and Fifth Eye fits into that mold by identifying big problems early in a less-invasive way."
Baird said the founding of Fifth Eye and subsequent funding is proof of the strength of the entrepreneurial ecosystem in Ann Arbor. Before the company was founded, Arboretum helped her vet the technology for commercial viability.
"They were vital in giving us feedback in deciding whether to bring this technology out of the university," she said.
Concurrently, Cultivation and Arboretum, both focused on investments on health care, were looking to do a deal together, a deal that was encouraged by one of Cultivation's existing investors. "Cultivation found out about Fifth Eye from one of their investors, who is a doctor," said Baird. "He had found out about us and said to Cultivation, 'Hey, you ought to look at this company.'"
Menlo Innovations, a software developer in downtown Ann Arbor, is another piece of that entrepreneurial puzzle. Fifth Eye is based in Menlo's Startup Garage, a tech incubator adjacent to Menlo. Menlo is also helping develop the software Fifth Eye uses. As Menlo did with Accuri, it reduced its fees for software development in exchange for equity.
Baird said Fifth Eye, which employs five, will remain in the Startup Garage for the rest of this year. She said the company will continue to use local contract research organizations as well as Menlo to keep employee count low. It has also started using Amazon Web Services Inc. to build out its cloud-computing platform.
She said if human trials are successful, she will hire a marketing team next year, which might require the company to find its own headquarters.
Mark Salamango, Fifth Eye's co-founder and chief technology officer, was formerly chief information officer at UM's Center for Integrative Research in Critical Care; co-founder and chief analytics officer Ashwin Belle was on the research faculty at the Center for Integrative Research; and co-founder and chief data scientist Bryce Benson was a computer research analyst at Michigan Medicine.
All three joined the company full time last May.
"The technology that Fifth Eye is commercializing was developed over the past five years by this team embedded in Michigan Medicine, where there were doctors and nurses providing lots of input to guide the development," Baird said. "Talk about living the dream of customer input from every angle to make sure the product is a great fit."
In addition to equity capital, Fifth Eye's technology has received $4.5 million in grants since the research began in 2014.