The brand new Sheltowee Medical Device Fund LP (SMDF) has emerged from stealth mode after recently breaking escrow and making its first investment in a Miramar, FL company.
Based in Knoxville, SMDF’s Managing Partner is Eric Dobson, the long-time leader of the former Angel Capital Group that merged earlier this year with Sheltowee Business Network (SBN) to create the Sheltowee Angel Network. That move was planned as the first in a couple of actions to position several closely aligned entities to serve as “the clearinghouse for angel deals in America’s heartland east of the Mississippi River,” a goal Dobson described in this March 2020 teknovation.biz article.
“We had everything planned to launch SMDF earlier this year before the pandemic hit,” he told us in a recent interview. Like those of so many others, the plans were delayed until mid-year when the formal organization occurred followed soon thereafter with the initial investment in EMBolic Acceleration LLC. The company serves Interventionalist Radiologists with an initial product named the HourGlass™ embolization plug that is used in occlusion procedures.
Now, the Knoxville-based fund is focused on completing its fundraising goal of $20 million by early 2021. Once the fund is fully capitalized, SMDF plans to make 20 investments – five in each of the next four years. Dobson has teamed-up with Brian Doughty in the new fund that is an outgrowth of both the Sheltowee Angel Network of Louisville, KY, and the DeltaForce Group of Charlotte, NC.
“He’s an amazing salesman,” Dobson says in describing Doughty, Principal in DeltaForce. “He has developed a phenomenal model.” The DeltaForceTM method, as it is named, has been demonstrated to propel companies through their early, awkward stages faster and more cost-effectively than traditional venture investment models for medical devices.
In its recent announcement, SMDF described the fund’s investment thesis as targeting “seed and early stage medical device companies in the cardiovascular, orthopedics, and digital wearables market segments, all areas of expertise by the leadership team and Scientific Advisory Board of the fund.”
Dobson explained that each portfolio company will be actively engaged by the SMDF leadership team and be integrated into an ecosystem of innovation, product development, and product commercialization.
“These companies must have clear intellectual property value, a clear path to commercialization, and be ready to embrace the DeltaForceTM method,” Doughty added. “EMBA scored well on our 15-point structural diligence report and equally well on our 217-point market acceptance risk report. We have high expectations of the company.”
Dobson said SMDF is not necessarily looking for what he described as “iconic Founders,” but rather those who are very solid. “We will surround them with the resources they need,” he said. The fund expects to lead most of the rounds in which it invests.
Dobson explained that the new SMDF initiative is part of a strategy to provide a vertically integrated path for start-ups from angel through venture funding. It includes the new fund, the Sheltowee Angel Network, and the Appalachian Investors Alliance (AIA). Sheltowee has organized groups in Knoxville, Nashville and Louisville that Dobson says operates like an “investment club model.” He’s Chief Executive Officer while Alex Day, another serial entrepreneur, serves as Chairman. The AIA is the non-profit vehicle led Jim Hart as Executive Director and for which Dobson is responsible for entrepreneur-facing educational programs, his first love.
“I spend time in all three,” he says of the three separate but closely aligned entities. As far as the future, Dobson is very upbeat.
“We are excited about what we have been able to accomplish this year in the midst of the turmoil of 2020,” he said. “We expect to fully capitalize the fund shortly and expand our impact. We are thrilled we were able to break escrow, make our first investment, and create such an outstanding Scientific Board of Advisors this year. We expect to make one more investment before year end. And, 2021 is shaping up to be a great year for Sheltowee.”
Those interested in exploring a relationship with SMDF at this link.