University investment fund designed to bolster startups

By Lindsey Scullen, Daily Staff Reporter
Published January 8, 2015

The Michigan Investment in New Technology Startups initiative has invested $6.9 million in 11 different University-based startup companies, according to the University’s Investment Office.

MINTS is a $25-million venture fund managed by the University’s Investment Office, established by President Emerita Mary Sue Coleman in 2011. The initiative invests in startup companies that produce technology developed at and licensed by the University.

Rafael Castilla, director of Investment Risk Management at the University, said these companies must gain preliminary funding from an independent professional venture capital investment firm before qualifying for MINTS funding. Moreover, MINTS would provide supplementary support for research and entrepreneurship.

One of those entrepreneurial research efforts funded by MINTS is Atterocor, a company set on developing a new compound — ATR-101 — for the treatment of adrenal cancer. Atterocor co-founder Julia Owens sad adrenal is rare, impacting around 1,000 patients in the United States.

Owens said that diseases as rare as adrenal cancer often lie “below the radar screen” of major pharmaceutical companies.

“It was much more compelling for a startup to take on an opportunity like this,” Owens said. “We do think that there will be a reasonable financial return for our investors, but by doing this in a small company, very capital-efficient manner, we think that we can do the development more quickly and make it financially viable to develop a drug for such a rare population.”

Both Frazier Healthcare Ventures and the Michigan Pre-Seed Capital Fund, a Michigan Economic Development Corporation program led by the business incubator Ann Arbor Spark, provided Atterocor with $250,000 in seed funding.

With preliminary financing under its belt, the company qualified for MINTS funding after receiving an introduction to the venture fund through the Office of Technology Transfer, the office in charge of commercializing University-developed technology and bringing it to the market.

During its second round of financing, Atterocor received $500,000 from MINTS and $15.5 million from three other venture funds.

Castilla said MINTS is an additional support that the University’s Investment Office is able to provide to companies like Atterocor who are rooted in University research and entrepreneurship.

Both he and Owens noted that the University is heavily involved in adrenal cancer research.

“U of M has a number of adrenal cancer experts and adrenal biologists that make it uniquely positioned to be involved in starting a company like Atterocor,” Owens said.

She said this unique positioning comes from an endowment made by former Michigan football coach Bo Schembechler to the University. Schembechler founded the Millie Schembechler Adrenal Cancer fund in memory of his wife, thereby providing the University the money it needed to inaugurate one of the only multidisciplinary adrenal cancer research centers in the world.

In addition to holding the Millie Schembechler Professorship in Adrenal Cancer, Atterocor co-founder Gary Hammer is the director of the Endocrine Oncology Program in the Comprehensive Cancer Center at the University. The EOP has been recognized internationally for its accomplishments in the treatment of adrenal cancer. Atterocor is one of the research initiatives that has resulted from the center.

Castilla said MINTS is a “small piece” of the University’s venture capital investments. It allows the University’s endowment to invest in and finance startups with technology licensed through the University’s Office of Technology Transfer.

“From the Investment Office point of view, the purpose of MINTS is to generate return for the endowment because that’s what we do,” Castilla said.

MINTS is beneficial to University investments primarily because it helps diversify the University’s endowment. MINTS typically invests in smaller companies and in their early stages while much of the University’s endowment lies in bigger companies.

Castilla said the MINTS initiative not only aims to make money but also to help commercialize technology and products like Atterocor’s drug. MINTS strives to make sure that cutting-edge, worthwhile technology doesn’t remain stuck in the lab.

“If we have a drug and we think it can treat adrenal cancer, we need a way to get it out to the world and that costs money,” Castilla said. “You have to raise financing, you have to get investors, you have to do FDA trials.”

MINTS serves as a way to back University entrepreneurship, to diversify the University’s endowment and to commercialize University technology.

“There aren’t many universities that have such a program,” he said. “We’ve had calls from other universities that are interested in MINTS, but there aren’t a lot of universities that have a similar program at this point in time.”