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A Baltimore startup that developed a surgical tool to recycle the blood of a patient suffering from internal bleeding landed a $100,000 investment Monday from AOL co-founder Steve Case, winning a "live pitch" competition among eight Baltimore companies.
Sisu Global Health, founded less than two years ago by three women, was singled out for the potential impact its Hemafuse surgical tool could have in emerging markets of sub-Saharan Africa, said Case, CEO of Washington-based investment firm Revolution LLC.
Case brought his "Rise of the Rest Road Trip" to Baltimore on Monday to encourage residents and investors to rally around homegrown entrepreneurs, visiting city startups and incubators, and ending up at the Baltimore Museum of Industry for the late afternoon competition.
"It's solving a big global problem, particularly in Ghana, with what I see as a creative solution," Case said in an interview after each of the eight startups was given just minutes to sell him and other judges on the viability and need for their products, services or technology. "It's a kind of a change-the-world idea."
In her presentation, Sisu CEO and co-founder Carolyn Yarina, who has a background in chemical engineering, spoke of the need for the more affordable device in a part of the world facing severe shortages of donor blood.
"We expect this to impact over 11 million lives," Yarina told a panel of judges, including Ben Jealous, former president of the NAACP and now a partner at Kapor Capital, and Chris Jeffrey, founder of OrderUp, the Baltimore-based meal delivery company that Revolution invested in and was recently acquired by Groupon for $69 million.
The backing from Case "is a mark of validity," she said.
Sisu, which has conducted clinical studies on the device with Johns Hopkins, already has raised $500,000 and is working toward raising another $700,000 in seed funding that will allow it to distribute its surgical tool in Ghana in next year. She projected the company could take in $24 million in revenue by its fifth year.
Yarina said she and her partners developed the technology after observing hospitals in Ghana and seeing "how hospitals ran out of blood."
The company started in Grand Rapids, Mich., but moved to Baltimore in February to participate in the DreamIt Health Accelerator, a program of the Economic Alliance of Greater Baltimore, the state Department of Business and Economic Development, Johns Hopkins, BioHealth Innovation and the Abell Foundation.
Baltimore was the latest stop in Revolution's initiative to showcase and invest in entrepreneurs in cities across the United States.
Case has said the initiative is designed to shed light on how much easier it is for startups outside Silicon Valley to launch, raise capital and create jobs thanks to technological advances, public policy reforms and increased public awareness. Still, he said, the playing field for startups is far from level geographically, with 75 percent of the venture capital investment going to just three states: New York, California and Massachusetts.
That disparity led him to launch Rise of the Rest, he said in a question-and-answer session before a crowd at the museum.
"I realized … this country is well positioned and has a lead as an innovating nation, but there's no guarantee that will continue," Case said. "That led to the idea of shining a spotlight on up-and-coming entrepreneurs in regions that have the potential to build the next big companies."
In Baltimore, he said, "there's great opportunity here, the talent is great, the energy is great," especially in areas such as education technology and health technology.
"The culture Baltimore has is conducive to creating great companies," Case said.
The city is making progress in attracting investment for startups, he said, but, as in other communities, "there is money in the community that's sitting on the sidelines. Figuring out a way to engage people in the community [to invest in startups] is important. … If you care about Baltimore and want a strong community in Baltimore 25 years from now, … if you want a better future for the next generation, invest in startups today."
Startups that competed in Monday's competition included six affiliated with Johns Hopkins' Fast Forward incubator, including ShapeU, a Web-based fitness platform that matches users with group personal training; Edessa, an automated handwashing system; Sonavex, which developed a product that detects blood clots before surgical failures; Proscia, a digital medical image analysis company; and PapGene, an early ovarian cancer detection system.
The Evening Sun
Two other competitors were Javazen, which sells "superfood" coffee, and GiftCardRescue, a website that allows nonprofit organizations to accept unused gift cards and turn them into cash.
Case said in a Baltimore Sun op-ed Monday that he sees strong potential in Baltimore — where tech talent grew by 42 percent between 2010 and 2013, making it one of the fastest-growing markets nationally. The city also benefits from universities such as Johns Hopkins, corporations such as Under Armour and McCormick & Co., and a growing base of funding from angel investors and foundations such as the Abell Foundation. Another plus, he said, is access to New York and Washington and a relatively low cost of living compared to cities such as San Francisco.
Before hearing Monday's startup pictches, Case said the competition is "not about the one I write a check for. It's how the community rallies around these companies."
Case co-founded America Online in 1985, when, he said, about 3 percent of the U.S. was online. AOL, which became the world's largest Internet company and the first to go public, accounted for nearly half of U.S. Internet users at its peak in the 1990s. In 2000, AOL and Timer Warner merged and Case stepped down as CEO.
Through road trips since last year, Case has invested $1.5 million in startup businesses in 14 cities. The tour moves on this week to Philadelphia, Buffalo, Manchester and Portland.
Case started his day in Baltimore attending a flag raising at Fort McHenry, then toured city startups, established firms and incubators, including R2integrated, Under Armour, Betamore and OrderUp.