Rainbow Medical raising $50m investment fund

Abbot Laboratories and Medtronics invested in the fund, which invests in medical device start ups founded by serial entrepreneur Yossi Gross.

Sources inform ''Globes'' that Rainbow Medical Ltd., which was established on the basis of medical devices companies founded by serial entrepreneur Yossi Gross, is raising $50 million in its second financing round. Two of Rainbow's strategic investors Medtronics Inc. (NYSE: MDT) and Abbot Laboratories Inc. (NYSE: ABT) are investing in the round, and one of them has already transferred the money.

Two other strategic investors are also participating in the round, along with GlenRock Israel of Leon Recanati, one of Rainbow's founders.

Rainbow CEO Efi Cohen-Arazi told "Globes", "We believe that this is the last financing round we will need, before we are financed by exits and dividends from our current companies. We're not exactly a venture capital fund, but an operative investment company that establishes companies on the basis of our patents, a model that exists nowhere else in the world."

Rainbow, founded in 2007, has twelve portfolio companies, eight of which are conducting human clinical trials of their products, and one of which has obtained EU CE Mark.

"We are always the sole initial investor," says Cohen-Arazi. "This saves the companies time and effort in navigating between investors and in protracted board meetings. We serve in the management of all of the companies, offering a range of services, including regulation, financial management, and legal advice. In this way, we can go far on a small investment."

Rainbow invests $3-5 million in each company, with the goal of reaching the human clinical trial stage. "At this point, we look for support and value support from third parties," says Cohen-Arazi.

Rainbow COO Gilad Lorberbaum told "Globes", "We only found companies on the basis of definite needs and with partners, research institutes, and hospitals with which we have close but less formal relations." He adds that Rainbow's strategic partners do not directly invest in its portfolio companies, and have no agreements with them. In future, some portfolio companies may be founded with a strategic partner from the beginning.

Cohen-Arazi said that most of the clinical trials by the portfolio companies are conducted in Europe. "This is because of Israel's Ministry of Health. Israeli hospitals cooperate, but going through the Ministry of Health is so hard that it's better to conduct a trial in Europe. I've been told, 'Do a trial here and then apply for CE Mark', but at that stage it's already possible to conduct trials in Europe.

"Rainbow also has extensive development operations in the US, headed by Ron Tavlin, a veteran US venture capitalist, from an office in Minneapolis.

Rainbow has 12 portfolio companies, and plans to reach 15. "All the products are complex and require clinical trials," says Yossi Gross. "We operate in a range of fields, blood pressure, diabetes, dentistry, vision, obesity, and Alzheimer."

The portfolio companies include:

  • Enopace Biomedical Ltd., which is developing a minimally invasive, implantable endovascular neuro-stimulator for heart failure patients, and which recently raised $7 million from Italy's Sorin Group SpA (BIT: SORN);
  • Vascular Dynamics Inc., which is an implantable stent-like device to treat hypertension, and which raised $13.5 million from US funds in February;
  • Maxillent Ltd., which is developing a minimally invasive, sinus lift implant;
  • Nano Retina Inc., which is developing an artificial retinal prosthesis for sight restoration, and is currently raising $10 million;
  • GluSense Ltd., which is developing an accurate, long-term, minimally invasive, implantable, continuous glucose sensor for diabetics;
  • BlueWind Medical Ltd., which is developing a novel wireless neuro-stimulation device for the treatment of peripheral neuropathic pain.

Published by Globes [online], Israel business news - www.globes-online.com - on June 3, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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