Categories

archive Block
This is example content. Double-click here and select a page to create an index of your own content. Learn more.


Authors

archive Block
This is example content. Double-click here and select a page to create an index of your own content. Learn more.
The Next Act for a Rock and Roll Hall of Famer? Crowdfunding Life-Changing Medical Inventions

The Next Act for a Rock and Roll Hall of Famer? Crowdfunding Life-Changing Medical Inventions

Liz Biscevic

Photo courtesy of RedCrow

Photo courtesy of RedCrow

A New Wave rocker and a wealth manager are teaming up to change the way health care innovation is funded. The unique paths of Jerry Harrison, perhaps best known as the Talking Heads’ keyboardist, and Brian Smith, a Morgan Stanley adviser jolted to action by family tragedy, converged with a commitment to social impact. The responsibility they feel to create change is what makes their company, the crowdfunding platform RedCrow, stand out.

For Smith, the transition into health care was a personal one. In 2009, five months into his wife’s first pregnancy, she went into labor and was rushed to the hospital. At 1 pound 4 ounces, their first child was born, but his daughter only lived a couple of hours. “It was definitely a traumatic experience for us. ... And as a result of that experience, my wife and I got closely involved with the March of Dimes, along with other causes making labor and delivery safer,” Smith says in a phone interview.

Smith became increasingly interested in fostering new innovations in the health care industry, especially around premature birth and complications in pregnancy. One of his Morgan Stanley clients told him about MindChild, an emerging company out of Tufts Medical Center that had developed a cutting edge, noninvasive fetal monitor. Though the company had a partnership with MIT, it didn’t have the funding to complete the product for approval by the Food and Drug Administration. This sort of chicken or egg scenario is a particular drag on the American health care industry: On one hand, there’s a promising new product with potential to save lives if it’s able to get funding and approval from the FDA. But on the other hand, getting a product ready for approval is expensive, and most venture capital firms don’t want to back products until there is a guarantee for return.

“It was so early that no investment bank and no VC would entertain them for investment, so they came to me knowing I was at Morgan Stanley and had access to high-net worth clients and that I really wanted to help them,” Smith tells me. But he couldn’t direct clients to MindChild without bumping up against conflict of interest rules at Morgan Stanley.

After a trip with his wife to Marin County, California, close to where they live today, he decided to leave Morgan Stanley for a business development role with MindChild, helping the company secure funding to continue development and work toward FDA approval. Smith discovered that high-net worth investors have a real appetite for early stage companies, especially if they seem to be driven by a worthy cause, but those companies often lack the exposure needed to bring in such investors.

Smith didn’t know at the time that trading his life as a wealth manager at Morgan Stanley would lead to a partnership with a Rock and Roll Hall of Famer looking for snake venom antidote.

By the early 90’s, Jerry Harrison had also made the transition to the Bay Area. After Talking Heads disbanded in 1991, Harrison had gone on to become a sought-after music producer, working with No Doubt, Live, and the Verve Pipe, among others. During that time, he also branched out into the nascent tech scene, where he co-founded and served as chairman of the board of the indie musician internet resource garageband.com before its sale to MySpace, and co-founded iLike, one of the original Facebook app sensations. By the time he met Smith, the polymath Harrison had already ventured into health care, helping a company developing a “nearly universal antidote for snake bites,” he says.

Photo courtesy of RedCrow

Photo courtesy of RedCrow

When Harrison and Smith began discussing the plans for RedCrow, they decided to use a structure similar to garageband.com—the crowd, of investors in this case, decides which companies end up on the platform. RedCrow provides some curatorial assistance to the crowdfunding approach, however. “I started watching what was happening in the crowdfunding space, and I didn’t like what I was seeing,” Smith recalls, claiming that many such platforms would put “everything and anything” up on the site. That sort of strategy, though generally profitable for the platform itself, makes it daunting for potential investors to find companies of value.

Because the potential for social impact is a key factor in the companies they select for their platform, RedCrow maintains a narrow focus and serious approach to vetting. Before a startup is considered by RedCrow, it’s vetted by both the co-founders and an advisory board comprised of health care professionals like Dr. Stephen Shaya, the managing director of one of the largest medical supply distributor in the country, J&B Medical. “More importantly, we’re helping companies tell their stories and why they’re doing what they’re doing,” Smith says. Harrison says he will sometimes weigh in on marketing, identifying “the aspects of what they invented that will have the most resonance with the investing community.”

Harrison claims that there’s a “new mindset” sweeping across the baby boomers and millennials. Rather than only considering monetary potential, potential investors are looking for companies that have a positive impact on the world. 

“There’s this mindset of ‘Yes, I want to make money, but I will take a little bit less of a return if I know the investment is really doing a good thing.’”

Though a sacrifice on returns is not what Harrison sees in the first three RedCrow companies, he believes that they are selecting ventures that would make the world a better place.

RedCrow’s first deals include Ixcela, a platform that helps people measure, improve, and maintain a healthy microbiome; MiRTLE Medical, a Boston-based company that allows doctors to perform MRI-type procedures without immersing their patients in a noisy tube; and Stretch, a platform that allows family members to document and easily share familial issues, health updates, and medical history. RedCrow will focus on health care for the foreseeable future, but plans to branch out to other verticals, like fintech, big data, cybersecurity, and virtual reality, with a continued focus on the potential for social good.

Harrison doesn’t see his involvement in the proto-punk and New Wave scene as all that different from his activity in tech ventures now. “Music was sort of the moral compass of the community,” he tells me, “but also … who people [were] was often defined by their music.” But now it is ideas—driven by technology—that represent our cultural vanguard, he says. “It’s one of the things I love about San Francisco,” Harrison explains. “You meet people, and they say they want to become successful and they want to become wealthy, but it’s because they want to have a new idea.”

Smith observed it’s “funny how things can be cyclical. Harrison was part of a band during a time when music brought people together. In many ways what he did with music is what equity crowdfunding is doing—it’s bringing people together again.”

Friday Good News Roundup: November 18, 2016

Friday Good News Roundup: November 18, 2016

5 Things to Know Today: November 17, 2016

5 Things to Know Today: November 17, 2016