Blue Sparrows: The medtech investment fund made by entrepreneurs for entrepreneurs
Incubators and communities like YES!Delft are there to offer startups the support and know-how they need to start their innovative businesses and grow. They introduce them to a network of fellow innovators that they can draw resources and inspiration from. And every so often, that network yields some pretty interesting collaborations. This time focused on medtech
Bo Wiesman is a seasoned entrepreneur and the CEO of NewCompliance, an innovative company that offers predictive dashboarding and analytics solutions to hospitals. As of a few years ago, he is also the co-founder of Blue Sparrows, an investment fund for early-stage medtech companies.
Bo started Blue Sparrows together with six fellow medtech entrepreneurs and as a group, they are an example of what networking at YES!Delft can lead to.
“We are all entrepreneurs from YES!Delft and this is where it all started back in 2014,” says Bo. “Because we were such a strong group of entrepreneurs, we got many requests from other medtech founders to provide advice or coaching, so we came up with the idea of setting up our own investment fund.”
It took Bo and the rest of the team about four years to set the fund up and get it to do what it was meant to do – invest in high-potential medtech companies from across the country. Today, it also has two experienced fund managers onboard, whose expertise complements the entrepreneurial experience of the rest of the team.
An investment fund run by entrepreneurs
What makes Blue Sparrows different from other funds is that while it does have people with an investment background onboard, it is first of all run by entrepreneurs.
Having built – and some even sold – their own business in the medtech sector, Bo and the rest of the team know what it takes to create a company from scratch. They have been through the ups and downs of being an early-stage company and can guide current startups to success, while avoiding the mistakes that they had once made.
“We can help startups on a very operational level – from validating their idea or already existing product, to creating a business model that works, to clinical validation and medical certification,” says Bo. As a team, they believe that adding actionable knowledge and experience to a company early on can significantly increase their chance of success. They also look beyond the financials and at the potential that a startup holds.
“We are entrepreneurs and not fund managers, so we can determine from our own experience whether a specific proposition has the potential to be successful. And because we are entrepreneurs, we can determine that way more clearly than fund managers can. They look mainly at the financial aspects, while we look at the product, the business model and the team – and help make adjustments where necessary.”
Focusing on early-stage medtech startups – a conscious choice
A lot of people might think that investing in an early-stage, innovative company is risky business. And they wouldn’t be wrong. Yet, for Bo and the rest of Blue Sparrows, it was very clear why they should focus on that specific group. Making one wrong step early on in a business can be detrimental, so getting the right knowledge and advice at the right time is crucial. The team of Blue Sparrows is, therefore, of the opinion that they should only invest in companies that they can add real value to.
“We tend to invest in the areas that we know extremely well, and that is medical technology,” says Bo. “It is not only about the money we invest, but also about the knowledge and coaching we can offer. That, too, has to be on a high level.”
To date, they have made five investments in startups that they believe have the potential to develop a solution, which creates value for both patients and doctors. In the initial stage, Blue Sparrows invests typically between 200,000-250,000 euros per startup, and mentorship and coaching come as part of the package. The fund subsequently continues to invest as the company grows and achieves new milestones.
One of their most recent and also successful investments has been in a startup called UV Smart, which has developed an innovative solution based on UV light that helps disinfect medical instruments and devices within seconds. “We invested in UV Smart about 18 months ago, as we recognized that they have a great team and an advanced technology,” says Bo.
As with all medical technologies, though, certification takes a long time and first revenues do not come in overnight. The current COVID-19 situation, however, has created an urgency for a solution like the one of UV Smart. “Normally they wouldn’t be selling yet, but due to the circumstances, they have had their product medically certified last month,” adds Bo, whose team has been advising the startup in the process.
It is surely of great value for a young medtech company to have experienced advisors – with the right business and industry knowledge – supporting them. Especially in times of uncertainty.
Blue Sparrows have found just the right niche to focus on. From here on out, they are looking to add new companies to their portfolio and later raise a second fund to continue investing in early-stage medtech startups. In the end, the only way to add value to the sector is to keep supporting its rising stars.