The Game of Innovation

InnovationGame_withtype

Troy Keyser is looking for the next good idea to help clinicians better care for their patients not just at Carilion Clinic, but nationally and even internationally.

Keyser leads Carilion Clinic Innovation, a partner for Carilion’s innovative staff that works to propel their ideas and inventions for improving care to the larger marketplace through commercialization. Innovations can be brought to market by an industry partner or spun out as a startup so patients across the country and globe can benefit from employees’ curiosity and commitment to innovation.

Carilion employees have shared more than 80 ideas, or “invention disclosures,” since the program launched in 2020. More than 40 invention development projects have been funded and managed, a dozen patents have been filed, three startups have received investments, and several commercialization agreements have been executed.

Inventions that are in the active pipeline include an improved orthopaedic procedure with accompanying novel devices, an artificial-intelligence-decision-support module for cardiac PET, and a personalized sensoring device for pulmonary patients.

“I always try to reflect on Carilion’s original vision and goals,” Keyser says. “How can we improve the health of our community through innovation? How do we build a thriving innovation ecosystem within Carilion? And how can we strengthen our region’s role as an economic engine for health care innovation?”

Carilion Clinic Innovation

Keyser was working in Boston, one of the country’s centers of health innovation, putting together clinical trials, licensing, and collaboration deals for Harvard-affiliated hospitals, when he learned of the opportunity in Roanoke. He jumped at the chance to build a new department focused on commercializing Carilion innovations and growing the region’s health and life science startup ecosystem.

“First and foremost, the area has an authentic collaborative spirit,” Keyser says. “That’s what really struck me. This is a very intentional community at a large scale, a community that understands the power of coming together.”

Keyser soon connected with serial entrepreneur Victor Iannello, Sc.D., who was setting up Carilion Clinic Innovation to encourage employees to develop and commercialize inventions to improve health care.

When Keyser first joined Carilion, the majority of inventions were concepts or rough sketches, and it became clear that greater resources would be needed to move the inventions through the development lifecycle. He has since recruited a biomedical engineer, Prachi Joshi, to lead Carilion Clinic Innovation’s invention development arm, and molecular bioscientist Aileen Helsel, Ph.D., to lead the commercialization arm.

Keyser says each idea is scored to determine whether it is novel, rather than just a tweak to existing devices, and whether it has commercial potential. Qualifying inventions can receive up to $50,000 in funding, along with project management resources guided by agile and lean methodologies. Carilion owns the intellectual property generated by employees, and then reinvests any proceeds as part of a virtuous cycle. Carilion handles the patents, develops the ideas, and markets the products. If an invention is successfully commercialized, the inventor receives at least 40 percent of the revenue generated.

“Our focus is on innovations with commercial potential,” Keyser says. “Not only might our patients benefit, but if we were able to license that intellectual property to, say, a medical device company that could bring the innovation to a larger market, patients across the country, if not the globe, could benefit. To get to that endpoint, we needed to make sure we had the right infrastructure to assess employee inventions to understand the commercial potential.”

The Human Factor

Beyond Carilion Clinic Innovation, Carilion’s innovators have a dedicated latticework of resources and funding opportunities. Close to home is Carilion’s Center for Simulation, Research and Patient Safety, which houses the Carilion Clinic Innovation makerspace, complete with high-performance 3D printers for rapid prototyping.

Sarah Henrickson Parker, Ph.D., senior director of the center, works to translate evidence into practice. As chair of health systems and implementation science at the Virginia Tech Carilion School of Medicine, she seeks to support inventions through the end use.

“When someone develops a new technology or drug, there’s a lot of excitement around the potential,” she says. “And when it receives FDA approval, that’s the pinnacle of promise. But then when it comes to actually implementing the innovation, to getting it used, the process gets really, really hard.”

Take the development of COVID-19 vaccines. Those working to make the vaccine were not the same people designing the syringe, figuring out how to transport the vaccine, or mounting a public health campaign.

“An entrepreneur, particularly in the biomedical sciences, frequently thinks about that first phase of the awesome new technology or drug,” Dr. Parker says. “Where I feel we are uniquely positioned—particularly with the human factors team, and with the medical school’s focus on health systems science—is to enter into the latter part of the conversation.

“You’ve got this great evidence-based innovation or best practice,” she says. “Now, how do you design it so it can be implemented quickly, correctly, and efficiently, without messing up everyone’s day-to-day work? This is what the human factors team does. Our discovery process centers on implementing innovations properly, so patients get the best care possible.”

Dr. Parker says she has found at Carilion an appetite to try new things and a nimbleness to gather data to figure out how to improve processes, systems, and devices for better patient care.

“We’d like to think implementation of a best practice is entirely evidence based,” she says. “Yet a lot of implementation comes from relationships and trust. Maybe you can get a subject matter expert to tell you, hey, that’s a good idea, but we need to tweak the implementation hardware, or that new process may not work in our context. Or, I’d be willing to give that a go. Carilion is the right size to build those critical partnerships and that trust.”

Taking the Ramp 

Carilion, Virginia Tech, and Roanoke have designated an innovation corridor between Carilion’s Roanoke campus and downtown to provide a physical space for entrepreneurs, scientists, health providers, and those who support them to interact and build those relationships.

Within the corridor, the city joined with Virginia Western Community College and the Roanoke-Blacksburg Technology Council to create the Regional Accelerator and Mentoring Program, or RAMP.

“We’re trying to help technology-based startups jump hurdles a little faster,” says Mary Miller, director of RAMP. “We help them avoid wasting resources, particularly financial resources, and we try to stop them from going down wrong paths.”

RAMP is a twist on other mentoring accelerators started by venture capitalists looking to increase the success of startups they’ve backed. Roanoke’s leaders viewed RAMP more as a way to encourage young companies in high-paying tech fields to grow in place.

“Many regional accelerators have demonstrated the benefits of supporting startups,” Miller says. “If you show them the support that a region or community can bring to the table early in their journey, then they stay. That’s the magic: the mentoring, the resources, the care and nurturing a company can receive.”

Young tech companies make pitches to RAMP through a competitive process. Miller taps into a deep bench of mentors who then help the entrepreneurs learn how to develop, manage, and market their businesses. By the end of 2020, two dozen tech startups had gone through the program, and RAMP won a $1 million U.S. Economic Development Administration grant to double its capacity. It recently added a second cohort focused only on life and health sciences.

The region is rich in mentors, Miller says, yet it needs a deeper pool of early-stage money. “The most critical money is the first money,” she says. “When you’re just getting started, a $50,000 investment can make a big, big difference, but it’s absolutely the hardest to raise because it’s also the riskiest for investors.”

Miller plans to create an angel investor group to help support early-stage startups. Rounds would raise $500,000 with a rule that no one person can put more than $5,000 in any one fund. Initial investments for any one company would be held to no more than $50,000, so the investor’s risk would be no more than $500 for any one company.

“Many people have expressed an interest in this idea,” Miller says. “Many potential angel investors just don’t know how to get started, and this would be a new pathway. Their support would be critical, as all the research finds that companies thrive in regions where early-stage money is more available.”

On the Verge

All these efforts together are accelerating innovation.

“This is not traditional economic development, where you try to land a company that will bring a hundred jobs into a box plant you built in an industrial park,” says Greg Feldmann, executive director and chief executive officer of Verge, a collaboration of partners focused on supporting the region’s innovation economy. “This is ground-up economic development, where you are taking many acorns and nurturing them, hoping a few turn into some pretty tall oaks.”

Feldmann says Virginia is trying to catch up to its peers. In 2018, the state looked at its lifecycle of innovation and whether ideas and products were making their way out of labs and into the marketplace.

“Roughly $11 billion of sponsored research was taking place statewide,” Feldmann says. “Relative to our population and size, that was a decent number.” But the study also found Virginia needed more venture capital invested before its many innovations could move through research and development and result in new companies and jobs.

“Maintaining the status quo is not a good strategy here,” Feldmann says. “If we want to participate in the innovation economy, we need to take action because market forces alone aren’t going to change things.”

In 2020, the commonwealth created the Virginia Innovation Partnership Authority to foster greater collaborations with governments, businesses, and universities, as well as the development of regional counterparts. In southwestern Virginia, Verge was formed by joining programs from the Roanoke-Blacksburg Technology Council, RAMP, and the Valleys Innovation Council.

“If you want to understand our passion and purpose,” Feldmann says, “we’re trying to organize the resources we have in our own backyard strategically, so we can be a regional technology hub that generates interesting and meaningful new companies and jobs.”

Through its affiliated organizations, Verge is building RAMP’s capacity to help more startups, providing networking, educational programs, and talent development initiatives for the technology sector through the Roanoke-Blacksburg Technology Council. Verge is also helping address capital access issues by supporting Common Wealth Angels and building bridges to investor groups beyond the region.

VTC Ventures

While the region is what many venture capitalists consider “flyover country,” unworthy of even a downward glance from a passing plane window, James Ramey, J.D., managing director of Middleland Capital, is convinced it can become a health and life science destination for innovation.

In 2016, as part of Carilion’s broader investment portfolio, Carilion and Virginia Tech created a venture capital fund to invest in high-growth companies within the greater region and across the VTC ecosystem. Since inception, this initial fund has matured into multiple investment vehicles operating as VTC Ventures.

Managed by Middleland Capital, VTC Ventures has two primary funds: the VTC Seed Fund, which invests up to $500,000 in early-stage, post-proof-of-concept companies, and the VTC Innovation Fund, which invests up to $5 million in mature companies that are still fairly early in their lifecycles. Ramey, who oversees both funds, says Carilion and Virginia Tech have collectively contributed just over $50 million across the funds.

Generally, portfolio companies need to be physically located near Roanoke, or have a meaningful connection to Virginia Tech or Carilion. In addition to investing in high-potential, high-performing companies in the region, VTC Ventures works with investors locally, nationally, and internationally to catalyze investment across the VTC ecosystem.

Ramey notes that most of the nation’s venture capital is concentrated in a handful of places such as Boston and San Francisco. Of the country’s 3,300 counties, about 40 of them receive more than half of the funding.

“We view this as an opportunity to invest in high-quality management teams with strong intellectual property that are under other investors’ radars, as these companies are off the beaten path,” Ramey says. “We find great companies in underserved geographies, including Roanoke and Blacksburg, where we then can leverage our national and international relationships to build strong investment syndicates.”

In addition to finding, funding, and helping to develop top-performing companies in the Virginia Tech Carilion ecosystem, VTC Ventures finds companies outside of the ecosystem and integrates them into Virginia Tech, Carilion, and sometimes physically in Roanoke and Blacksburg.

“We’ve had a lot of early success getting companies from outside the region with no previous connection to Virginia Tech or Carilion to become collaborators,” Ramey says. “We then show these companies what Virginia Tech, Carilion, and this region have to offer. They learn quickly that they don’t have to spend millions building their own labs, recruiting Ph.D.s, or hiring employees in high-cost geographies. These companies work with both Virginia Tech and Carilion to outsource their R&D, co-develop products, run clinical trials, and hire or contract with people in Roanoke and Blacksburg.”

Ramey also keeps in close contact with portfolio companies and entrepreneurs and provides them with substantial feedback and guidance.

“We’re not passive investors,” he says. “We work closely with our portfolio companies to help the management teams in any way we can. This includes providing strategic advice, raising capital, or introducing them to other investors or clients.”

Although VTC Ventures makes equity or convertible debt investments, not grants, and is focused primarily on investment returns, ecosystem growth is a key component of its mission.

“We aim to deliver strong investment returns, and making disciplined investments in great companies enables these returns,” Ramey says. “The success of these companies ultimately drives economic growth across an ecosystem. We view ecosystem growth as an intended consequence of our investment activities. One begets the other.”

Ramey has felt encouraged by the growth of startups in the region during the funds’ first few years.

“As we continue to string wins together, the Virginia Tech Carilion ecosystem ascends in the eyes of the world,” he says. “Our aim, over time, is for entrepreneurs and financiers to stop considering this flyover country. We are working hard to help make that ecosystem a destination for cutting-edge research, entrepreneurship, and innovation both within health care and beyond.” 

Written by Luanne Rife