Deals

Michigan students ‘play VC’ in a $25M biotech round

Students in the University of Michigan’s MBA entrepreneurship school have just participated in a huge round — $25 million altogether — for Sonitus, a biomedical devices startup.

The students manage the Wolverine Venture Fund, a $5.5 million fund that generally does small, early-stage investments. Interestingly, quite a few of the fund’s 20 portfolio companies — all hand-picked by students — have been in the life sciences and medical fields.

The Wolverine Fund previously invested in Sonitus in March 2011. Other investors in the previous round included Arboretum Ventures and Affinity Ventures.

The startup makes really fascinating hearing aids that work by conducting sound through the wearers bone using a tiny device that’s worn next to the user’s back teeth and an equally tiny behind-the-ear microphone. The system is called SoundBite, and Sonitus says wearers can eat and drink normally while the device is on. The system looks something like this:

“The Wolverine Venture Fund is part of a strong group of investors with an impressive track record,” said Sonitus CEO Amir Abolfathi in a release. “I was amazed with the trust the University places in the students to make these investments and consider it a model more business schools should embrace to foster entrepreneurship and smart investing.”

The Wolverine Fund has been making investments since the dotcom boom (and subsequent bust) and has seen three of its portfolio companies through to acquisition and, in one case, IPO. The fund’s managing partners are all students, some of whom are nontraditional MBA students with previous workforce experience. The fund’s managing directors are faculty members, and a slew of VCs serve as experts and advisors.

“This round has also been a tremendous experience for the students who oversaw the process,” said faculty member and fund managing director Erik Gordon.

“They were not only able to see the rapid progression of a portfolio company in the past year and participate in its latest financing, but they also got to collaborate on the deal with some very good, well-established venture capital firms from around the world.”

One such participant was Nicholas Douville, a seventh-year student in a joint PhD/MD program. Douville completed his PhD in biomedical engineering last fall and has been doing research on how microfluidic systems can be used to model parts of the nerves, blood vessels, and lungs of the human body and on single-molecule DNA manipulations and imaging. He’s currently doing clinical training at Michigan’s medical school, but participating in this investment round was hands-on experience in an entirely different way.

“We were given a seat at the table with experienced investors representing firms here in Michigan, from the coasts and overseas, and invested real money that is going to make a meaningful difference for the company and those with hearing loss and single-sided deafness,” he said in a statement.

“Being a part of the Wolverine Venture Fund’s second investment in Sonitus Medical was truly an invaluable experience and one that simply can’t be matched in a classroom setting.”

Sonitus was founded in 2006 and is based in San Mateo, Calif. The $25 million raise is the startup’s fourth institutional round and was led by Abingworth, an international investor dedicated to life sciences, with participation from all previous investors.

Top image courtesy of Peshkova, Shutterstock

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