Valley Growth Ventures Announces Portfolio Company’s Acquisition

YOUNGSTOWN, Ohio — Valley Growth Ventures announced Wednesday that one of its original portfolio companies has been acquired by a New Jersey-based medical technology company.

Cleveland-based MedPilot was acquired by Vytalize Health, marking the first fund exit for a Valley Growth Ventures portfolio company.

“Valley Growth Ventures is very excited for this transaction. It has been a pleasure to work with the MedPilot team as an investor, but also to serve on the company’s board of directors,” said Ernie Knight, manager director of Valley Growth Ventures. “This is the first exit for the fund, which is a significant milestone. We look forward to the great things the combined company can accomplish.”

Typically, exits happen in four to seven years after an initial seed investment, according to Knight. Having MedPilot exit three years after the fact is “certainly ahead of the general target” and a “major milestone” for the investment firm, he says.

“For a seed stage company, it’s a pretty short holding period, which is good,” Knight says. And while he declined to disclose numbers, “It was a positive return for our investors,” he says.

MedPilot was one of three companies Valley Growth Ventures invested in when the $6 million microventure capital investment fund was created in March 2018. The other companies were MedaSync, a Youngstown Business Incubator portfolio company with offices in Youngstown and Cleveland, and S4 Medical, a Cleveland-based medical device company.

Those companies along with DAtAnchor, a data security company, comprised the initial portfolio companies. In addition to capital, Valley Growth Ventures provides guidance and operational resources.

MedPilot’s proprietary vertically integrated care delivery system provides personalized patient solutions, including payment and engagement.

To date, MedPilot has served more than 1 million patients and boasts a 97% patient satisfaction score, according to the merger announcement.

The merger will allow Vytalize to serve its expanding Medicare population by enhancing its infrastructure for Medicare’s Direct Contracting program.

About a year ago, MedPilot brought Vytalize on as a client, says Matt Buder Shapiro, co-founder and chief marketing officer for Medpilot.

“Getting an opportunity to develop a deeper partnership with them is exciting for us,” he says.

Operationally, the merger will enable MedPilot to shift from a fee-for-service model to one centered on value-based care, Buder Shapiro says. The shift is significant, he says, because it puts the company in front of not just where the industry is going, “but where it should go,” he says.

“I think it gives us more longevity as a company,” he says.

Through its value-based health care model, Vytalize is geared more toward preventive services and monitoring to keep patients healthy and out of the emergency room, Buder Shapiro says.

Purely from a business perspective, the acquisition is a “significant win” for MedPilot’s employees, customers and stakeholders, because it brings a more funded company into the picture to invest in a Cleveland company.

Founded in 2015 in New York City, MedPilot relocated to Cleveland, where two of its three co-founders are from. MedPilot will operate as a service line of Vytalize, and will retain its name and branding, as well as its 35 employees, Buder Shapiro says.

Moving forward, MedPilot looks to train its existing workforce in the new value-based health care model, as well as hire additional employees. Buder Shapiro had no firm numbers on how many the company looked to hire, but says the interview process has started.

Buder Shaprio says Valley Growth Ventures is a very “hands-on investor,” and connected MedPilot with GBS Corp. here, which became a customer and partner with the company. GBS is also an investor with Valley Growth Ventures.

Bringing good partners like GBS to the table adds value to the firm’s investments, says Knight. Overall, the acquisition increases the firm’s credibility among investors, as well as entrepreneurs looking to align with investors who can help get them to market, he says.

“At the end of the day, the job of an investor is to create positive returns,” Knight says. “And we’ve done that here.”

It also provides Valley Growth Ventures some momentum heading into 2021. While the coronavirus pandemic put the firm behind pace with investments, Knight says it looks to secure two or three new investments this year.

“Our original target was always to reach eight to nine investments,” he says.

Although nothing is certain, the firm is actively looking at one new company that operates in the 3D printing and additive manufacturing space, as well as a software company in the construction space, Knight says.

“Generally, we look at anything in software and IT, health care, energy, or additive manufacturing and technologies,” he adds.

Copyright 2021 The Business Journal, Youngstown, Ohio.