Autogenesis scores in venture capital pursuit.

• Author: Murray, Marjorie
• Position: Developer of orthopedic hardware has secured startup investment funds - Includes related article - Company profile

Autogenesis Scores In Venture Capital Pursuit

The Anchorage developer of orthopedic hardware has secured more than $1 million in startup investment funds.

Juliann Perrigo, a partner in an Anchorage firm expecting to gross $128 million over the next three years, tells the story of trying to get a venture capitalist to invest in her fledgling company: "You'll never find the money,' he told me. |You'll never make this thing fly.'"

Perrigo says she looked him "straight in the eye and said, |Don't tell me I can't do it. Just tell me how to do it.'"

That was two years ago. Today, her company, Autogenesis Inc., has amassed nearly $1 million in investment dollars from two venture capital firms, the Alaska Science and Technology Foundation, and private investors. It also expects to find the $3 million it needs over the next nine months to go into production.

How did the owners of Autogenesis snare the capital they needed? With a solid business plan, a skilled management team, a unique product, thorough market research, and -- as her retort suggests -- a lot of grit.

"We look for staying power and determination during the startup phase of a company," says Timothy Draper, managing partner of the Polaris Fund based in Palo Alto, Calif. Polaris has just committed $342,000 to Autogenesis. "We talked to the Autogenesis people for more than a year before we put any money into the company and saw that they really knew how to make their cash last."

Autogenesis President John Pursley and his partners talked to more than 50 venture capital firms before getting two of them to buy in. But he now believes Autogenesis talked to the money men too early in the company's development. "Today, I'd do it differently," he says. "Back then, we didn't even have a prototype to show them."

The prototype is a set of computer components that work to automate a technique for regenerating damaged bone, tissue and muscles. Soviet physician Gavriil Ilizarov discovered in 1960 that, if a broken bone is put under tension by orthopedic hardware, it will grow and new tissue cells will regenerate along with it.

The Autogenesis computer components automate the Ilizarov process. They can be attached to several kinds of orthopedic hardware, and they eliminate the need to adjust the stretching devices manually. Because the components enable a physician to stretch the bone in minute increments, the approach also reduces pain, explains Pursley.

"The technique itself was a real stumbling block to...