Tuesday, October 3, 2023
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Betting On St. Louis

Sean Morris has traveled thousands of miles, made hundreds of presentations and spent countless hours in discussions with venture capitalists as he's built his medical device startup, Veniti.

Along the way he's answered thousands of questions about his St. Louis-based firm, so much so that he can now answer those questions in the blink of an eye. That includes the question he heard often when he first started seeking capital:

"Why are you located in St. Louis?"

"I had to do a lot of educating and explaining to the people who had money," says Morris, who started Veniti four years ago. "I knew I probably had to work a little harder than the average person if I was going to have my company here as opposed to Minnesota, Boston or San Francisco."

Ten years ago critics would have scoffed at the idea of a venture-backed startup surviving in St. Louis. Morris is on a mission to prove those critics wrong and show that times have changed.

"This is a great community, and I think it is up-and-coming," he says. "St. Louis is being put on the radar for technology, whether that is high-tech, IT, biotech, pharmaceuticals, agriculture, etc. The infrastructure is in place.

"The universities here are fantastic. We have great hospital systems. And there is money in St. Louis. So all the ingredients are here for a company like mine to

be successful."

Morris is not alone. Over the past few years, more and more entrepreneurs have been choosing St. Louis and moving here from all over the country to start their businesses, whether they are venture-backed, franchises or private enterprises.

"I came to St. Louis in 1999, and at that time we had no sources of money for startup companies," says Bob Calcaterra, managing director of Startup Midwest Management LLC. "Today it is unbelievable."

Calcaterra's company is involved in starting, structuring, managing and financing early-stage companies. "What we need now are some success stories," he says. "When we get those, I really think it will all just explode."

So far Morris is well on his way to becoming one of the success stories. He raised more than $16 million from a range of venture capital, individual and bank investors in his first round of funding. Just last month he announced that the company had raised another $9.7 million in a second round of funding.

The company has three technologies that focus on the management and treatment of venous disease. Venous disease refers to conditions related to or caused by veins that become diseased or abnormal. The disease affects more than 25% of the U.S. population, according to the Lakewood, Colo.-based Venous Disease Coalition.

Morris saw the need for treatments for venous disease while he was working for Latham, N.Y.-based AngioDynamics. He came up with a unique venous stent designed specifically for the treatment of venous outflow obstruction. When his firm wasn't ready to focus on his stent technology, Morris decided to move to St. Louis and start Veniti.

After starting the company he quickly added two more products to create a suite of venous-related products.

The products are: Veni RF Plus, a venous ablation system that treats varicose veins with steam technology; the Vidi Vena Cava Filter, which helps prevent blood clots in the vena cava; and the original product, the Vici Venous Stent, a stent that is specifically designed for veins.

The decision to build a suite of products has been a hit for Veniti with investors, according to Calcaterra. "Most companies out there only have one product to invest in," he says. "He now has three."

Though Veniti is now going through the process of FDA approvals, it has already accomplished the goal of helping the local region. Two of the main advantages of startup companies are the influx of investment dollars coming into the community and the influx of talent.

Morris has pulled employees from as far away as Minneapolis and Salt Lake City to work for Veniti. "Most of our talent has come from outside of St. Louis," he says. "Employees have moved their families here, bought homes and are now a part of the community. That is a good thing. If we are successful, maybe those folks stay here and start having children and those children stay here and go to college. That's how we start building an even better talent pool and leave a footprint that serves the community for a long time."

Karen Fraser, Veniti's senior director of clinical affairs, moved her family to St. Louis from Minneapolis, viewed as the major hub of medical device companies. "I came to St. Louis because I was looking for something really exciting," Fraser says. "This opportunity intrigued me because of its potential. I didn't know much about St. Louis when I came, but now I really like it."

Dave Goetz, director of quality at Veniti, also moved to St. Louis for his position. Goetz, who moved his family here from Salt Lake City, has not only enjoyed St. Louis but is also excited to help the region build a startup culture.

"This area can be a good incubator for several industries if it can attract the right talent pool and the right base," he says. "It will take some time to make it happen. It is not like it will take one or two companies or a handful of people to change things. We really need to build the novelty of a college campus, similar to San Francisco or Boston. The advantages of that are huge."

For example, Goetz recalls standing in line at a Starbucks in San Francisco with a plumber who was talking about some of the plumbing work he was performing that day. Then, Goetz says, the plumber started talking about a web concept he's developing. "That comes from being in that culture where everyone is challenged," Goetz says. "Instead of just working their old jobs, everyone starts to think about opportunities and what they can accomplish."

As the community continues to build this startup culture, Morris and Calcaterra believe the one thing that is lacking, even though it has improved, is access to capital. "We really don't have funds that will lead a deal in the $10 million to $15 million range," Calcaterra says. "What the lack of those funds could lead to is another investor coming in from out of state, investing in a St. Louis company and moving that company to another city."

Morris and Calcaterra agree that the more success stories the region can foster, the faster it will succeed in creating a startup culture and environment. "Success stories will lead to more investors," Calcaterra says. "Success stories will also then lead to members of those successful companies branching out and trying to succeed again, which will create even more potential."

In the meantime, Morris is working hard to set the standard for others. "My job is to do well and become one of those success stories so people invest in St. Louis companies in the future," he says. "If we are successful, local investors will continue to invest."

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