Medical device startup aims for animal market: QuadraSpec raises another $3.9M from investors

Fast-growing West Lafayette-based medical-device maker QuadraSpec Inc. announced this month that it raised $3.9 million in venture capital from a syndicate of investors.

For a 2-year-old Hoosier startup, that’s a jackpot. But CEO Chad Barden is already searching for more.

“You have to start on it right away,” he said. “Now it’s easier to get an audience, but the diligence is no less strenuous.”

Since forming in 2004, QuadraSpec has attracted $8.1 million, including multiple grants from the Indiana 21st Century Research and Technology Fund. Few Hoosier high-tech startups could boast similar success with investors.

But Barden, 33, said the company likely will need to raise at least $7 million more before it can sustain itself from its own profits.

That means Barden’s traveling days are far from finished. Showcasing QuadraSpec before potential investors coast to coast has become an almost full-time occupation.

Meanwhile, the flow of cash into the startup is beginning to yield results.

Located in the Purdue University Research Park and based originally on Purdue research, QuadraSpec is quickly becoming the Boilermaker poster child for high-tech transfer.

The company began with a bold goal: Create a medical device that could simultaneously conduct 1,000 diagnostic tests on human biological samples.

At the end of last year, QuadraSpec had just five full-time employees. Today, the company has 38, and next month it will launch its first product.

It’s not starting with the human market, however, or with a product that simultaneously conducts a large number of tests. Instead, it will debut a device for veterinary laboratories that runs a test for canine heartworms.

“It’s a tactical approach, because the animal market has less of a regulatory barrier for entry,” said QuadraSpec Chief Operating Officer Joerg Schreiber. “It’s a much, much shorter path, basically a desk-review process, in comparison with humans.”

But investors are excited, nonetheless. For them, it means QuadraSpec has reached a milestone.

“They’ve accomplished great things with a moderate amount of capital in a phenomenally quick time,” said Ken Green, managing partner of Carmelbased Spring Mill Venture Partners.

“This gives them an opportunity for validation of the model, the technology and the product earlier. It’s not a detour on their development pathway. It’s on the development pathway.”

Introducing a veterinary device first will allow QuadraSpec to work out kinks, setting the stage for future versions that conduct multiple tests.

QuadraSpec also gains a revenue stream, which will allow it to stretch investors’ money further on research and development.

“One of the banes of startup technology companies are founders who won’t release a product until it’s ‘perfect,’ and then they never get a product out, because it’s never ‘perfect,'” Green said.

“It’s almost always a good idea to get a product in the market, get recognition and validation. You learn what the customers like so the next generation can be better.”

For example, Barden said, QuadraSpec already has learned that its goal of 1,000 tests is higher than necessary.

The cost of a medical device that can run so many tests simultaneously isn’t justified by its utility, he said. So instead, QuadraSpec will aspire to build one that can run 25 tests at first, with the eventual goal of expanding capacity to 150.

“This is a very, very rational way that technology products are introduced,” Green said. “Let’s find the market opportunity we can get to now and add enhancements a little further along.”

Still, QuadraSpec officials say the company remains a long way from realizing its potential. They also know that many promising high-tech startups ultimately fail.

That’s why they’re not letting their early successes go to their heads.

“It’s impressive or scary [growth],” Barden said. “I’m not sure which.”