WATERLOO — After its technology was adopted by hip replacement surgeons in New York City and Chicago, a Waterloo startup plans to use its first round of private investment to increase sales in the all important American market.
Intellijoint Surgical raised $11 million from several private investors in the Toronto-Waterloo Region Corridor who the company says do not want to be identified.
“One of the important things to note here is we have been able to raise all of the funds in Canada,” said Armen Bakirtzian, the startup’s co-founder and chief executive officer.
“I think it shows the tremendous support we have in our ecosystem, and in the Toronto-Waterloo corridor,” he said. “I think they are putting their money into our company because they see great potential.”
The investment comes about two year after Intellijoint’s product, which enables surgeons to make precise measurements for hip replacement operations, was publicly launched. The technology has been adopted more quickly in the United States than in Canada.
The funding will help Intellijoint expand sales south of the border and transition from startup to scaleup, Bakirtzian said.
“This is a huge milestone for our company. It allows us to do so much in terms of growing our user base, increasing our penetration and adoption, and growing our revenues.”
During the past two years, Intellijoint focused on key hospitals in New York City and Chicago that are leading centres for hip replacement surgery.
“The No. 1 orthopedic hospital in the entire country is in New York City, and we have been approved at that hospital,” Bakirtzian said.
Intellijoint now employs 33 people, with about 25 of them in Waterloo. It is hiring staff in Waterloo, New York and Chicago.
“This funding allows us to accelerate a lot of key initiatives,” Bakirtzian said.
The company’s main product, Intellijoint HIP, helps surgeons take accurate measurements for hip replacement operations that are done from the back or the side of the patient. Now it has technology to help surgeons do the operation from the front.
“This makes it a comprehensive product for all surgeons regardless of their approach to the joint,” Bakirtzian said.
The hip joint is complex. Surgeons must know the exact length of the leg. The exact position of the cup where the bone rotates also is needed. Measurements change with every patient.
More than 10 hospitals in the U.S. are using Intellijoint’s technology.
U.S. hospitals have been much quicker to adopt Intellijoint HIP than Canadian hospitals because there are incentives built into the American system, Bakirtzian said.
“Our product improves patient outcomes so U.S. hospitals are more willing to use it because if they do it poorly they will be penalized,” he said. “In Canada they are going to get paid regardless.”
He acknowledges the early-stage support his startup received from governments in Canada, but he believes that needs to continue as startups grow into scale-ups. Early-stage startups focused on research and development get a lot of support, but that drops off when it comes to commercializing that technology, he said.
“In our first four years, we raised $3.5 million from governments, and in the last two years we raised $40,000,” he said.
“I find it very interesting and somewhat alarming that the amount of support for Canadian companies transitioning from startup to scaleup from the public sector, is quite limited,” Bakirtzian said.
“That forces the private community, obviously, to step in. That money is not necessarily easy to find, especially if you want to find Canadian money.”
That funding gap causes some scale-ups to move to the U.S., and others to flounder and fail, Bakirtzian said.