A new Israeli health tech venture fund launched this week. The fund, named Shoni Health Ventures, will invest in digital health and medical device startups that are in the pre-seed and seed stages of fundraising.

The fund is affiliated with Sheba Medical Center, which is the largest hospital in Israel. The startups that Shoni invests in will have access to the hospital’s innovation center so that they can develop, pilot and commercialize their products.

“Sheba realized that there’s a gap in early stage innovation — there’s a lot of diamonds in the rough, and no one is picking them up. The early stage is very risky, and it’s usually a stage for angel investors,” Eran Lerer, Shoni’s CEO and managing partner, said in an interview.

Shoni’s focus on startups raising pre-seed and seed rounds differentiates the fund from others, Lerer declared. The fact that Shoni provides startups access to Sheba’s innovation center also helps the fund stand out, he said. The center includes development labs dedicated to AI, medical devices and telemedicine, as well as unlimited access to physicians, data scientists and business experts.

Sheba doesn’t invest any of its own money into the startups that Shoni chooses to support — the fund allocates those dollars by itself. However, Sheba will receive financial gains if a startup becomes successful, Lerer pointed out. He said that “Sheba will get its share” because the hospital provides resources that will be instrumental to startups’ long-term prosperity.

The venture fund has already made investments in five startups: Quant Health, Aisap, CoPilotMD, FeelBetter and Append Medical. All of these companies are all based in Israel, which makes it easier for them to hone their products at Sheba.

The five startups, while all early stage, are developing a wide range of products. Quant and Aisap are both focused on AI — the former provides an AI-powered platform to simulate clinical trials, and the latter uses AI for real-time ultrasound diagnosis. 

CoPilotMD and FeelBetter are building systems to help providers make better use of their data. CoPilotMD is developing a healthcare data management and navigation system, and FeelBetter’s system drives better preventive care by identifying high-risk patients and the interventions they need. 

Append is a medical device company that is designing a minimally invasive implant to decrease stroke risk in patients who suffer from atrial fibrillation.

While the startups that Shoni has invested in are based in Israel, Lerer said they are looking to eventually deploy their products in U.S. hospitals.

When it comes to the types of digital health startups Shoni is looking to support in the future, Lerer said he and his team are keen on companies that can demonstrate a well-thought-out business model.

“There are so many stakeholders in healthcare — payers, providers, clinical studies, doctors, hospitals. It’s very challenging to connect all these dots, so a company that is able to connect these via a valuable business model will be extremely important,” he declared.

For medical device startups, Lerer said Shoni looks at three main criteria. First, companies need to show that their device has a strong clinical benefit and safety profile. This means “it needs to be at least as good as the current standard of care, but hopefully better,” Lerer said.

Medical device companies also must be able to explain what their road to reimbursement looks like, as well as provide an expected timeline for that feat. Lastly, the final criterion medical device startups must demonstrate is that their product can integrate smoothly into the workflows that doctors currently use.

Lerer said the venture fund will probably make investments in about 20 companies but isn’t sure how long that will take. The fund did not disclose the amount of capital it has.

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