Israel is a powerhouse of innovation, with more startups per head than any nation on earth.

But the tech they’re busy researching and developing isn’t always the tech that’s going to sell.

Shai Policker, a high-tech veteran, is addressing that problem in the area he knows best: medical devices.

He’s approaching some of the biggest corporations in the world with one simple question: “What do you need?”

He then helps found and fund a startup that will work toward meeting that specific requirement — such as avoiding pipeline blockages during dialysis or monitoring recovery after gastrointestinal surgery.

Policker headed MEDX Xelerator, an incubator fund founded in 2016 that helped establish around 15 medical device startups, typically with investments of around $1 million.

He’s now launched a spinoff, Edge Medical Ventures (EdgeMed), that aims to provide more substantial funding (typically up to $3m) to support more mature startups. The aim is to raise a total of $70m.

“What we often see in Israel is amazing engineers with great technologies,” he tells ISRAEL21c. “But they’re not 100 percent aligned with what the market needs and what the medical community needs.

“On the other hand, you have major clinical needs still out there that are looking for a solution. There is kind of misalignment sometimes between the developers and those who use the technology. You can find it in other spaces as well, but it’s especially pronounced in the medical space.”

The most compelling needs

It’s often hard to understand who needs what, Policker says. 

Physicians, hospitals, clinics, medical insurance companies and other stakeholders, all with different incentives, will all describe different needs.

His role, drawing on 25 years’ experience in medical devices, is to understand the exact nature of the most compelling unmet need, and to assemble a team with the talents and the resources to meet it.

A new medical device that proves to be a gamechanger could easily have a $1 billion market potential, he says, so there’s a huge incentive to back the right horse.

“We start from the problem,” says Policker. “We work with some of the biggest medical device companies in the world, and they tell us what they would like to see three to five years from now.

“They actually pitch ideas to us. We take that problem, that unmet need, and then we use our network of entrepreneurs and physicians in Israel and around the world to form a team that will ideate and try to solve it.”

EdgeMed portfolio startups

One such example is Patensee, a startup founded in Or Yehuda, central Israel, in 2019. Its device monitors possible blockages in the lifeline known as a fistula that connects kidney patients to the dialysis machine.

Patensee is an imaging system that works in fraction of the time it would take a nurse to do a manual check. It’s super-accurate and eliminates any physical contact that could be painful for the patient, or pose a risk of infection.

Another example, currently being developed by Exero Medical, will monitor patients for life-threatening leaks after gastrointestinal surgery. 

The founders saw no other device that uses data collected directly from the surgical site to analyze recovery in real time and raise an alert if there’s leakage. The company, also based in Or Yehuda, was founded in 2019.

Leaving the baby behind

It’s all about solving the right problem, Policker says. “Talented Israeli engineers can do great things when you pose the right problem and the right question to them.”

In some cases they’re the same talented engineers who had approached MEDX Xelerator for funding in the past, and had been turned down. 

“They may have pitched an idea to us that we found unfundable, not because the people are not talented or experienced, but because they were solving the wrong problem, because there is already a solution for that, or because the market is too small and nobody will invest in it,” says Policker. 

“Sometimes we have to convince them to leave their baby behind and switch to a completely different problem that fits their expertise. We will provide them with funding, they’ll have a strategic partner from day one, and they’ll have all the elements that they need to be successful. 

“We pick and choose things that we feel that have the highest chances to resolve, things that we feel that we understand the most, and that we have the right entrepreneurs to bring into the picture. Then we sign an entrepreneur-in-residence agreement, and we work together on the problem.”

Diverse talent

Why do healthcare companies in the US turn to Israel, a nation of scarcely 10 million people, to develop much-needed medical devices, rather than doing it themselves?

“We are a very mixed group of people — physicians, engineers, researchers, chemists — in terms of expertise, and with that comes also diversity in terms of backgrounds,” says Policker.

“The more diverse talent that you have in your team, the better the discussion and ideas and solution that will come out of it.

“In addition, quite a few of our team are from elite army intelligence units, who would otherwise go and work in communication or cyber.

“But they want to make an impact, so they come to the healthcare field. In many cases they come to us, and we find the right problem for them to tackle. 

“After worrying about predicting, let’s say, security threats, they are now looking at different data to try to predict more healthcare-related threats.”

Mostly business as usual

Edge takes the baton from MEDX Xelerator (which no longer provides funding) and offers the higher levels of investment needed to get startups across the finish line. 

Many are “old friends” that started their journey with MEDX Xelerator funding in the first place.

“Unlike your typical venture capital fund, we have a predictable and very high quality deal flow that we know very well. We need to do very little diligence because we already know these companies inside out,” says Policker.

Launching an investment fund as Israel battles enemies on all fronts may seem like an unusual move, but he says despite everything it’s mostly business as usual.

“There were very few interruptions in our operations during the entire period of the war. Companies have been able to continue, to move forward, and to get funding from external investors,” says Policker.

EdgeMed has so far raised over $15m, which it will use for series A and B investments. Series A is the first significant funding ($2m or more), typically for a startup with a working product. Series B ($7m or more) allows a more mature startup to scale its operations. 

Edge hopes to reach its $70m target by early 2025. 

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