A bet on a health tech company has netted a healthy return for investors in a Naples-based fund.
The Tamiami Angel Fund III reported its highest return on an investment with the sale of iScribes, a medical transcription service for physicians, to a publicly traded company.
The fund — the third for Tamiami Angel Funds — invested $265,000 in iScribes in July. Less than six months later, the young company was acquired by Nuance Communications, a multinational computer software technology business headquartered in Massachusetts that provides speech and imaging applications.
The sale brought the fund's investors an internal rate of return of 32 percent, which takes into account the present value of future payments, said Tim Cartwright, chairman of Tamiami Angel Funds.
"This is the fifth acquisition or recapitalization transaction we've had out of our 17
portfolio companies across the three funds and our highest return to date," he said.
The actual profit is about $137,000, and most of it has been paid out to investors, Cartwright said.
"About 80 percent of the returns have been paid out to us," he said. "The majority of the deal has already been realized. Over the next two years we will get the payments out of escrow and earn-out."
iScribes was born out of the frustrations of its co-founder Jared Pelo, an ER doctor who found it a pain to complete all the documentation his hectic job required. His company offers a mobile app and wearable technology that allows doctors to record visits with patients — and provides virtual medical scribes to decipher the information and complete the documentation, while remaining compliant with HIPAA privacy and security rules.
"Once I started practicing medicine, I quickly saw how burdensome documentation had become," Pelo said in a news release. "Doctors were burning out."
The documentation is loaded right into the patients' medical records and it's ready to view by noon the following day.
iScribe, based in North Carolina, sought money from the Tamiami Angel Fund to crank up its marketing and to recruit more scribes.
"They actually grew their revenues by about 25 percent during the period that followed our investment, which is meaningful," Cartwright said.
Tamiami Angel Funds was one of the largest investors in iScribe. After the company made its "Shark Tank-style" pitch to the fund's investors, there was a supermajority vote to consider the opportunity, and after more research there was a unanimous decision to invest in it.
"Tamiami Angel Fund invested at a critical juncture in the growth of the company and in addition to the investment offered sage business advice," Pelo said.
Angel investors help entrepreneurs before they seek venture capital, but come in after the startups have exhausted the money their founders rounded up from friends and family. These early investors put in their own money and work with companies to help them succeed.
More: Angels invest in local medical device startup
More:Angel investors back for another round
More: Angel Fund boosts North Naples tech firm
Money is still being raised for Tamiami Angel Fund III, and only about 25 percent of the money raised so far has been spent, Cartwright said.
The fund is at $4.2 million, and Cartwright expects it to grow to $5.5 million to $6 million.
"So we still have a lot of investment activity in front of us," he said.