Since early in her childhood, Megan Nellis (CWR ‘22) was an entrepreneur at heart—although she didn’t quite have a name for it. “I was always trying to create businesses so my family and friends would pay me,” she recalls. “I loved making wallets out of duct tape to sell to friends. I charged my family for dance performances. It was always something.”
That something was tucked away when she enrolled at Case Western Reserve University (CWRU) in 2018 to major in Chemical Engineering. “Everyone was serious about their education at Case, and so was I,” she says.
Fate brought her back to entrepreneurship in spring 2020 when she lost a coveted summer internship due to the global pandemic. Nellis reached out to the Veale Institute of Entrepreneurship, which connected her with a remote internship through the Remote Entrepreneurship Project Program. Nellis was matched with a startup called Natalist, founded by Halle Tecco (CWR ‘06), that sold fertility and pregnancy products. Once again, she was hooked on entrepreneurship.
In 2021, Goldberg recruited Nellis to serve as a fellow in a new Veale Institute initiative, the CWRU Alumni Venture Fund. Although she was interested in entrepreneurship, she had no knowledge of venture capital or investing. Curiosity won out and she agreed. “I was facing my senior year and was conflicted about the future. After Professor Goldberg assured me that I’d learn what to do, I accepted the fellowship, got a book on venture capital and took an MBA entrepreneurial finance class,” she says.
“That decision changed the entire trajectory of my career.”
Transforming from academic to entrepreneur
The CWRU Alumni Venture Fund was created to invest in promising startup companies founded by CWRU alumni. Due diligence is performed by students under the tutelage of fund managers and alumni advisors, providing a unique, hands-on learning experience.
Fellows are given the opportunity to choose deals in which they’d like to participate. Nellis selected Vitalxchange led by co-founders Charu Ramanathan, PhD (GRS ‘04, biomedical engineering) and Ketal Patel (GRS ‘97, biomedical engineering). She was attracted because one of the co-founders, Ramanathan, is female.
“There are not many women in entrepreneurship and venture capital so that was a draw for me,” Nellis explains. “It’s hard for women in these spaces. I felt I should take this assignment to support another woman.”
Ramanathan can attest to the difficulty of an entrepreneur’s journey. Growing up in India, career choices in her family were limited to engineering or medicine. As a young girl, Ramanathan was unsure of her path. What she was sure of was the desire to be a mother. “Motherhood was a priority for me,” she says. “I wasn’t sure what I would do in my career, but I knew I would work on my terms.”
She and her husband arrived at CWRU in 1996, where she planned to pursue a PhD in biomedical engineering and he a MS in computer science. “I was lucky to be in the right place at the right time, working in a lab with a professor and other students translating technology from bench to bedside.” Ultimately, Ramanathan invented a noninvasive technology for monitoring heart rhythms that led her to founding a startup in 2007 called CardioInsight.
“It was such a challenge building a product from the technology,” admits Ramanathan. “I also had a difficult time transforming myself from an academic to entrepreneur. I quickly learned I also had three strikes against me: I was young, I was a woman of color, and I didn’t have business experience.”
Ramanathan persisted, licensing her technology from CWRU, hiring an interim CEO and securing early investors, Cleveland’s JumpStart and Draper Triangle out of Pittsburgh. Still, there were challenges. While CardioInsight had proof of concept, it did not have regulatory clearance. Ramanathan was not too concerned—FDA approval is a lengthy, costly process— as she had investors who had made soft commitments in the millions of dollars. When the economic crisis of 2008-2009 hit, Ramanathan’s investors pulled out of the deal.
“We ran out of money,” she says.
Down but not out, Ramanathan summoned her internal grit and attended a heart rhythm conference in San Francisco where she met a renowned cardiologist from Bordeaux, France. He was so impressed, he invited Ramanathan to come to France and trial her device on patients. At this point, Ramanathan was a mother of two young kids and a citizen of India. International travel was difficult. Unwilling to take no for an answer, the cardiologist instructed her how to get into France through the French consulate. Says Ramanathan, “I somehow bumbled my way to France and then spent 11 exhausting days there.”
She calls the trip to France a “miracle.” Based on the results of the initial patient trials and CardioInsight continued progress, the French cardiologist made multiple investments in the millions of dollars and brought on additional investors. He also assisted in securing 15 clinical sites in the European Union for additional clinical trials.
"The next step in life"
By 2014, CardioInsight was over the product development hump and Ramanathan and her team turned their energy on securing a strategic investor. She received term sheets from two major medical device companies, and accepted Medtronic’s offer of $30 million in non-dilutive funding to help CardioInsight secure FDA clearance. One year later, Medtronic acquired CardioInsight for nearly $100 million.
Ever humble, Ramanathan says, “This was a good financial outcome.” As part of the deal, she remained with Medtronic for two years but soon chafed at corporate life. She and her eventual co-founder in Vitalxchange, Ketal Patel, began plotting their next startup.
“We were both parents and had a shared empathy for moms and dads. Our goal was to help people consume health care on their terms because no one invests in your health like you,” she explains. “So we designed an application platform where people could exchange vital health information to take them to the next step in life.”
She adds, “It was also important to both of us that the platform have equitable access regardless of socioeconomic status. Black and Latino women often are disenfranchised by the healthcare system. We didn’t want to create another app that only benefited the top three percent of the population.”
In 2019, Ramanathan and Patel launched Vitalxchange to support parents of children from birth to age five. At first, the target users were parents of children with special needs such as ADHD and Down syndrome. Fairly quickly, the decision was made to include all parents of young children. The motivation was simple.
“Ninety-seven percent of brain development occurs in the first five years of life. And while the Centers for Disease Control and the American Academy of Pediatrics have clinical milestones for early childhood development, this information was not easy for parents to access or understand. Foundational child development topics like social emotional resilience, sleep, nutrition, and good digital habits were not being addressed anywhere,” Ramanathan explains.
“Becoming a parent does not mean you are a parenting expert. We saw we could use the Vitalxchange platform to empower parents to help their children achieve key developmental, behavioral, and social emotional milestones by giving them day-to-day activities, the ability to track their children’s progress, access a team of child development experts, and communicate with their doctors. Everyone uses apps these days. Parents are comfortable with this model.”
Vitalxchange went to market as a direct-to-consumer app on the App Store. Now, in addition to direct-to-consumer, the co-founders are pursuing partnerships with employee benefits groups, Medicaid, and other organizations that will enable them to more quickly and easily scale their user base. Already, Vitalxchange has a partnership with WINFertility, a company that offers family-building benefits solutions to employers, health plans and individual patients.
Functionality has also evolved from a largely content-driven platform to a software-as-a-service model that provides users with access to a concierge and experts such as nutrition or sleep coaches.
In terms of funding, Ramanathan and Patel bootstrapped the company with their own money before raising a seed round led by the Oval Fund with participation from JumpStart and angel investors. In total, they have raised a total of $2.5 million. But there was one more investor they wanted to add to their cap table: the CWRU Alumni Venture Fund.
Students funding alumni, dreaming bigger
“When Michael Goldberg approached me about the CWRU Alumni Venture Fund, I wanted to be part of it. I saw it as an opportunity for Case to build a presence in the entrepreneurship ecosystem and create more venture capital in Cleveland. Michael also promised a quick, smooth process for funding,” Ramanathan says.
The first step was an introductory meeting between Vitalxchange’s founders, Goldberg, and Nellis, who was leading the students’ engagement. “The passion the co-founders have for their company was obvious. It takes a lot of work to create a tech solution. I was impressed and we decided to move forward with due diligence,” Nellis says.
The students proceeded with due diligence with additional meetings with the co-founders, reviewing numbers, and talking with other investors in Vitalxchange. “That was really important in understanding the decision-making process for investing in the company,” Nellis says. “We also worked with our alumni advisors for input before deciding to invest in the company.”
Ramanathan says the process was smooth and she enjoyed working with Nellis. “She is a good communicator, energetic and excitable. She asked very good questions and reviewed all of the material on time, which are good skills for investors.”
Nellis smiles at the compliment. “In the beginning, everything was new to me. As I got into due diligence, I really grew to understand the process. The exposure to a female founder like Charu was inspirational and working with the other students—we all have big dreams. Mine now includes earning an MBA and maybe one day starting my own company.”
Written by Melanie Lux