The Texas Medical Center (TMC) is a collector of colossal adjectives and accolades. You probably already know it as the largest medical center in the world, also home to the renowned Texas Children’s Hospital and MD Anderson Cancer Center. TMC also hosts Baylor College of Medicine, Houston Methodist Hospital, St. Luke’s, Memorial Hermann, and more. With an impressive 120,000 employees, 10 million patients a year, and more than 180,000 annual surgeries, it’s no surprise that incredible medical breakthroughs happen at TMC’s academic and research institutions, not to mention its 21 different hospitals. That’s why the impact of its TMC Venture Fund runs the gamut.

Venture capital is quite a rarity in Houston, in fact. There are only about dozen active venture capital funds based in this city with a metro area of 7.2 million people. While there’s a ton of wealth in Houston, it’s mostly in real estate, wealth management, private equity, energy, etc., not so much in venture capital funds for tech startups. That’s why, in 2017, the TMC Corporation launched the TMC Venture Fund with a humble $25 million—with the TMC Foundation as the sole investor—and the dream of filling a much-needed gap in the Houston venture capital ecosystem. Since its inception, TMC Venture Fund has partnered with 24 startups, with a focus on digital health and medical device companies. In 2022, it doubled its fund to $50 million.

Something that sets the TMC Venture Fund apart is that all the money that’s made goes right back into the next round of companies. By contrast, in most venture funds, partners pocket the profits, then raise more money instead.

“It’s very much driven towards our ethos: we want to create the most efficient ecosystem to take things all the way from discovery to commercialization,” says William McKeon, president and CEO of TMC.

When McKeon joined TMC 11 years ago, he couldn’t believe that the biggest medical system in the world didn’t have a venture fund. The first thing he did was build the TMCi Accelerator (the i stands for Innovation), which connects startup founders to mentors, service providers, and corporate partners to start, build, and sustain their new company. This involves clinical trials, pilots, data security, fundraising, and more. The TMC Venture Fund was the natural next step.

For young entrepreneurs who need money for their company, it can be hard to find initial investments since most venture capitalists don’t invest in risk; they invest once a product or technology has clinical data proving that it works and is reliable. But startup companies need money from the very beginning.

“What we really needed was a vehicle where we could step in and give these young entrepreneurs a window of opportunity to really prove out their technology,” McKeon says. “We didn’t want to create a fund just by itself, we want to have the expertise to help these companies go through all the steps and understand what they should spend their money on.”

For TMC Venture Fund to invest, companies still have to meet a high bar. Advisors and experts from all of TMC’s organizations and hospitals join in a Shark Tank–like pitching event on a quarterly basis to evaluate new startups. The biggest mark they look for: a project has to have the potential for big impact.

“You have to really do something that’s better for patients first and foremost, be less expensive or more efficient, or bring new results to the health outcomes of a patient,” McKeon says. If the TMC Venture Fund looks at 100 companies, maybe two will get invested in. “The filter is really small; you have to have a game-changing product.”

TMC Venture Fund’s portfolio has amassed a collection of companies in the medical tech sphere. A few notables: Medable, a digital health company; Motif Neurotech, which developed radio wave technology to treat depression; and, most recently, Koda Health, an advanced care planning (ACP) startup with a mission to streamline the process of planning your health care. ACP includes medical private attorneys, “do not resuscitate” orders, etc.—basically, all decisions, documentations, and notarizations you need.

“We’ve seen support from TMC in all phases of our growth,” says Tatiana Fofanova, CEO and cofounder of Koda Health. “They helped introduce us to Houston Methodist, our first client. And this summer, they’re helping us through our current stage, which is scale, so we can step into that new level of maturity as a company.”

Fofanova founded Koda Health in early 2020 with chief medical officer Dr. Desh Mohan and chief technology officer Katelin Cherry. It now counts Houston Methodist, Memorial Hermann, and Cigna’s Medicare Advantage Group as customers.

Looking to the future, McKeon is excited to expand the TMC Venture Fund portfolio into the world of therapeutics and brain health, including drugs, devices, and other therapies to treat conditions like depression and Alzheimer’s. And, of course, he wants to double (or triple) the fund.

“We’re seeing better and better companies throughout the years, which means we’re going to make even better investments and we’re changing people’s lives,” he says. “That’s what drives us every day to get up and come into the TMC: to reimagine every aspect of our health, and if we can make a small difference, then it’s worth everything.”