Sorrento Valley startup raises $3M following pitch competition win — all from local investors

Just months ago, Shiv Shukla was standing under spotlights at Qualcomm Hall, presenting his startup idea to an audience of over 500 people. That night — trembling from nerves and adrenaline — he won the biggest startup competition in San Diego. Now, he’s back with some news: he’s raised more than $3 million from local investors to push his experimental technology forward.

Shukla, 32, is founder and CEO of Neuralace Medical, which makes software and a medical device to treat chronic pain caused by physical trauma — like a car accident or injury. The device stimulates damaged nerves with magnetic pulses, re-enabling the nerves to manage pain. The equipment — called Axon Therapy — is meant to be placed in pain clinics, where patients can go in for treatments that decrease in regularity as time goes on.

A way to treat long-term pain without addictive and dangerous painkillers is attractive to those familiar with the country’s opioid epidemic. Statistics show 2,199 people in California died from opioid-related causes in 2017, and the death toll nationwide just keeps rising.

The same day Shukla was presenting his idea onstage, President Trump was signing a bipartisan package of measures to address the country’s debilitating opioid problem.

The timely business pitch for Neuralace’s medical device likely contributed to his success at the John G. Watson Quick Pitch competition last year.

The money

Since taking first place — and a $50,000 winning check — at the competition, Shukla went on to finish raising his seed round. He said the pitch competition (organized by Tech Coast Angels, San Diego Venture Group, and Cox Business) boosted the company’s traction. Investor interest was high, and Neuralace attracted more capital than he was initially seeking. All the money came from San Diego-based venture firms, a rarity for local startups. Mesa Verde Venture Partners, which invests in early stage life-science companies, joined as a new investor, along with Teal Ventures, a newly founded VC firm specializing in digital health care. Previous investors FusionX and MooDoos also participated.

The fresh $3 million is in addition to the $850,000 in convertible notes Neuralace raised in 2017. The startup is wrapping all the funds into one seed deal totaling $3.85 million. The deal is expected to close on June 28.

What’s next for Neuralace?

Shukla said the new funds would go toward expanding his team, including five contract software engineers and a full-time senior sales leader. Other than hardware and software development, the new money will also fund Neuralace’s FDA application, clinical studies and manufacturing.

The company is pursuing approval through the FDA’s 510 (k) clearance process, which allows device manufacturers to skip clinical trials if they can prove their device is equivalent to another device that is already on the market. The company still plans on conducting a randomized controlled study involving 120 patients to help convince customers that the method works.

“We want to be an accountable pain management company for patients,” Shukla said. “There are a lot of promises out there, but they’re low on execution. The space has become jaded. We want to perform a gold standard study to show them how legit (the device) is.”

Shukla expects FDA approval by 2020.

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