After fighting administrators to support his idea, Jamie Grooms made millions—and is now helping other start-ups evade the hurdles that hindered him.
At 32, Jamie Grooms was passionate about his product—spinal fusions machined precisely from the bones of human transplant donors—but no one took him seriously.
“I had a big kid’s dream, and everyone told me ‘go away,’” he says.
Grooms’ biggest stumbling block was the University of Florida administration. He was director of UF’s Tissue Bank, yet most administrators would hear nothing of his vision of creating a nationwide business based on human bone transplants.
Things have changed in the 17 years since.
He’s now an administrator on the state payroll. He’s also working hand-in-glove with UF administrators, as well as with administrators of state universities and state-funded research labs across the state.
His job? Making the process for today’s entrepreneurs easier than it was for him.
In January, Grooms took over as CEO of the Florida Institute for the Commercialization of Public Health Research, which helps bring discoveries to market at state universities and research labs. Grooms administers an $8.5 million low-interest loan program that provides start-ups with $50,000 to $300,000 each, which must be matched with private funding.
“What I experienced before was ‘then,’ and this is ‘now,’” Grooms says. “Administrators and researchers have worked things out. Now we have a high level of trust and respect for each other.”
Every start-up gets to a point at which it is up-and-running, but it doesn’t have enough money to cover all the expenses it needs to be successful, Grooms says. The state loans will bridge that gap. “This money will help businesses get across the Valley of Death,’” Grooms says. “I’ve survived it, and it’s a painful process.”
The “Valley of Death,” as Grooms sees it, is the point at which a start-up has begun to generate sales but hasn’t proven itself enough to attract venture capital.
“This is my cause,” he says of his new role. “I want to share what I learned from all the failures I had so other people can succeed. This is something I truly believe government should do.”
Most people don’t associate Grooms with the word “failure.”
Grooms and his partner, Richard Allen, made tens of millions of dollars for UF—as well as a tidy sum for themselves—from the company that grew from Grooms’ work at the tissue bank.
That company, now known as RTI Biologics, is a global leader in implants from donor tissue. RTI, based in the Progress Corporate Park in Alachua, raised $75 million in its initial public offering in 2000, and its annual sales for 2011 were $169.3 million.
UF profited handsomely from its 60 percent stake in RTI at the time of the IPO.
Despite the success of RTI, Grooms says it could have been better—if he had the kind of help that he’s now providing in his new role. “RTI could be three or four times as big as it is if I had avoided the mistakes I made,” he says.
Building Success One Step at a Time
The first breakthrough in the financial success of RTI’s predecessor, Regeneration Technologies, came when Metronics, a medical products corporation based in Minneapolis, invested $2.5 million in the company.
UF administrators finally took notice. It was then that Grooms and the university reached an agreement to split the proceeds of the “intellectual property” involved with the company’s tissue transplantation technology.
Sales started to grow, enticing $10 million in investment in 1999. In addition to Metronics, Lehman Brothers was among the investors.
Bringing Allen into the company was critical to its early success, Grooms says. “He had been helping new companies for quite a while. He brought business experience to the dream. No one trusted me, but they trusted Richard.”
Grooms and Allen realized that they needed a CEO with more experience running a company of the size they now had.
Grooms recruited Brian Hutchinson, who joined RTI as CEO in 2001. Hutchinson had been vice president of worldwide product development with Stryker Corp., a global leader in medical equipment and medical devices.
Grooms left RTI and started AxoGen, which produces nerve graphs and is also headquartered in the Progress Corporate Park. Once it was getting off the ground, Grooms again looked for a CEO with the kind of experience needed to move into the big leagues.
He found Karen Zaderej, who had been successful in product development with Johnson & Johnson. Zaderej joined AxoGen as chief operations officer in 2007, and she now is CEO, with Grooms remaining as chairman.
Under Zaderej, AxoGen’s nerve graphs have become widely used, helping restore functioning of extremities of soldiers and civilians who otherwise would be paralyzed.
In November, the company merged with LeeTec Corp. of Texas, which invested $12.5 million, and AxoGen became publicly traded.
The willingness of Hutchinson and Zaderej to join local companies demonstrates the quality of the companies that have grown in Alachua County, Grooms says. “We can attract world-class CEOs because of the quality of our companies. These aren’t ‘mom and pop’ companies. They’re global companies.”
Grooms could have been content to work with AxoGen and with a small number of start-ups he was mentoring privately. “I love what I’m doing. It’s incredible to have the money and the other resources to make the impact we’re making.”