Capstan Medical founder Dan Wallace, the Westside medtech startup's chief technology officer, and CEO Maggie Nixon (right).
(Via Capstan Medical)
Business & Technology

Santa Cruz medtech company Capstan Medical raises $31.4 million in new funding round, looks to local expansion

Capstan Medical, founded in 2020, is developing a minimally invasive technology to treat mitral and tricuspid valve disease. The Santa Cruz company recently raised $31.4 million in a Series B fundraising round led by Palo Alto-based venture capital firm Eclipse. The funding will help with hiring in four key areas — software and controls engineering, mechanical engineering, clinical and operations.

Editor’s note: This story is your introduction to a new Lookout feature spotlighting Santa Cruz County business. Find the full roundup from Jessica M. Pasko by clicking here.

A Santa Cruz company working to transform the treatment of heart disease recently received $31.4 million in a new funding round as it looks to local expansion.

Capstan Medical, founded in 2020, is developing a minimally invasive technology to address heart valve disease. About 695,000 people died from heart disease in 2021, according to the latest statistics available from the Centers for Disease Control and Prevention. Specifically, Capstan Medical’s platform is aimed at treating what’s known as mitral and tricuspid valve disease.

Capstan Medical executives say that traditional heart valve repair or replacement surgery is highly invasive and requires longer recovery times. They are working to change that with a less invasive option than open heart surgery.

“We’re making headway on using a catheter-based robotic delivery platform to treat heart disease patients,” explained Capstan Medical CEO Maggie Nixon.

The company is making these efforts from its headquarters in the Wrigley Building on the city’s Westside. Chief technology officer and founder Dan Wallace first came to Santa Cruz after moving to the Bay Area to attend graduate school at Stanford University in the early 1990s, eventually making his way over the hill to settle in Santa Cruz.

Capstan is the latest in a handful of companies Wallace has founded in the Santa Cruz/Scotts Valley area, and he’s held space at the Wrigley Building for about 15 years, Nixon said. Wallace started Occam Labs, a medical device incubator, in the building, and that led to launching Capstan Medical.

Wallace assembled a team and brought in Nixon, with whom he’d worked previously, according to Nixon.

In January, Capstan Medical will be expanding its footprint in the Wrigley Building to three times the size of its current space. The company currently employees about 30 people, almost all of whom work in the Santa Cruz location. (Wallace and his family split their time between Santa Cruz and his wife’s native New Zealand.)

“We’re committed to growing here,” said Nixon, who currently lives in San Jose but plans to relocate full-time to the home she and her husband purchased in La Selva Beach once her children graduate. “We love the location, especially the proximity to Natural Bridges.”

Santa Cruz has the right mix of innovative, creative spirit crossed with high technology, she said, making for “a great problem-solving environment. The Santa Cruz environment really helps us cultivate that.”

The Series B funding round, led by Palo Alto-based venture capital firm Eclipse, will help with hiring in four key areas — software and controls engineering, mechanical engineering, clinical and operations. (Series B financing is a company’s second round of funding after it has met certain milestones and is past the initial startup stage.) The company plans to double its headcount over the next 12 months. It is currently focused on research and development; it will be several years before Capstan Medical is able to bring a product to market.

“We will be growing pretty substantially across all areas of the business,” said Nixon. “This is a place where there really is patient need; it’s an exciting place to be  — finding options where there really aren’t.”

While Capstan’s latest funding round comes amid a general slowdown in the market for venture capital investment, there’s been an uptick when it comes to medical technology and biotechnology investment specifically.

VC investment in medtech fell in 2022, but that downward trend began to reverse in the first half of 2023, according to financial analysts at Pitchbook. Some of the biggest growing areas for investors are surgical robotics, cancer care and what’s known as neurostimulation, which can be used to treat a number of different neurological and psychiatric disorders.

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