Diabetes is a chronic, life-threatening disease that affects an estimated 21 million people in the United States, and some 194 million people worldwide. Characterized by the failure of the body to produce or properly utilize insulin, diabetes is a pandemic with no known cure. The most effective treatment – continuous subcutaneous insulin infusion (CSII) therapy, traditionally available only with insulin pumps – has long been recognized as the most effective form of diabetes management. Yet the obstacles to adoption of insulin pumps – including the lack of discretion, the need to learn complex technology, and the enormous cost – have limited insulin pump use to less than 5 percent of people afflicted with diabetes.

In 2000, a team of experienced professionals came together to find a way to break down the barriers to CSII therapy and eliminate the many obstacles that make the therapy unreachable for the vast majority of patients. The team conceptualized a novel approach to CSII therapy using a low-cost, wireless, discreet system, making it possible to extend this therapy to all diabetes patients. With that, Insulet Corporation was born.

It did not take long for the innovative idea - and the top-notch group of founders who conceived it - to capture the attention of leading life science venture capitalists Prism Ventures. Prism gave Insulet the financial backing it needed to research and develop its new approach. Soon after, other top VCs including Alta Partners, Oakwood Medical Investors, Pequot Ventures, SV Life Sciences, and Versant Ventures offered their support as well. For the next five years, the team worked tirelessly to bring the innovative idea to fruition. The result was the introduction of OmniPod Insulin Management System in 2005, a breakthrough approach for managing diabetes with CSII therapy.

By finding a way to bring the proven healthcare benefits of CSII therapy together with blood glucose monitoring in a safe, subtle and easy to use system, Insulet was poised to take the industry by storm. Yet to do so, the company first needed to transform itself from an R&D institution into a company with robust manufacturing, distribution, sales and marketing capabilities. Doing that meant additional funding was required.

While the company could have easily turned to its equity investors to fund it through this critical period, more equity was not what the Insulet management was seeking. They were convinced that once they transitioned into the manufacturing stage and could start shipping the OmniPod System, they would start generating revenue fast. And while Insulet management knew they would eventually need another round of equity to help expand market presence for the OmniPod System, they preferred to raise the round at a valuation that took a steady stream of customers and revenue into account.

"That's when we started to consider venture debt. We knew once the marketplace saw the OmniPod System - what it was capable of and the price they could get it for - we would gain market traction quickly. So we didn't see the need to raise additional equity dollars for this purpose," said Rebecca Burke, Insulet's Controller. "We called our board of directors as well as executives from other companies for recommendations on which venture debt provider to work with. And Lighthouse Capital Partners came to the top of the list."

Continued Burke, "Once we called on Lighthouse, they worked fast. They understood immediately what we were trying to do, the market we were playing in, and what it was going to take for us to reach success. We didn't need to spend lots of time educating them and explaining our business model. They just got it. That helped us not only to move into our manufacturing stage quickly, but also gave us a level of comfort that the firm understood our company and showed a willingness to stay flexible and committed as we moved forward in our go-to-market strategy."

Once Insulet took on the venture debt loan, their plan worked precisely as designed. They moved into manufacturing, started shipping product, and began gaining real market recognition. With a proven manufacturing process and an impressive customer list, the company went on a year later – to raise another $50 million in venture capital in a round led by OrbiMed at a significantly higher value than they would have achieved a year earlier.

"With this latest round of financing, we can continue to execute on our long-term business strategy and, at the same time, rest assured in the knowledge that we are taking the right steps for building the greatest possible value for our company, our employees, our investors and our customers." said Burke. "Taking this approach means that we are in the best possible position to deliver on our vision of improving the lives of people living with diabetes."

To learn more, visit the company’s website at www.myomnipod.com.