Keynote from Life Sciences Venture Forum at NYVCA in March 2016. Focused on:
• Avoiding Key Fundraising Blunders: Fundraising mistakes most make again and again and how to avoid them
• What No One Will Tell You, But You Need to Know: The key issues/problems you’ll need to address that most fail to understand or prepare for.
Surprising Fundraising Lessons Most
Companies Fail to Learn
Avoiding Key Fundraising Blunders
Shahid N. Shah, CEO
This and many of my other presentations are available at
www.netspective.com www.ShahidShah.com 3
Who is Shahid?
• Serial entrepreneur with multiple externally funded
startups including exits.
• Angel investor, board member, in several digital
health and Internet startups.
• 20+ years of software engineering and multi-site
healthcare system deployment experience in
Fortune 50 and Government sectors.
• 12+ years of healthcare IT and medical devices
experience (blog at http://healthcareguy.com)
• 15+ years of technology management experience
(government, non-profit, commercial)
• 10+ years as architect, engineer, and
implementation manager on various EMR and EHR
initiatives (commercial and non-profit)
contributing author, blogger,
engineer, and healthcare
What’s this talk about?
• What are the most common
fundraising mistakes most make
again and again and how can
you avoid them?
• What kinds of BS can healthcare
investor and customers detect?
• What innovations can you help
• Where are the major
opportunities to grow your
• Go narrow, specialize, dive deep – talk
about what’s important to your
– Revenue, profit, and growth matters to
• Understand PBU: Payer vs. Benefiter
• Understand why healthcare businesses
buy stuff so you can serve them in
ways they find you indispensable
• The key issues/problems you’ll need to
address that most fail to understand or
Healthcare investors have great BS
The opportunities are real and achievable but…
Investors are getting better
Many more have done 2 or more deals
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Investors are gaining experience
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Rounds got bigger & riskier
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No, you will not disrupt healthcare…
This is $1 Trillion and the
Healthcare Market is about
This is $1 Billion
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Because path to payment is not easy
Nothing you do matters to the
But a lot of what you do
could matter to specific
No, your big data, telehealth, or
mobile ideas will not change
But if you can use them to add or extract value
from the existing system, you’ll do just fine.
No, your EHR/PHR or app will not
be used by enough doctors or
patients to matter.
But if you can get even a fraction of them
to use your software, you’ll do just fine.
No, your new genomics, diagnostics,
or medications will not easily be
accepted by permissions-oriented
“eminence driven” institutions.
Find customers with a problem-solving culture
willing to share risks and reward failures.
No, your offerings will not be
easily integrated into regulated
device-focused clinical workflows.
Incumbent vendors will not entertain the potential of
new legal liabilities without someone to share it with or
new competition without direct compensation.
No, your projection of the Total
Addressable Market (TAM) is not
really the market you can reach.
Complexity of the industry means that total spending of
a TAM is not really something you can achieve even at
scale. Focus on total reachable market (TRM) instead.
No, I do not believe you when
you say you have no competition.
Staying with the “status quo” or indirect competition
from entrenched workflows and slow-changing business
models are huge competitors.
You have made the job of
treating, or curing
faster, better, or cheaper
for clinicians through the
use of technology or
You have made the job of
treating, or preventing
diseases and improving
overall wellness of
patients through the use
of new incentives,
business models, or tech.
You must be selling “actionable innovation”
You can help your customers achieve practical, relevant, actionable solutions
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The fundraising environment
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The fundraising environment
Understand how investors evaluate risk
To succeed in healthcare fund raising you need to…
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Venture phases are de-risking gates
Who’s the payer & what
problem are you solving
Who are the users and
what JTBDs are you
helping them with?
Can you properly
describe the solution for
each kind of user
Can you build the
Product Risk (Seed)
Is the payer real and are
you solving the right
Do the users really have
JTBDs that need your
Can you enhance and
pilot the solution you’ve
Are there regulatory
risks to consider?
What liability risks will
arise through use of
Market Fit Risk (Angel)
Are there enough other
payers that have the
Do other buyers’ users
have same JTBDs?
What marketing plan is
in place to generate
How well have the users’
Can you deploy the
current solution into
Is there a path to
Sales Risk (Series A+)
Can you sell the same
solution to multiple
Can you adapt and
enhance the solution for
new users with different
JTBDs quickly enough to
Is there evidence for a
single or multiple paths
Can you scale sales into
Is there buzz and are
Question: will I get nX return within y months with this team and their idea that I have some passion around?
Example: will I get 10X return in 5 years with Shahid’s team and this imaging analytics idea?
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Traction proof is not easy
PIBU: Payer vs. Influencer vs. Benefiter vs. User
If you don’t understand the exact interplay between PIBU your sale will fail
The payer is the
that writes the
check for your
The person or group
that benefits most
from the use of the
Or the person or
influences the users.
The person or group that
actually uses the product.
Why selling into healthcare is hard
Easy sell (e.g. iPhones, tablets, pagers)
Hard sell (e.g. medical devices / EHRs)
What kinds of customers are your buyers targeting?
You need to know not just your own segments but your buyers’ customer segments
• Obesity Management
• Wellness Management
• Assessment – HRA
• Physical Activity
• Physician Coordination
• Social Network
• Behavior Modification
• Health Promotions
• Healthy Lifestyle Choices
• Health Risk Assessment
• Stratification & Enrollment
• Disease Management
• Care Coordination
• MD Pay-for-Performance
• Patient Coaching
• Physicians Office
• Other sites
• Catastrophic Case
• Utilization Management
• Care Coordination
26% of Population
4% of Costs
35% of Population
22% of Costs
35% of Population
37% of Costs
4% of Population
36% of Costs
Source: Amir Jafri, PrescribeWell
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How will you choose to compete?
Share risk with
Improve free cash
Create MSPs to take
of multiple JTBDs
The best ways to share risk
1. Top-line revenue growth: companies
that help grow revenue for their clients
are always welcome. There are fewer
competitors when you’re selling solutions
that grow revenue.
2. Free cash flow improvement: if you can
help healthcare companies improve cash
flows, you’re going to have a much easier
time than companies that don’t.
3. Bottom-line or margins enhancement:
companies that can show how they can
grow their customers’ margins will skip to
the front of the line when setting
appointments with their clients.
4. Cost containment: if a solutions provider
can clearly show how they can help
contain costs, they will see many
competitors but will still have a good
story that can help differentiate them.
5. Managed services: taking over major
areas of your customers’ workloads
6. Technology: being “just” a tech partner is
now table stakes, and it will be very
difficult to compete.
The business needs
• Quality and performance
• Patient stratification
• Care coordination
• Population management
• Surveys and other direct-
from-patient data collection
• Evidence-based surveillance
The technology strategy
• Aggregated patient registries
• Data warehouse / repository
• Rules engines
• Expert systems
• Reporting tools
• Dashboarding engines
• Remote monitoring
• Social engagement portal for
Do you have ideas in payment design?
Payment models going fee for service to outcomes-driven care
How will your customers get paid for your stuff?
• Your best option
• Very few truly disruptive
technologies can be
directly paid for by
providers within the USA
• Limited adoption of
‘traditional’ pay for service
reimbursement for next
• Second best option
• Improvements in
technology are outpacing
• Reimbursement will come
but its time consuming and
• Emerging option
• Payer requirements for
improved quality and
efficiency are creating
indirect incentives to adopt
• Solutions targeting new
are highly useful to medical
If you haven’t figured it out for them, customers will not figure it out for themselves
Act like a regulated entity, narrow your
focus, and concentrate on workflows
To succeed in healthcare you need to…
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Your customers’ innovation fit determines your opportunities
Be aware of regulations, don’t fear them, use them as
a competitive advantage
How to best identify your buyers (not users)
FFS vs. VBC?
The list goes on
Help them stay away from market segmentation, focus on identifying PBU particpants
customers will depend
on helping your
customers identify theirs
Problems your customers looking to solve
Focus on jobs that customers need to be done, not what you want to build
E-mail [email protected]