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IVMC Spring Conference 2022: Sebastian Anastassiou speaking on 'Funding your medtech start up'

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Summary

This on-demand teaching session will provide an overview of the key criteria investors look for when funding med tech startups. Delivered by Sebastian, an investment manager at a venture capital firm, participants will learn an early funding roadmap with practical advice on understanding stakeholder needs, value proposition and innovation. In addition to high-level overviews, an open question-and-answer session will be held to provide medical professionals with the opportunity to engage and ask questions specific to their field.
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Learning objectives

1. Understand the different types of investors in the med tech healthcare space. 2. Define criteria investors typically use when assessing a med tech startup. 3. Appreciate the value proposition needed to create successful solutions for different stakeholders in the healthcare space. 4. Understand the importance of evidence for the technology and market traction in gaining investment for a med tech startup. 5. Analyze the funding roadmap and timeline for an early stage med tech company.
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Computer generated transcript

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The following transcript was generated automatically from the content and has not been checked or corrected manually.

way, way form. So interesting. Good. Okay. Well, Mayor, I I'm not sure how this works. Are you moderating questions or do I just deal with it in the chat? I'm mainly mother to read questions for you. If you'd like me to tell me how ever you find most helpful for more than happy to help. I mean, here for a sec so I can read Question. Okay. No, that that's fine. I think I think I can I can follow the questions on the chat. Um, So what I had in mind is that I'll I'll present, um, a few slides about to basically set the scene and shouldn't take too long. Um, on. But I I want to leave. Um, you know, a lot of time for for questions as well, because that's where I feel. I feel you get the most out of the source of workshops. Um, okay, let me just share some slides, okay? Actually, actually marry if if if you could, um if if you could help with the questions. Because if I'm in, if I'm in present remote, I can't see anything else except for the slides. No worries. It's all I read them to use a soon as they come yet. Or would you like me to read them at the end or Yeah. All right, let's do it at the end of student the end. Oh, if you want, you can stop with intervals and asked me if there's any questions. We'll tell you what's come way we'll we'll work on it. You know, whatever happens, have since that's okay. Okay. So, um, just to start, um, I'll introduce myself. So I'm Sebastian on by the the investment manager at a venture capital firm called me in a capital. Um, just a bit about myself. Personally, I have a background in your A science onda. Um, before before joining in the capital, I spent most of my time in London working for UCL. Um, actually the the commercialization company off, you see else. So I was responsible for for commercializing all the biomedical research that the academics and professors were were developing eso that involves, you know, setting up startup companies in in the healthcare space, doing the initial work and spinning them off, uh, managing the intellectual property aspect off of university research and then getting it out into the market by licensing technologies to bigger companies, for example. And I have an MBA as well on. But that's where I made my Segway into the venture capital industry. Eso just a bit about Nina Capital s. So you know who who you're talking to essentially. We are on early stage healthcare Rencher Capital Firm. So we invest and we invest in in the earliest stages off a company's life cycle on the way invest at what we call the intersection of healthcare and technology. So we messed up your li in the healthcare space, Um, in solutions that essentially tackle healthcare problems using technology, which can be medical devices that can be software solutions, variety, variety, off companies in that space. Um, so here I just like to show this this'll picture here where you see the whole healthcare industry. It's it's very big. You have everything from services hospitals, which I think is a lot of what I know what you you do. You know, I think your physicians are oh, our students and wanting to become doctors and right through to, um Pharma, uh, tech and digital, which is essentially where we play. This is where we invest. So that's our That's our sweet spot. Healthcare. Um, data driven solutions, Tech software. Um, early stage way. Do focus on European, European country companies, but we also invest in in the US A. Swell. So that's just very briefly about about myself on be the capital. So the purpose off for one here, I'm going to tell you that about how to fund a med tech startup. Um, it's a huge, huge topic, sometime going to try and just set the scene with, with some basics to help you understand what the process looks like and what investors are looking for. Essentially so typically investors, they they have a set of criteria when they when they assess, uh, med tech startups before investing on and the first, the first point is typically a specific investment thesis. So, for example, with us we we focus on what we call need driven solutions. So we like to see companies that have truth has really understood the healthcare need and built a solution to address that need. There are other other funds that have different, different thesis. So there's there's a fund in the US that only invest in immigrant founders, um, which actually does make sense because the majority of unicorns in the US are actually founded by immigrants. Um, you have female founder focused funds, only a zoo. Well, so that's when when, when you're going up looking for investors, pay attention to this thesis on They have it on their websites essentially so that that's that's their first screening points essentially on. Then there are a whole host of other criteria that they that they look at on drink without a doubt the top, the top criterias team. So they look at how strong you as a founder on the rest of your team is. Do you have the correct background? Do you have the drive? Do you have the knowledge? Do you have the deep understanding off the off off the space on the problem that you are trying to solve with with them with your with your startup? And on day we don't only look at the core team, I eat US founders and what's in? We don't expect you to know everything or have all the skills. Um, it's absolutely fine. What's important is that you've supplemented, um, your team with key advisors. These are people who have been there, done that. You really understand the space, um, on dissension, supplement your knowledge and can really help you on. That's also an indication that you can attract key talent to your vision on your mission, which which adds extra extra. So what? I'm looking for comfort that this really is, Ah, a solution worth backing. And then there's a whole host of other things. So we look at typically in the med tech field technology, innovation, evidence. Now, that can be, um, both evidence for the technology itself. So early proof of concept data, Um, maybe an an NV p A minimum viable product on then it can also be, ah, market traction s o. Depending on the stage off the company and the type off technology. You may be able to get some early customers. Um, on. I think, actually, one of the most important is is, um is the value proposition across all stakeholders. So the healthcare space, as as as you know, it's, um, it's very complex, You know, if if it's compare that to the consumer space where you're selling an iPhone for an iPhone, the person who buys the person who uses um on the person who makes the decision to buy are all the same person. So it's quite easy, easy. But it's It's a lot simpler in that sense when it comes to the healthcare on the med tech space you have, for example, you have developed a medical device for a particular indication you have. The people who decide to um to use it are the physicians. Typically, the people who use it are the patients, and the people who pay for it are either insurance companies or or or governments. So those are three completely different stakeholders who have different incentives when it comes to really adopting on medical devices and other healthcare solutions. So, um, making sure that all of these stakeholders are aligned with a common value proposition that's key to get across and, well, not just to get across to get investment, but actually to make a successful company on. Then there There are other things way. Look at the defense ability off off your technology, you know? Are there patents? Is it difficult to copy etcetera? And then, of course, the classic market size and the potential for, um for for the return potential for the investment. So it says investors, we have our own investors that we have to please on. They expect a certain return for their investments. And so typically we look at opportunities that have the potential to to get 10 times, um, out what they put in. And but again, that varies it. It's a swell, but so that's sort of an idea off of what typically we look for, um, I'm wondering, May be Maybe now would be a good time for some questions around What? Um, what I've talked about so far, Um, before I move on, um, so so far, there is no questions yet with anyone wants to ask questions about what's been said so far, please, with ribavirin, the China of lead out loud. Okay, well, if there's no questions on that, hopefully I was extremely clear, if not family. He's asking questions and okay, I'll just continue then on the mayor, let me know if there are any specific questions. Of course. Okay, so this is essentially what investors typically look for, um, before the make an investment. Now it's a busy slide. It gets it gets, um, gets easier after, but essentially, I thought it would be nice to show the general the general funding road map and on and the the timeline for an early stage MedTech companies. So typically, you go through different investment rounds on that involves different stages off your lives off the come off of the companies life on ah, different, um, different value generating milestones. And, um, um, composition off the companies. So the first is basically Inc Now, at this stage, it's basically just you on, maybe a co founder, a couple of others. You have, um, understood the need on you've done the stakeholder analysis that I was talking about. Um, you may have very, very early proof of concept medical device, for example, or a healthcare solution. Um, on at this stage the type of investors that typically you would look at, um, our first of all yourselves. A lot of founders put in these initial small capital to get things going. Um, you have grants, obviously. On. This is this is where, um, what we call business angels come into play. So these are These are individuals that have a lot of money. They're interested in the space on da They like investing in very early stage companies and typically in the they back the founders in this case. So, um, because at this stage is too early for a venture capital firm to come in. But that's where you find these business angels who who have network they have the knowledge and experience in your field. So they're not only investors, but they also, um they also help you get to the next stage and throughout throughout these stages, what you have to do is have a very clear what we call the use off funds. So that's over here. Um, so the stage is off. Raising funds should be linked to clear milestones that you will use the money to achieve on these milestones, um, equate to significant increase in the value off the company and also the risks it. So, for example, at this stage, you be using the funds to, for example, build build a core team, get some grants in, do some more tech and product development towards towards something that can be at least used. For example, in pilots and Onda, uh, also, you know, other things. It depends on the company. You could maybe file some patents, for example. But all of these value generating milestones it it depends on your company. Essentially on that's key. They're free to work out. What are those milestones? And you're going to use this money to to achieve these monsters, At which point the company will be worth more. It'll be d risked, and you can raise more money in the next stage. So typically, after this foundation stage, you have, um, proceed. Uh, what we call a pre seed company. Um, ideally, at this stage, you've basically achieved all off all of these value generating masters that we talked about before. So here you have. You have some advisers you have. Um ah, bigger team the'tr Logie is much further along. Ideally, you you have some some pilot studies with. If you're selling to hospitals, maybe you have this envy. People adduct in the hospital on their testing it out on. If there's regulatory regulatory barriers, you you're moving towards getting regulatory approval. Um, and again, at this stage, you This is where it really early stage V. C's can come in so typically awesome. Need a capsule. We invest at this stage, but also business. Angels again can invest in this stage. So here you'll probably have a mix off business angels on, um, on, uh, early stage, venture capital. Um, again, you raise the amount of money you need to achieve more value generating milestones. Eso I've put a few examples here, but essentially, it's expanding the team, moving the technology from just the technology to a true product. Um, that can be eventually sold on used on the market. And again, more evidence, more clinical evidence, more utility evidence that it's actually being used on has a utility for all the stakeholders take it back to, um, the stakeholder mapping. Essentially, we have physicians, patients, payers on that. There you demonstrates a utility. Essentially, um, for all of these days, call these. And then again, you moved to this question in the tract. Sorry. Before moving on? Sure. Would you like me to say it? Yeah, I'm moving back forward. So I can see. So who do you contact to discuss? A potential idea. Is it like dragons? Done? And so you can. That's an interesting question. Um, if you haven't idea, I guess you have what we call incubators. Um And these are organizations that, um, that help help. Early stage founders filled out the idea. Essentially. So you have, um I'm trying to think off the top of my head. Um, and we have something called entrepreneurs first. That's Ah, an example of often incubator where they basically put. And someone with an idea. Maybe you're a physician. I I see my parents. Your name came. You know, um, you're probably a physician. Um, you have this idea. There are programs that maybe put you in contact with the co founder who has business background on. Do you work on the idea together and basically, do the initial thean Isha work for the foundation of the company? Um, that's more of a structured proproxy. Um, but I think the best way is find people who know the space on dumb and talk to us many people as possible. I think that's sort of the best idea going. Lincoln reach out to friends who may know someone in the space and share your idea. Um, I think that's a big mistake. People do. Is, um, they think someone's going to steal the Steeler idea. Um, they probably won't the only way you're going to develop. The idea is, um is by sharing it, showing where people talk to as many people as possible. Okay, um, thank you for that question. Um, so, yeah, um, I was talking about this stage of the priest need. Then you go to Will Cede stage on. At this point, you've got more of a team. You have, um, more of an actual product. Essentially on. Do you have I look more evidence that you get what we call product market fit Onda. At this stage, you'll have several pilots on D. Possibly even one of those pilots has converted to a proper customer. Who is paying for the solution O r. The technology on again. You raise the amount of money you need to hit certain value generating milestones, essentially, and and then you keep on moving. Essentially, I think you're getting the You get went. Um, So once you get to, you know, this stage, um, you you have what we call at the series A. You have demonstrated that your product, your solution is wanted by the market on. You have actual customers you have revenue on, but this stage is is where you you set the company up for growth and scale. Essentially on throughout all of these these stages, you have different veces which I forgot to mention. So here at the pre seed, you know, you have this early stage of these tease. My gosh, sundials, Um, as you go further along, you have different ventricle firms who invest that later stages, and that sort of progresses as as you go on. Obviously, grants are very important because it's free money on do you want? I'll get to it after this. Essentially, how the investments look like, um so, yes, that's essentially it for the funding roadmap. From here, you just keep on going. This keeps happening. Essentially, you raise some money, you you hit some value generating milestones. That means your company is worth more than you raise some more and do the next phase. Essentially, um, so that's that's that's basically away to frame what the whole process looks like. Um, now, in terms off, actually, how to go about doing this? Um, again, it comes back to what I said, use your network. Um, find people who you know, You know, other people, and they can make what we call warm introductions. That's one of the best ways to do it, um, and have a process. So it's a bit of a numbers game. Ah, raising the first capital on future capital. Essentially, you need to speak to a lot of potential investors. A lot of them because some of them I may not be a fit. Some may just not get what you're trying to do. Investors aren't often. You know, the best experts. They will never know what your company does better than you, and they will not be able to understand it in the short time that you have to convince them. So it's really it really, really is a numbers game. Um, Andi throughout this process, take feedback. So the worst you can do is is be defensive. If if in investor says they're not going to invest, asked them why take the feedback and on maintain a good relationship with them because you never know that in the next face you may. They may be interested in investing because you've done something amazing. Um, so be open to feed back, and it'll rate on how you're presenting on. Eventually, you'll you'll find. Find some some funds. Um, okay. And then I think this is Yeah. So finally, I just give you an idea off. What? What does an investment look like? So you have a lot of different mechanisms, but typically you have two different ones. So, um, one is what we call convertible loans or there's a something else called a safe in the U. S. These are very quick on easy, easy agreements which essentially, they give you the investment, and but they don't take it. Ownership in your company, straits away. Essentially, that investment will convert into, um into shares off the company at the next financing round, essentially on. The reason for this is that then you don't have to talk about violations, how much of the company they're going to buy for? For that investment, it's it's it's really good for, for for the earliest stages, when you're talking to her early early stage ventricle pital or business angels. Typically, that's what what they will do. And and then as you progress, you'll typically do what we call an equity round. And this is where investors actually, by the part of your company, um Onda Ah, again. How much of the company they buy? It varies, but rule of thumb typically at, you know, the earlier stages. You can expect them to want about 20 to 25% of your company. Now. That's not just one investment. One investor. That's the whole investment. So if you're raising 1 million lbs, for example, half of that may be from one investor on but the other half from another investor. But overall, the whole one million will typically cost you around 20 to 25% of the company on. But sort of, how have Alyoshin will work? And we can. I don't want to go into too much technical detail here. It's, uh I left it here to basically see if this is something you're interested in talking about. Um, on D. Yeah, There are other terms of inequity rounds other than valuation, which are important on DA again. I can answer any questions about them, but it's important to not just think about the the valuation of your company. Think about other other other factors, um, for example, control on off the investors and and what consent you need from them, that sort of thing you don't want, you know want investors to be too controlling off you because that prevents you from doing what you need to do, um, to make the business work on. Um, a lot of the times of the early stage things change. You may pivot on making sure you have some flexibility is very important. And And you're just finally I mean, if you ever do this process, enjoy it, Hafun, um, on when you find these investors, be very picky. If you can, um, you're looking for an extension of the company, not just money. You want to look for what we call value, add investors where they actually can help you get to the next stage on. Do you really have to like them? You know, you're going to be working with them essentially. And so, um, so it's important that, you know, you're smart about who these early investors are because they are key to helping you get to the next stage. Essentially. So that's all from my splice. And I thought I'd leave some time for questions and just used the sliders away to frame the whole discussion. But open to any questions. Have you go about finding these investors. So Google is typical weight. But again, Ah, try and build the network. So you're you. You have, um you have more connections than you think. Um, what did they say? You know, everyone in the five degrees of separation so everyone is connected by a least five people or something. Um, find find those people in your network who know investors essentially on. But as I said, use them to get introductions. Um, on do you could make You could make a list by going online. They have loads of investor lists, and you have crunch. Base is 11 website that basically has a bunch off start of company. It's a database for startups and investors s so you can do that. Do I have a business card? Uh, I do. Um, Would you like it? Um, I can I can I can give you my email. I can actually put so that's my email. Feel free to reach out on. Do find me on. Linked in a swell, Um, like I'm always happy to to have a chaps, even if even if you want to have a chat about your idea. Um happy to happy to just chat about it and give you some advice I like. That's what I like doing. Which is why I'm in investor. Because all day I basically speak to amazing founders. You have amazing ideas on, uh, and eventually actually worked with them. Once we invest any other questions? If we had a night is not necessarily in our degree field, but we have experience in the field. Okay, So and experience is is a little more important than than a degree in my my opinion. Um, the the credibility aspect, it's less about your degree and more about your experience. I would say, um, on the way, you can increase sort of the credibility off off. The idea's a zar whole. Find advisers who are experts in in in that field on DA. Bring them on board, essentially, um, find, keep people and bring them around you. Um, that's sort of how how how you can build the credibility. Essentially, we we really value key opinion leaders as advisers, and so I think that's the best way to do it. But honestly, experience is more important than than just a degree in the in the field. I hope that answers your question. Um, but if not, put another question in the in the chance. Um, Samuel. So an example of a successful start up you have been invested in on what the challenges were. Okay, um, let's see. Let's see. So says as an investor, we have in our we have how many investments now 31 31 companies? Um, they all have have different challenges. Um, I can give an example of one that's gone quite far. It's it's called Ultram IX on based Out of Out of the UK and came out of off Oxford University. So they they essentially developed a nard official intelligence, um, solution to to to work on echocardiography and echocardiography images to diagnose cardiac problems. Essentially. And it's it's a tool to support physicians with with echocardiography analysis on do eventually diagnostics. And they started in the UK Um, they got regulatory approval, Um, on D what they What they managed to do is is start selling on getting deployed on the NHS simultaneously. They also got on regulatory approval in the US in the United States. Um, and that's a very that's a great strategy to essentially do from the early stages, but it's challenging. Um, what you want to do is is you can start in your home in your home market, But for a company to be really investable, you need to think big. And then most all the s market for that is the US. So setting up a connection in the U. S. Market finding people who who, um, who can really bring the company into the US That's really it's a big challenge. But it's key, and and And that company did, did it really well, they can itch to raise a large Siris be with, um I think it was 30 $30 million or something. With the mix off European and US investors because of the fact that they managed to get regulatory approval in from the FDA they had partnerships with with US hospitals on, you know, no clinical well on D All of that, um, is a nice success story of how they went from so the UK and managed to cross the pond to really get the big market um, typical challenges. I think the biggest challenge for all off the companies is hiring the right team. Um, if you make the wrong higher is early on, it can really slow you down. And you have to fix things to actually get going again. Um, higher the right people who can really help and work with you to build the company the way you you you foresee it. I hope that's that's a nice example. And I have a bunch of others and any other questions. It's really weird. Not it's not, You know, I actually interacting with with voices, more seeing faces. So we have about 10 minutes left. Um, happy to just wait around, um, of it longer. If if you have any more questions, us there we go Ethical issues. Do you get involved in the ethical approval for these startups? And how do you mean ethical approval? Do you mean ethics for clinical trials? Or if they're if their mission. But here's to certain ethical standards. I see you're typing, so I'll just I'll just wait if it involves patient care. Um, yes, Um, we s that's this has never been, uh, never come up because we assume that it's all done according to, uh, correct ethical guidelines. And, uh, at this stage, I think, you know, typically, if the founders a physician or or whoever the founders are, um, they we trust that they really understand the ethics around, uh, what they're building on that that's been addressed. But it's not something that has been a problem. Uh, we've never I've never seen a company where, um, there's been questionable ethics around around any product. Or if there has been, it's been solved already. You're welcome. I mean, I I encourage you to to keep coming up with ideas if you're interested in setting up. And that's a company essentially on, um, again, speak to us. Many people, as you can to actually understand, really understand the needs. Um, off of patients, doctors, um, healthcare systems on distress test to your idea based on based on these assumptions, and slowly, Slowly, you'll you you test it's rates test. It's rate your idea. Um, until you you found something that you think Okay, this can solve the problem on on D. Not only will it solve the problem, but for patients, but doctors will want to prescribe or use it as well. Um, on the NHS is willing to, uh, willing to actually adopt it A z well, for example, and also think beyond the NHS is well because healthcare system's across the world. They're so different, especially when you compare what we call value, value based system such a Z, those in Europe versus, um, versus the majority of the US where, um, it's it's quite heavily revenue based for for for hospitals. Soon something that works in Europe because it reduces cost. Um, on da improvise. Better care may not really work in the US because it may hamper it may cut into revenues off the hospital. And even if it is, that's a care for patients. It's sad truth. But these are all things that you have to think about Onda address If you want to really build something that can have through impact on on patients to make sure it actually gets adopted, So it's really, really think about that. And the education head? Yes, um, off the top of my head? No. Um, but there are that. I definitely know there are, um and in fact, our managing our founding partner, Marta. She she's quite passionate about the Ed Tech field. So if you're interested again, feel free to reach out off line on, uh, I'm happy to help in any way. An easy way to find it is Googling educational technology, Venture capital. And there will be some that pop up. Okay, it's five minutes left. If you have any again, if you if you don't have any, any questions that come to you. Now you have my email. So feel free to shoots across any questions that may come up later in the day. The week year. This is how you build your network. Connect with me or Lincoln on Um, no other questions. They're how How long do we How long do we wait before you can leave whenever you like with? Because I feel like if there's no more questions than there is no point, you're more than welcome to stay the five minutes or you can just really Okay, well, I'll wait another minutes or so on. Uh, there no questions. It was a really good talk with her. I was, Thank you so much. No, thank you. It's it's It's It's weird. Weird, uh, giving it on the, uh without actually interacting with people. Yeah, with that. Then he's got me especially that you're coming off the only one on Yes, here. I would turn light on, but they told us thinking That's that's fine. Yeah. Thank you for thank you for your help. Notorious. All Okay. I think that's it. I hope it was informative for everyone. Um, and if it wasn't again, reach out with any questions. Are happy to clarify or speak to your Fine. Okay. I think I'm going to step off now. Um, this was fun. Thank you. Thank you. My right, everyone. So if you guys are okay to make it back, um, to the main stage for the upcoming, Um so actually, I think it's posters. Sorry. So if you'd like, uh, to visit the poster whole, you can check everyone's boosters out. And then that's from 12. 30 to 1 posters and then 1. 30. Yeah, right. 30 is lunch. Oh, yeah. You can feel free to get the posters and have lunch from 12. 30 to 1 30 more of my workshop. Thank you guys. Um, yeah. Enjoy your lunch and we'll see you soon.