Healthcare IT Investors Reveal the Fundamentals to A Good Meeting

22 Oct

By Christine A. Wu, Research Analyst, LSN

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What kinds of companies are healthcare IT investors looking for, and what is the first question they ask in a meeting? Healthcare IT investors answered these questions and offered unique insights and valuable advice at LSN’s RESI Boston conference in September.

Moderated by Barbara Gamez Sims, Technology Licensing Manager, Mayo Clinic Ventures, our panelists include:

“What’s in it for us to care?” This is the first question Hyuk-Jeen Suh of Samsung Ventures asks in a meeting. “Many start-up companies have not thought of that,” Suh clarified. Many entrepreneurs would highlight their ability to increase phone sales, but “that doesn’t mean anything to us.”

Gabe Ling of General Catalyst agreed – “What makes us different from other funds and how can we be helpful for you?” Yet most of all, Ling explained that investors are “always testing the quality of thinking behind any company.” As his first question, Ling asks, “Have you built something that is thoughtful?” All the questions around market and competition should be answered if the entrepreneur has put necessary time to think through all the relevant strategies behind his or her company.

Aaron Nelson of dRx Capital highlighted that not only do entrepreneurs need thoughtfulness, but they also need passion and trust from the very beginning. “If not, then the probability [of a good meeting] will be very low.”

Suh advised entrepreneurs to reveal a taste of their “secret sauce.” On one particular meeting, Suh asked how the company’s technology worked, in which the entrepreneur, rather than explaining, said to just trust in his technology. “He just couldn’t get over that hurdle.”

After a good meeting, the panelists focus on the management team. Along with developing trust, investors look at the quality of the entrepreneurs and their ability to work together in the field and plan a clear investment process. Michael Jin of TEEC Angel Fund builds the relationship to thoroughly evaluate how the team progresses the business of their company. Ling, on the other hand, does background checks. “You would be surprised with what some people hide!” he exclaimed.

Finally, each panelist provided a takeaway piece of advice for entrepreneurs:

  1. Companies must thoroughly investigate their benefit to the investor.
  2. Timing matters. “If you come to approach us a week before the round will close, we will have difficulty with that time frame because we have to check your IP.” Suh explained.
  3. Have a good energy level! “I personally love working with high-energy people…If you have a great idea and a high-energy personality, that’s great,” Ling exclaims.
  4. Have a fundamental understanding of your business. “Oil down what you’re doing into an understandable map,” Nelson explains, “If you can’t explain fairly quickly and easily without spreadsheets and excel models, that’s a big stretch for me.”
  5. Focus on what you’re good at. Jin explains that this doesn’t mean to just look at your technology, but “sometimes you need outside help to build up your sustainable area.”

Reveal a taste of your “secret sauce.” A lot of entrepreneurs approach VCs, and especially CVCs and get nervous to sharing their mechanics. “I don’t need your nuance or source code, but be able to explain why is it that this works where the whole world has tried and you are the first to succeed?”

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