By Karen Deyo, Investor Research Analyst, LSN

Medical device startups often face difficult challenges when seeking funding. Many investors have limiting criteria in their investment mandates when it comes to medical devices – whether limiting the regulatory pathway or the need for regulatory approval at all, consideration for traditional devices vs. the combo devices with digital components that are becoming so prevalent, or even the size of the market or complexity of use. With the increased challenge of either penetrating an already crowded market with an improved iteration of an existing device or attempting to introduce a new type of device to the market, it can seem like medical device startups can’t win.

At RESI Boston, taking place on Sept. 11^th, the Medical Device Investors panel will feature the following five speakers who will share their perspective on investing in early-stage device companies, whether as strategic partners or financial investors. They will share their thoughts on what startups can do to catch the attention of investors, despite the challenges that may exist in today’s market. The panelists are:

Shahram Hejazi, Partner, BioAdvance

Shahram Hejazi, Ph.D., is a life science investor & entrepreneur. Over his 25+ year career, Shahram has invested and/or directed more than two dozen startups.  Since 2008, he has been a Partner with BioAdvance, where he serves on the Boards of 6 portfolio companies and is responsible for leading investments in medical devices, diagnostics, digital health. Shahram has also been on the faculty of Princeton University, since 2014. Previously, Shahram was the president of Kodak’s life science division, and before that, he was the founding CEO of Zargis Medical Corporation (a Siemens’ spin off). Prior to that, Shahram was the Global Head of the Strategic Business Development at Siemens Medical. Shahram is also the Chairman of the advisory board of Integral Molecular Inc., and the Chairman of PPDC at CHOP. Shahram has a Ph.D. in electrical engineering and an executive business education.

Darshana Zaveri, Partner, Catalyst Health Ventures

Darshana Zaveri is a Managing Partner of Catalyst Health Ventures (CHV). Darshana joined CHV in 2006 and has 13 years of experience in the life science and pharmaceutical industries. She is actively involved in all aspects of fund management including investments and capital raising. She led investments in nVision Medical (acquired by Boston Scientific), Augmenix, Inc., (acquired by Boston Scientific), Lantos Technologies, Inc., Maxwell Health Inc. (acquired by Sun Life Financial), and Aria CV Inc. She previously represented CHV on the Boards of nVision, Augmenix, and Maxwell Health, and is currently a Director of Lantos Technologies and Aria CV. Prior to CHV, Darshana was an investigator within the cell biology department at Vertex Pharmaceuticals, Inc., where she led drug development programs in oncology, metabolic disease, and immunology. Darshana received an MPA from Harvard University, a Master in Cell and Molecular Biology from Boston University, and a BS in Biochemistry from Bombay University in Bombay, India

Lu Zhang, Managing Partner, Fusion Fund

Lu Zhang, Founder and Managing Partner of Fusion Fund. Recently, Lu is selected as 2018 Young Global Leader by the World Economic Forum. Before this, she also got selected as Silicon Valley Women of Influence 2018 and Top 10 all America Chinese Youth. In 2017, she was awarded the Forbes US 30 under 30 & Featured Honoree of VC category and also awarded as the Town & Country 50 Modern Swans Influencer. Prior to starting Fusion Fund, she was the Founder and CEO of a medical device company (acquired in 2012). Lu is active in the entrepreneur and investor communities providing mentorship and serves as an advisor to programs like Microsoft AC, Singularity University, StartX at Stanford, and Youth Council of Future Forum. Lu received her M.S. in Materials Science and Engineering from Stanford University and holds several patents.

Michael Thomas, Director, Inova Strategic Investments

A veteran med-tech CEO, Michael Thomas is venture capital investor with the Inova Health System Strategic Investments team (ISI and IPHA). Prior to Inova, Michael was CEO of Appian Partners, an Annapolis, MD-based life sciences consulting practice. His med-tech experience spanned several early stage, growth stage, and turn-around ventures as CEO of Appian Partners, ReGear Life Sciences, NuSomnea, Tanzen Medical, Appian Medical, iSonea, and Sleep Solutions. Mr. Thomas was founder and CEO of Appian Medical, a digital health firm that developed an algorithm to diagnose Obstructive Sleep Apnea. Mr. Thomas spent 2.5 years as CEO of iSonea Ltd (ASX:ISN), a publicly traded global, asthma digital healthcare company. He raised $25MM for iSonea and increased the company’s market capitalization from $4MM to $250MM. He is a member of the Board of Directors for Circadiance, a specialty CPAP mask manufacturer. Thomas graduated from Cornell University with a degree in Microbiology.

Aaron Sandoski, Co-Founder & Managing Director, Norwich Ventures

Aaron Sandoski is Co-founder & Managing Director of Norwich Ventures, a specialized venture capital firm focused on early-stage MedTech.  Aaron’s current investments include Affera, Arterys, Lexington Medical, Pelvalon, Podimetrics, ReThink Medical and Vaxess Technologies.  Previous investments include Rhythmia Medical (acquired by Boston Scientific) and Intelligent Bio-systems (acquired by Qiagen).  Prior to founding Norwich Ventures, Aaron worked for DEKA R&D, the engineering think tank of Dean Kamen.  He has also worked in start-up operations where he helped launch a subsidiary of Express Scripts and helped launch a venture-backed payments company. Aaron began his career as a consultant at McKinsey & Company, where he advised healthcare clients ranging from leading medical device companies to a rural hospital system.  Aaron is co-author of How the Wise Decide (Crown Business), a book on best practices in making tough decisions, which has been translated into 11 foreign languages.  Aaron earned an MBA from Harvard Business School and graduated summa cum laude from Dartmouth College with a double A.B. in Chemistry and Economics.

If you would like to attend this and other exciting panels taking place at RESI Boston, make sure to register!

By Dennis Ford, Founder & CEO, Life Science Nation; Creator of RESI Conference Series

From my experience in the fundraising arena, there is a pervasive lack of understanding regarding what it actually takes to raise capital. Entrepreneurs underestimate the associated time and resource commitment needed for a successful fundraising campaign, and that exacerbates the capital-raise dilemma. Part of the overall challenge is how to raise awareness among entrepreneurs as to the true effort required for a fundraising campaign. The first issue is that a campaign should be treated as a full-time undertaking – one or two people in the company have to commit to this endeavor as their primary focus. You can try and do it part time or catch-as-catch-can, by attending a few conferences a year as many companies do, but this is much more likely to be ineffective and unsuccessful, especially if your company has a limited runway left.

The fact of the matter is, fundraising takes a full-time commitment. Of course, a CEO or CSO has to continue their supervisory roles and company tasks (that’s the other 40 hours), but make no mistake about it, the majority of the setting up, launching and then executing a campaign should be your “primary effort” if you want to see results. Consequently, the BD staff at LSN spend most of our time explaining this critical fundraising dynamic to fundraising CEOs. The LSN mantra is:

• Fundraising is not a part-time proposition
• Before starting your campaign, make sure your branding and messaging is lucid and cogent. Your marketing collateral should be able to garner investor interest on the first read – this involves really working on your story
• Fundraising is a numbers game, and because it’s a numbers game you need to move from a regional to a global mindset to increase statistical probability – your local region may give you 50 investors that are a fit for your firm, where looking globally will give you 500 or more targets
• Get a list of investors that are a fit for your stage of development and product, The Global Target List (GTL)
• Set up a CRM to manage the list of 500 or so global investor targets
• Canvass and work the GTL: Get a “people person” resource to canvass the targets through phone and email campaign. It is great when CEOs cold call but much more productive when a professional admin or BD staff canvass and set up the calls
• You need to get out of the building and out in your turf. LSN has six global RESI events that can make meeting partners very efficient. Fundraising involves creating a dialogue that turns into a relationship and then, potentially, a capital allocation.
• Follow up is a great challenge and also another universe unto itself. Following up (or neglecting to) makes or breaks a campaign on many levels.

Most entrepreneurs fail because they think a fundraising campaign is just a side project. Part-time fundraising doesn’t scale and elongates the effort, increasing the timeline. On average, it takes 9-18 months to raise capital, data LSN has aggregated from discussions with many fundraising CEOs and early-stage investors. I am always shocked when, during my fundraising boot camps, I ask the audience how long they think it takes, and the answer is 6-9 months. Some people do get funded in that timeframe, but it is the exception and not the rule.

LSN has been in the middle of the early-stage life science fundraising arena for the past seven years and I am happy to share what I have learned. My challenge is trying to help educate startup executives in what it takes to do a fundraising campaign. Fundraising is a universe unto itself and isn’t a kinda sorta part time thing. The most shocking realization that a fundraising CEO has to deal with is that if you want to raise capital, make it your main priority, or find someone in your company who will, to maximize your chance of success.