Last month I had the sadistic pleasure of serving as a judge for a business plan competition at the 2013 Advamed conference. I have to give credit to the fledgling entrepreneurs who agree to present at such sessions, designed to publicly expose the flaws of their technology, commercial story and personal presentation styles. The only grimmer form of torture is watching a videotape of yourself giving the company pitch.
The presentations by these energetic new CEOs, on top of the many I encounter in my day job, got me thinking about the “must-have” elements of early stage medtech fundraising pitches. So here is my checklist – commit it to memory if you want to avoid public humiliation at my hands during some future business plan competition:
Be clear on what your product is, right up front
It is surprising how often I hear a pitch that leaves me asking, “So what exactly is it that you have / do / make?” A good product description should be understandable by an intelligent layperson, incorporating enough technical elements to sounds like an accomplishment but not rocket science; remember that you know way more about your specific area than your potential investors do. Include images, or animations if your technology is used in a procedure or it is difficult to envision how it works. A concise technology description should be in the first tenth of your pitch deck, not the exciting climax after a big buildup of the company history, IP, market, and so on, or you will lose people quickly.
Articulate the important problem you are solving
Once a potential investor understands your product or service, the next natural question is, “So what?” The simpler your value proposition story, and the more compelling, the better it will be received. I fondly recall a conversation with a founder of Nellcor who simply described the value of pulse oximetry as “preventing death.” A technology doesn’t have to save lives, though, to be meaningful. An example of a clear value proposition, selected randomly from MedGadget, is “Fertility Lab-on-a-Chip: Assess Your Semen Quality at Home.” I get the concept right away, and can see why men might want a home test for this particular purpose.
Define your customers
Closely following the “so what” question are “who cares” and “who pays.” Who are the customers for your technology? In what setting will it primarily be used? Who will champion it? Who will need to be convinced of its value? To paraphrase George W. Bush, who will be The Decider? It is advisable to focus on a clear set of customers and stakeholders who are logically vested in the problem you are solving and are in a position to take action.
Spell out how you will create value with the $$ you are raising
Investors are funny creatures; curiously, they like to know what you plan to do with the money they are being asked to give you. What near-term milestones will the funds enable your medtech company to achieve, and how will achieving them increase the value (and valuation) of your company? Don’t waste a slide on a bar chart showing a 3-year revenue ramp to $1B in sales (and that’s just the US market), or a plan for a big licensing deal or strategic take-out in two years. No one will believe you and you won’t look credible. Instead, highlight the data you will generate, the functional prototype you will develop, or the regulatory clearance you will obtain, and the activities and expertise that must be funded to get you there.
Instill confidence in you and your team
If you’ve done a good job on “what”, “so what”, and “how much,” its time to tackle “why me.” It may be trite to say that investors invest in teams, not technologies, but it’s true. Company leadership is most important; have you assembled the right skills and experience on your team to get the job done? Do you as a leader exude energy and passion in your presentation? Have you engaged strong advisors and collaborators to support you, connect you and lend credibility to the solution you are peddling? Are they for real or did you just run into them in the men’s room at a scientific meeting? Keep in mind that any serious investor will call them!
I would love to say that the value of technology speaks for itself, and in rare cases a great idea can overcome a discombobulated pitch. But like a depressed real estate market, with all of the forces and odds against medtech entrepreneurs, a little “staging” is a wise investment if you want to make the sale.