Starting and sustaining a new venture in healthcare IT can be a long and winding road. But for those who have the ideas and persistence – there is help for the journey.
Just before Cleveland Clinic’s Medical Innovation Summit kicked into full gear,
entrepreneurs and investors were treated to a funding source workshop hosted by the Cleveland Clinic Innovations, HealthXL and HIMSS, featuring three leading experts: BrianThomas and Don O’Sullivan with Triple Tree Capital Partners and David Eichler, with 18 years of experience at the NYC-based Psilos Group healthcare venture capital firm and now in his new role as partner with Cleveland Clinic Ventures.
Participants at the workshop heard practical advice and “pearls of wisdom” on the stages, challenges and rewards of bringing disruptive new products and platforms into the world of modern healthcare.
David Eichler described four key stages of bringing a product to market:
Proving the concept through tech development, market definition and clinical validation; it’s critical to raise capital at this point to get to the next stage, with those fresh out of college often relying on family, friends, mentors and non-traditional sources.
Early stage when organizational development begins, the management team is set, measurable ROI defined and a story is built around lowering costs.
Commercial stage when customers are acquired. “This is when things slow down, and it’s the hardest part,” says Eichler.
Growth is the final and “fun stage,” when there is demonstrated value and a business is determining how to grow.
Thomas and O’Sullivan presented Triple Tree’s summary of the funding continuum and potential sources from personal funds, micro loans, Angel and Venture Capital during the startup and early phases … to Early Growth Capital, Corporate Venture, bank and government loans during the growth phase. After that comes the exit stage, with a cash-out strategy, management buy-back, employee stock ownership plan, IPO and sale to a strategic buyer.
The panel all agreed that in health IT credibility matters – and building a strong reference of delighted customers, not just “logos on a page.” They were emphatic in stressing that new businesses often take 12 to 15 years to become successful – so patience is critical.