BOSTON – Having a great idea is just the first step to landing a financial partner in device development – backers also scrutinize more intangible qualities.

The willingness to work as part of a team, the ability to project realistic expectations, the fortitude to take risks and persevere when circumstances get tough – these attributes are critical to forging a strong strategic alliance with a financial partner, Brian Tinkham said at the 2018 AGA Tech Summit, sponsored by the AGA Center for GI Innovation and Technology.

“Some of the brightest physician minds in the world are not the best med-tech device engineers,” said Mr. Tinkham, vice president of sales in GI Solutions at Medtronic. “When you enter the space of med-tech development, you have to join a cross-functional team. You’ll need skill sets that aren’t instinctive to you or your closed network in order to become successful.”

Mr. Tinkham offered what he called “practical pearls” for securing the financial backing every physician entrepreneur needs to bring an idea to the marketplace.

Put your own skin in the game

“To me, ‘skin in the game’ is mainly money. Investing your own money, your family’s money, changes the way you behave at the board meeting and when you spend that money,” Mr. Tinkham said. “We like people who are all in on this. When I see an entrepreneur who’s showing a return that’s not good enough for his own investment, I can lose confidence and trust. We want people who won’t walk away from their money, their family’s money, or my money; when times get tough and challenging, decisions need to be made.”

Be realistic

There’s a difference between confidence and irrational confidence, Mr. Tinkham said. “If you come to me presenting a game plan that says you’ll have a commercially viable product in 1 year for a $500,000 investment, you’ll shoot your credibility right off. We know exactly how hard it is to build a $10 million business, never mind a $100 million business. When you obviously don’t understand what lies ahead of you, it hurts your credibility. Work with people who have experience and let them help you present your ideas and goals in a realistic way, and that will help with raising capital so you can execute your plan.”

Be capital efficient

“The key takeaway here is that raising $100 million doesn’t necessarily make for a strong return for investors. The strong return comes with $20-$40 million raised. Most likely businesses that have raised that much have built a commercial structure, provided proof of concept with some actual sales, and generated enough customer interest to attract strategic partners.”

Location, location, location

“This is so important when you’re developing technology: You need to know where the people with high levels of competency are, and where the money is. If you don’t live near these localities, get on a plane and get there – that’s where the business is being done.”

California and the Philadelphia-Boston-New York corridor are the two biggest med-tech and investor hot spots in the United States, Mr. Tinkham noted. Smaller centers of innovation are scattered around the country, including Seattle, Denver, Minneapolis, Chicago, Pittsburgh, Washington, Raleigh-Durham, Atlanta, Austin, and Phoenix.

Be patient

“Adopting a new technology takes time, and the more disruptive the idea, the longer it takes to achieve market adoption. Translating that into med-tech, the time from founding a company to exit will take more than 5 years. Only 10% of companies do it in less time than that,” Mr. Tinkham said. “And you have to remember that not all of the exits we see are good ones – they can be exits in which investors lose most of the capital they’ve brought into the company.”

De-risk

Be the entrepreneur who takes a vision to a viable product.

“Most physician entrepreneurs come up with an idea and protect it – but don’t move it further. We want to see an idea that’s been created and then de-risked. You protect it, you prototype it, go into preclinical studies, then clinically validate it or obtain regulatory approval. And then in the end, to us the best measure is your revenue. Are customers buying it? Do they see in it the same value that you, the entrepreneur, sees? If you can get it there, you’ve got something. The further you de-risk something, the more attractive you become.”

Are you a physician innovator?

If you have an idea for a new technology to improve gastroenterology, the AGA Center for GI Innovation and Technology can help you through the device development and adoption process.

Get in touch with us at cgit@gastro.org.

msullivan@mdedge.com

With these pearls, the med-tech space can be your oyster

Are you a physician innovator?