If you’ve ever watched Shark Tank, you’ve gotten a taste of venture capitalists’ (VC) innate skepticism and hard-nosed ability to triage ideas. A recent webinar hosted by Cambridge Healthtech Associates offered a good practical "101" for scientists, inventors and clinical innovators – which we’ve distilled into the six tips below.
1. Find the pain.
VCs will want to know what "pain points" you are solving – the burning need or unpleasant thing a customer wants to avoid or fix right now. In health care, this could be the need for a more definitive diagnostic test or a cost-saving option, or, for the pharmaceutical industry, the need to reduce R&D costs by finding a better way to pick compounds to take to clinical trial.
2. Ask around.
A common mistake that inventors make is to assume their creation is something everyone needs – without actually verifying this. Talk to potential end-users. Is there a compelling clinical need, in a large enough market, with payers who are willing to pay for this breakthrough? If insurance companies don’t want to pay for a consumer device, could it be priced to sell retail? "Start talking to a potential customer before you need them to buy," advises presenter Dawn Van Dam. "Make them part of the process."
3. Be ready to explain your difference from the competition… in as little as a minute.
Do you really stand out in the marketplace? A survey by Bain & Company found that while 80 percent of suppliers felt their products were unique and differentiated, only 8 percent of customers did. Yet, your unique selling proposition can be something as simple as enhanced customer convenience or customer support. If you’re not convinced you stand out – and many skeptical physicians and scientists aren’t – a VC won’t be convinced either. Your team should practice answering the question "How are you unique?" in 15 minutes and in a one-minute "elevator" pitch.
4. "What’s in it for me?"
Put yourself in your customer’s shoes and understand what motivates her buying decisions. First, know who your customer is. "In life sciences and health care, there’s not just one person who’s buying," says Van Dam. Think not just of your customer, but her boss and her boss’s boss, and what they get out of your creation – not what features you’re offering. How will your novel idea fit into their current systems and processes?
5. Make your presentation compelling and memorable.
Motivate your audience early – leading not with your scientific or technical know-how, but with how you’re going to change things in the marketplace. "Your science always comes later as a back-up," Van Dam says. Use your voice and your body when presenting, and keep them wanting more. If you have a deck, limit yourself to 15 slides. Script yourself and know how you will transition from one idea to the next. If need be, have a business partner do the presentation.
6. Show you can do it.
The investment community wants to see that your start-up company has traction and can make things happen. Document your progress and momentum. If you don’t have sales yet, track other milestones. Present market research, testimonials from potential customers and any validation data for your invention. Assemble advisors and a board of directors: They can help lend you credence.
Before you start pitching, talk to a patent lawyer or your institution’s technology transfer office, if you think the idea could be patentable. And if you’re a scientist or physician and funding and running a start-up aren’t within your skill set, consider finding a partner who can handle the business side, Van Dam advises, rather than trying to do it all yourself.
"The old saying is it’s better to have 50 percent of something than 100 percent of nothing," she says.