Partnering with larger players can prove essential to a small medtech company’s business strategy. But learning how to maneuver through collaborative relationships can be tricky. Part of Philips Healthworks’ mission is to help young companies grow by teaching them valuable skills, like how to establish partnerships. Senior director Brian Rosnov spoke with MassDevice.com editor Sarah Faulkner in advance of his appearance at DeviceTalks Boston on Oct. 2.
What is Philips HealthWorks? As a venture capital fund, what qualities do you look for in a partner?
While the Philips HealthWorks team is linked to our Health Technology Venture Fund team at Philips, we see ourselves, first and foremost, as defining a new model for innovation community engagement. Think of Philips HealthWorks as a new front door for early-stage companies to collaborate with our global company.
Our program is 12-weeks long, cohort based, and operating out 5 hubs around the world, including Cambridge, MA in North America. While the programming is stage agnostic, our sweet spot is early-stage companies that have critical mass within the team (both technical and commercial), have a breakthrough innovation they are pursuing, some runway, but have not completely figured out how to turn that innovation into an impactful business. And if the founders are open to coaching from a global health technology leader, we love to help through our program. Given the breadth of our portfolio, we do source across a broad range of strategic areas for Philips, across consumer and professional health, but we are looking for “diamonds in the rough” where we believe our internal capabilities can support and add new value to the founders, well beyond capital and customers.
The program is very selective, and for those invited to participate, we operate it completely free of charge. Also unlike other programs I have seen, we operate the program as peers to the founders. Our program shares with founders our experiences and ways of working as a leader in health technology, while supporting founders with their highest priorities and utilizing the global capabilities of Philips to validate potential paths forward. Throughout the program, founders are getting to know Philips, they are building relationships across our company which will extend well beyond the term of the program, and they are able to make the tough decisions for their businesses faster and with more confidence.
What sorts of strategies can small companies use to navigate partnerships across the industry? How can they get their foot in the door?
There is definitely an art to getting your foot in the door. Here are a few pointers from my experiences at Philips HealthWorks and things I have learned from the early stage companies we have worked with:
- Start your company in Massachusetts! Our public sector has been doing a phenomenal job laying the ground work necessary to activate the local digital health innovation economy, and there is a new openness and willingness to support young companies across our community. The best way to be a part of it is to be located in the middle of it.
- Build and utilize your network. It may seem obvious, but the reality is that our networks tend to be our best sources of introductions, and for me these often turn into high quality leads. Introductions are important.
- Be persistent. Founders often tell me that one of the biggest challenges they have when engaging a large organization as a potential partner is figuring out who to talk to. It’s never obvious. But do your research, be persistent, and use your network. You are not just looking for a cold introduction, but you are trying to develop a relationship with someone who will be your champion throughout the partnership process.
- Be yourself. Tell your story. Be proud of who you are and what you have accomplished. Be passionate about what you are doing and where you are going. I want to be inspired by your vision, not fed a bunch of slides you think I want to see. The timing of initial meetings is rarely perfect, but as situations change, I do regularly follow up with founders who make a great impression.
- Understand the partner you are trying to engage. I always appreciate companies who take the time to study Philips and frame their opportunity and ask in the context of our company. It really does help me, help you.
- Know your stuff. I don’t expect you to have all the answers, but I do expect you to be an expert in the areas you say you are an expert.
- Don’t fudge traction. If you have customers, awesome. If you don’t, that’s ok too. Just be truthful.
- Listen and observe. There are always useful signals that can help you understand if this is a partner worth pursuing (and how to open the door wider) or not. Every partner is not the same, and you need to be smart about where you choose to spend your time.
- Thank you. I always send a thank you note and appreciate seeing them as well.
- Be realistic. Developing meaningful partnerships takes time, but unfortunately the process is unpredictable, and for most early stage companies, time is the scarcest resource. There are huge potential upsides in strategic partnerships, however founders need to be constantly evaluating the potential value versus effort it will take to develop and their burn rate.
What are some of the benefits of partnering in medtech? Challenges? How can small companies overcome these challenges?
For early stage companies, medtech is an industry where partnering can make a significant difference. The typical founder I meet has been inspired to solve a challenging problem for patients and caregivers, and they are fully committed to doing the amazingly difficult work to validate the impact of their breakthrough innovation. But in our industry, that’s just the beginning. The stakeholders and their relationships are complex, the sale cycles are long, the regulations and the economics driving decisions are evolving, and the capital markets are tight. Assuming you can figure this out in one country, it doesn’t necessarily translate to the next. So this is where I see partnering helping in medtech. Partners such as Philips have internal infrastructure that can help founders de-risk and accelerate their breakthrough innovation to global markets and can be patient capital in the early stages of the company.
The challenge I actually find is that early stage founders are often advised to stay away from partnering with large strategic companies. I hear a lot of different reasons why, ranging from IP concerns to control to speed of decision making, all influenced by some negative experience in the past and completely ignoring and undervaluing the potential positives.
I am not saying partnering with a large global corporate is easy, and I can’t speak for every company, but at Philips HealthWorks, we believe it is incumbent on the large corporates to change the way we operate, to be more open to sharing and willing to experiment, to “pay it forward” and fundamentally be a better partner to the innovators in our communities. Philips has been a pioneer in open innovation. We work in an industry where every successful innovator will make life better for all of us, and so at Philips HealthWorks, we decided to just ask innovators and founders directly, “How can we help?”
We are incredibly excited with the results to date, and we believe the relationships built through Philips HealthWorks will both empower founders with new knowledge for the business and provide a new positive experience on the value of partnering with Philips.