Wednesday, May 25, 2016

How to Pitch an Investor through Email

Pitching investors in person and online is a skill one can learn.  Here are some key steps in reaching out to potential investors through email to pitch your deal. 

Choose investor prospects carefully – don’t spam an entire list but rather use lists to research and identify qualified candidates.

Indicate why you are reaching out to them—show why that person and company could be interested in your deal. This could be based on a past investment, a network connection, or a group affiliation.  A

Show your connection to the reader – finding a common connection will greatly improve your chance of a response so it’s worth looking for someone who can make an introduction.

Show the problem you solve, the solution you offer and the market you target—do this in one or two sentences and not one or two pages of text.

Show indications of traction—show 3 to 5 examples of traction such as leads generated, sales closed, number of clients in the program, etc.

Introduce yourself and show social proof – there’s a tendency to start the email with this information but showing your position in the community and credibility comes after you have established a relevance to the investor.

Close with a one sentence ask—make clear what you want next such as a conference call, a meeting, advice, etc.

Also remember these following points:

Write in a conversational but business-style tone

Keep it short and to the point and svoid extremely long blocks of text

Use numbers to make your pitch stronger as it shows specificity

Remember to attach the executive summary or pitch deck.

Best regards,
Hall T. 

Saturday, May 21, 2016

Healthcare Texas 2016 Conference Wrap Up

The HealthCare Texas 2016 annual technology and venture capital conference in Austin, Texas was a rousing success, bringing together 109 companies and 65 investors and holding 270 one-on-one capital matching meetings. The massive turnout from the health care and business community at the two-day conference sent a loud and clear message that Austin is quickly becoming a major force in the health and life sciences and venture capital landscapes.

The conference, which was held May 3 and 4 at Brazos Hall, a chic turn-of-the-century warehouse in downtown Austin, featured keynote speeches and panel discussions on a variety of cutting-edge health care topics and trends, including information technology, informatics, and value-based reform.

“The turnout for HealthCare Texas 2016 was outstanding,” said Matt Black, director of the Texas Growth Capital Forum. “The conference definitely furthered our goal of maintaining a lasting ecosystem of funding for technology growth companies here in Austin.”

“HealthCare Texas 2016 was proof positive of Austin’s standing as an emerging biotech and life sciences hub,” said Hall T. Martin, Founder/CEO of Texas Entrepreneur Networks. “As indicated by the hundreds of one-on-one meetings, the interest from entrepreneurs and investors in Austin’s health and technology spheres has been awe-inspiring.”

Austin Mayor Steve Adler clearly and succintly explained the appeal of the city to investors during the panel “Austin 2020” on Day 2 of the conference.

“I really do think that this a magical place,” Adler said of Austin. “We’re the fastest growing metropolitan area in the country and have been for the last five years.”

Adler said the fact that Austin creates more startups per capita than any city in the U.S. is driven by its “entrepreneurial, creative and innovative core.”

Austin’s life science cluster is currently at a launch pad, the mayor said.

“The infrastructure is here and growing,” he said. “This is a pivotal moment.”

Important partners, including the University of Texas and the city’s business community, have brought research dollars to the city.

This fall, UT’s Dell Medical School will open its doors to its first class.

“Austin is the place where ideas become real,” he said. “Launching the Dell Medical School provides an opportunity for us to meet the challenges of minimal capital, a trend of the future.”

Dr. Mark McClellan, former commissioner of the U.S. Food and Drug Administration, spoke to a packed audience during his keynote address on health policy that it’s critical companies’ business plans align with government policies.  

“Being aligned where policy is heading is important,” McClellan said. “There’s a lot of interest in getting better treatment to patients faster.”

McClellan, who was hired as a faculty member for the new Dell Medical School late last year, said health care companies need to be able to change quickly and adapt to government policies as needed.

“What you do matters as innovators,” he said. “But you’re dealing with very important consequences while dealing with very scarce resources.”

The Dell Medical School, which welcomes its first class of students in August, presented the conference.

Christopher W. Kersey, managing partner of Camden Partners, a prominent Baltimore-based venture capital firm, delivered a keynote on global health care.

“It’s fascinating what’s happening out there,” said Kersey, who also serves as chairman of the board of Johns Hopkins Medicine International. “I often say we’re in the third inning of an extra inning baseball game in terms of the extent to which health care technology can transform the continuum of care.”

Kersey said health care expenditures make up 15 percent of the GDP of the United States. Globally, it’s around 7 percent.

Many countries around the world have experienced double digit growth in private health care sectors, Kersey said, with Australia and India being notable examples of nations that have seen significant growth in recent years.

Kersey discussed three major trends in health care technology: cyber security, personalized medicine, and biopharmaceutical development.

Sunday, May 15, 2016

How Uber/Lyft's departure from Austin will impact your VC Fund Raise in Texas

For some, the recent defeat of Proposition 1 in Austin signaled Austin's shift away from the tech world in which venture capital is a critical component for starting and growing companies.  At TEN we recently ran our Healthcare Texas 2016 event in which we had over 100 companies from Texas (mostly Austin) pitch in one-on-one sessions with 60+ venture capitalists, private equity, and angel investors from across the country.

In the run-up to the event, I talked with many of our investors and heard a variety of viewpoints about Prop 1 and on how the fight between the City of Austin and the the Transportation Network Companies  (TNCs) was playing out.  Some investors viewed it as a proxy on Austin's position in the Tech world but most considered it a political fight over who is going to call the shots.  Many questioned Uber/Lyft's campaign strategy and tactics.  In the end that strategy backfired on Uber/Lyft and they lost the vote along with some credibility.

The common message I received from investors was this . . . as long as you have quality deals that meet our fund's criteria, we'll keep coming to Austin.  As one investor said, "the teams are great, the valuations are good, and we want more."

We ended up with over 240 one-on-one sessions throughout the two-day event.  We launched the Austin Healthcare Council initiative.  Uber and Lyft are no longer picking up rides within the city of Austin, but most expect they will be back. The VCs are asking, when is your next event?

Saturday, May 14, 2016

5 Characteristics of a Lead Investor

I often hear of entrepreneurs stuck in their fund raise efforts with several prospective investors but no one willing to be the first invest.  That's because the first investor could be the last investor in a deal and no one wants to be that investor. The lead investor breaks down that barrier by providing the initial capital and due diligence that paves the way for others to join the deal.

Here are some key characteristics of a lead investor:

--Provides a substantial sum of capital -- at least $100K.  The $25K check writer should not be leading the deal.

--Provides advice as he should have experience in the industry and know well the problem the company is solving.

--Is your leading advocate. By going first, he's putting his reputation on the line.  It's important to keep the lead informed as he's championing your deal -- more so than other investors.

--Brings a strong reputation that attracts others to your deal.

-- Performs the initial due diligence. Al investors should be performing their own due diligence but most will use the lead investors work as the basis for their decision.  This upfront work can easily reach 30 to 40 hours of work.  If the entrepreneur doesn't offer compensation it can be quite difficult to sign up an lead investor.

In finding a lead investor it helps to start with those who know your industry and market.  Those with a successful business track record are ideal candidates.  They say it takes 7 touches to close a sale.  So it takes 7 touches to close an investor.

Thursday, May 5, 2016

"VC Angels"--Angel Groups become the New Venture Capitalists

As crowdfunding becomes more prevalent some angel groups are repositioning themselves away from the crowdfunders as a new type of venture capitalist.  Those groups who have experienced investors and can tap the expertise in their group have the makings of a VC firm with a strong support base and an internal funding source.

These angel-based VCs are foregoing the usual application/screen/pitch/invest model used by current angel networks.  Instead, they spend their effort on searching for the best deals that fit the expertise of their group.  Most angel groups which still use the "Submit your application here" model don't see the best deals because those deals are being picked up long before they make it through the screening process.

The angel-based VC is typically led by 5 to 7 experienced investors who in most cases have a professional background in the finance world.  They leverage the resources of their angel group for expertise on managing the portfolio companies -- sitting on boards, monitoring progress, helping with sales, etc.

In the past venture capitalists passed on many deals because the VC firm had limited bandwidth to sit on boards and follow up with the portfolio.  "VC Angels" can have large networks of investors who contribute to the portfolio with their time in addition to their dollars.

A fund model would allow for sharing the results of all the deals rather than individual financings. Members of the group would be required to participate in screenings and follow up activities to continue vesting of their shares in the group fund. This model provides diversification to the members and ongoing contribution of support to the portfolio as well.

With the shift from a geographical focus to a vertical focus, angel groups could form in specific areas such as mobile apps, healthcare, fintech, cybersecurity or others.

Saturday, April 30, 2016

Better Care at a Lower Cost -- Interview with Mark McClellan

That’s been health policy expert Mark McClellan’s mantra for years. Finding ways to get payment and regulatory policies to support better care and a lower cost is what McClellan does.

“That’s very much part of the current expansion of efforts to move to payment models that are based more on results and value,” he says.

McClellan will discuss the transition toward value-based health care delivery in his keynote speech “The State of Health Policy” May 3 in Austin at HealthCare Texas 2016, an annual conference bringing together more than 300 leading innovators in healthcare information technology, life sciences, and therapeutics.

“A lot of these payment reforms are about giving health care providers more flexibility in doing what they think is working with their patients and is best for their patients’ outcomes, but at the same time, since resources aren’t unlimited, having more accountability for results,” McClellan says.

Last December, McClellan, who served as head of the U.S. Food and Drug Administration from 2002 to 2004, joined the faculty at Dell Medical School at The University of Texas at Austin to advance the school’s mission of redesigning health care around value.

McClellan says that while his primary basis with UT is its new health policy center, he’s working with Dell Medical School on an ongoing basis as they take steps to implement new health care trends and ideas into the curriculum.

“One advantage of being a new medical school is that you don’t have to do things the old fashioned way,” McClellan says. “The leadership of the medical school has undertaken a tremendous effort to ask fundamental questions like ‘What kind of education do physicians need to practice in a future medical system that is hopefully going to be much more about better care at a lower cost?’”

Dr. Clay Johnston, inaugural dean of the Dell Medical School, said McClellan’s work will support efforts to revolutionize the way people get healthy and stay healthy.

Mark has been a national leader in conceptualizing how to build a better health care system, and now he can really accelerate the pace in putting that system in place,” Dr. Clay Johnston said of McClellan after he was hired at UT.

Another one of McClellan’s objectives has been to help provide better information on the quality of care. McClellan says in recent years there has been much support for more transparency regarding prices and quality health care.

“I think there’s a lot promising work going on, including by some early stage companies, to help turn all of this health care data into information that’s really useful for patients and physicians and other health care providers that are guiding their decisions,” McClellan says.

McClellan notes that its very difficult to take raw information from claims data and convert it into a confident, accurate measure of the total cost of care that a patient faces.

“It’s not just a matter of what shows up on an insurance claim but things like: ‘Did a patient have a better functional outcome after surgery? What was the outcome of cancer treatment for a patient with an advanced cancer?’”

McClellan says the good news is we’re making progress.

“It’s an area where there’s been a lot of recent investment by health information companies providing patient-oriented and actionable analytic information on quality and cost of care,” he says. “I hope we continue to make further progress there.”

Sunday, April 24, 2016

Texas Biotech Landscape -- 2016

Biotechnology comprises a significant and growing part of the Texas economy as new innovative biotech companies sprout up in Austin and throughout the Lone Star State each year. Biotech is essentially technology grounded in biology that harnesses cellular and molecular processes in order to develop products aimed at improving human health. Biotech encompasses an array of breakthrough technologies, including those that combat diseases, increase crop yields, and develop cleaner energy sources.

Texas is home to one of the country’s leading biotech industries with more than 3,700 biotech manufacturing and research and development firms and more than 93,800 biotech-related jobs. (The average salary of these jobs is around $90,000). Dozens of global biotech companies, such as Novartis, Medtronic, and Abbott, have major operations in Texas. In 2012, Texas ranked No. 2 in the nation for the number of life scientists and physical scientists employed, with nearly 48,000, according to the National Science Foundation.

Austin, the state capital, is home to state-of-the-art research facilities and has one of the country’s most educated populations. Austin’s creative and entrepreneurial landscape is bolstered by the availability of funding, research collaboration, clinical trials, and highly-skilled workers.

This combination of factors begs the question: Could Austin become the next biotech hotspot?

This very question was posed in a recent article in STAT, an online health, medicine, and science publication.

The article points out that, within a 25-mile radius of downtown Austin, nearly 200 life science companies have sprung up, many of them startups that launched within the past few years.

The University of Texas at Austin currently brings in approximately $60 million in grants from the National Institutes of Health each year. This June, UT’s new Dell Medical School will welcome its first class of students. Dell Medical School promises to bring even more intellectual property and grant money to the region.

We seem to have all the right components in play,” Tom Kowalski, president and CEO of the Texas Healthcare and Bioscience Institute, told STAT, when asked if Austin could become the next major biotech hub. It all seems to be a wonderful harmonic convergence.”

Last year was a big one for the city’s biotech industry as Austin-based companies Mirna Therapeutics and XBiotech both went public with initial public offerings that raised $44 million and $76 million, respectively. Aeglea BioTherapeutics also filed for an IPO after receiving more than $80 million in private funding and grants in less than two years.

For biotech companies looking for a more affordable area than Silicon Valley, Austin makes a lot of economic sense. There’s no state income tax in Texas, and the state offers sales tax credits for some research and development expenses.

“Austins life science industry is reaching critical mass,” Asuragen, Inc. CEO Matt Winkler told the Austin Chamber of Commerce. “As an entrepreneur, I look forward to Austins future as a bioscience hub.”

Wednesday, April 20, 2016

Profile of Chris Kersey of Camden Partners

Ask a realtor what matters most in a property and you’ll hear “location, location, location.”

Ask Christopher W. Kersey, Managing Member of Camden Partners, what matters most in an investment strategy and you’ll hear “people, people, people.”

“Venture capital and private equity are very relationship-based businesses,” Kersey says. “Camden has raised many funds in the last 20 years, and we’re now backing folks whom we’ve backed before. We work with business builders with whom we have previous relationships, whether they’re the CEOs, the founders, co-investors or deal sourcers.”

Kersey says “serial relationships” are the key driver for what he does at Camden Partners, a Baltimore-based private equity firm providing capital to companies in health care, education, technology and business services.

“The best entrepreneurs and executives - the people who have been in this business for multiple cycles - know how they want to build their next operating company and they know which trends are important and I think we likewise have a good sense for how industries evolve over time,” Kersey says. “There’s some trend recognition and predictive skills needed in our investing industry, but much of the success is attributable to people.”

On May 3, Kersey will give a keynote speech on global health care and technology at HealthCare Texas Conference 2016, an annual innovation and growth capital conference in Austin that brings together the greatest minds in health care technology from across the U.S.

Kersey serves as the Chairman of the Board of Johns Hopkins Medicine International, the development branch of Johns Hopkins Medicine with hospital management and clinical education services in North America, South America, the Middle East, Europe and Asia.

“It’s a honor to be a part of the leading academic health care brand in the world,” Kersey says of the position, which he has held since July 2011. “We have a stellar team representing an amazing institution globally.”

A major focus of HealthCare Texas Conference 2016 will be on how health care is being transformed through information technology, big data, and value-based reform.

In Kersey’s view, the top two technological trends in health care today are point of care technologies that enable mobility and revenue cycle management companies that improve CFOs’ management of cash in terms of how providers and payers are paid and when they’re paid.

Kersey says the infusion of technology into how health care is delivered makes health care an exciting sector to invest in. And it’s only the beginning.

“When I talk about the future of health care, I frequently say that we’re in the second inning of an extra inning baseball game in terms of how technology can transform the delivery of health care.”

Camden Partners’s assets under management are approaching $1 billion.
“We anticipate gradually increasing our fund sizes with each subsequent fund,” Kersey says. “Serving as a steward of capital - our own capital and our investors' capital - is a real honor. I’m very proud of the current portfolio, but perhaps most importantly, my partners and I have the opportunity to work with some of the country’s best CEOs.”

Two of Camden’s most successful companies in the portfolio are Essence Group Holdings and PatientSafe Solutions. Essence is the leader in population health management, evidenced by a recent No. 1 KLAS ranking in population health services, and PatientSafe is a top mobile clinical communications company specializing in point-of-care medication management and barcode scanning. 

The success of Camden’s relationships with Essence and PatientSafe are “excellent examples of prior relationships with management team members,” Kersey says.

So what is it Camden looks for in a management team?

No. 1 is character and integrity. No. 2 is a proven track record of success with institutional capital.

“Backing previously successful CEOs is a big deal,” Kersey says. “Regarding our investment strategy, we also place a real premium on what we call technology-enabled service companies that possess hybrid business models that differentiate based on great customer service on the front end combined with proprietary technology on the back end that helps the business scale.  This is a very powerful front end-back end combination.”

Saturday, April 16, 2016

Texas Medical Device Landscape--2016

Each year medical devices continue play a vital role in people's lives. These products are revolutionizing medicine with groundbreaking advances in both the treatment and the detection of diseases.

A medical device is defined by the FDA as "an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including a component part, or accessory…intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease.”

The U.S. is the largest medical device market in the world with a market size of approximately $110 billion. In 2012, the U.S. market value represented around 38 percent of the global medical device market. There are nearly 7,000 medical device companies in the U.S., most of which are small and medium-sized enterprises (SMEs).  More than 80 percent of medical device companies have fewer than 50 employees. Medical device companies are mainly concentrated in regions known for other tech industries, such as microelectronics and biotechnology. 

Many of the biggest players in the medical device industry have corporate facilities in Texas. More than a dozen Fortune 1000 medical device companies have manufacturing or management operations in the Lone Star State, including Abbott Laboratories, Agilent Technologies, Baxter International, Becton Dickinson, GE, Johnson & Johnson, Medtronic, St. Jude Medical, Stryker, Zimmer, among others.

These companies have developed a large medical device workforce in the state. Over 740 firms employ more than 15,400 workers in this sector, making Texas one of the top states in the country for the number of medical device workers.

A wide variety of medical products are developed and manufactured in Texas, ranging from surgical sutures and bandages to medication delivery systems and molecular biology kits. While a broad spectrum of medical specializations are served by Texas device companies, the state has developed several unique clusters, including ophthalmology, orthopedics, cardiology, diagnostics, and wound care.

Venture capital has played a major role in the development of Texas’s medical device industry. Since 2005, the state’s Texas Emerging Technology Fund (TETF) has invested more than $88 million in medical device-related deals, and, from 2009 to 2014, venture capital firms invested more than $526.7 million in 82 Texas medical device deals.

Sunday, April 10, 2016

Texas's Life Science and Health Care Scene -- 2016

Research and development (R&D) is at the core of Texas’s biotechnology industry. In Texas, biomedical research, or research conducted to aid and support the development body of knowledge in the field of medicine, is bolstered in large part by the state’s vast network of public universities and medical institutions. These school and health-related facilities invest strongly in biomedical research and development. In 2013 alone, Texas universities spent nearly $3 billion on medical and life sciences research, which made up more than 65 percent of all higher education R&D expenditures in the state.

Public investment in biotech R&D is complemented by Texas’s significant concentration of private sector R&D activity. More than a thousand private R&D firms, employing nearly 20,000 workers, call Texas home. Many of the world’s largest private biotech R&D firms have operations in Texas, including PPD, Covance, Quintiles, and INC Research.

In addition to R&D centers, Texas has more than 1,600 medical and testing laboratories. These laboratories employ nearly 40,000. Major lab firms in the state include LabCorp’s Esoterix subsidiary, Spanish biological product firm Grifols, and Sonic Healthcare’s Clinical Pathology Laboratories subsidiary.

Over the past decade, the state’s Texas Emerging Technology Fund (TETF) has invested more than $142 million in some of the state’s major higher education institutes for biomedical research-related deals in areas ranging from genetic engineering to pharmaceutical manufacturing.

The Lone Star State is also among the leaders in cancer research. Major Texas institutions in cancer research include MD Anderson Cancer Center in Houston, Scott & White Cancer Institute in Temple, and Texas Oncology and Mary Crowley Cancer Research Centers in Dallas. Furthermore, the Cancer Prevention and Research Institute of Texas (CPRIT), a $3 billion initiative based in Austin, has played a major role in expanding Texas cancer research.