The Los Altos Town Crier published an interview this week about two recent investments with my angel group HealthTech Capital:Local angel investors kick-start two health-tech firms By Elliott Burr
Los Altos Hills resident Anne DeGheest serves as managing director of HealthTech Capital, an angel-investor group based in town. Recently, the healthcare veteran's firm invested in two startups as part of a Series-A syndicated financing round. Following is a Q&A between the Town Crier and DeGheest.
Q: As the name suggests, your company invests in tech companies centered in the health-care industry. What are some telltale signs that a particular company is a good investment?
A: HealthTech Capital is a group of angel and venture investors investing in companies that will decrease health-care costs. We typically see two big categories: better productivity tools to improve the delivery of health care by existing providers (from hospital to home health) and new patient engagement solutions from the very sick to the healthy/fitness market.
Q: What convinced you and your colleagues to invest in PharmaSecure and Niveus Medical?
A: We were very impressed with what the entrepreneurs had accomplished with very little capital. They showed passion, commitment and an ability to deliver significant milestones with a small amount of angel capital. They have big ideas that can have significant impact to the health-care system. In both cases, we had mentored them heavily before we made the investment. PharmaSecure uses cellphone technology to combat the global problem of counterfeit drugs. Niveus Medical is developing a technology to preserve muscle strength during long hospital stays, especially time in the intensive-care unit, and could accelerate patient recovery, shorten hospital stays, and reduce both hospital and payer costs
Q: HealthTech Capital invested in these two companies alongside other venture-capital firms. Is there a growing trend toward syndication? What are the benefits/drawbacks from a venture capitalist's standpoint?
A: There is a growing trend for angels to organize themselves into specialized groups like HealthTech Capital to pool their expertise together and increase their investment leverage. In addition, these angel groups are cross syndicating with each across the country. It allows us to close a larger round of $2 million to $3 million and attract small venture firms to syndicate with us. There has now been a growing amount of deals with angel groups leading the round with an anchor term sheet and having smaller venture firms following these term sheets. It allows venture firms to diversify and deploy their seed capital into more deals knowing that these established and respected angel groups will be value added in identifying promising companies as well as mentoring them to the next level.
Q: What are some ways in which you mold the business strategy of a young health care/tech company?
A: As a business architect and mentor capitalist over the last 25 years with my personal company, MedStars, I have been working closely with health-care entrepreneurs in understanding the pain points of all the stakeholders involved, developing a value proposition for each one of them that creates a sense of urgency and building barriers of entry beyond traditional patents. In particular, I have been very successful at creating new large health-care markets by adapting other industries' business models and technologies to solve inefficient health-care workflows. HealthTech Capital is expanding on this approach by leveraging all our members' expertise in existing health-care delivery, FDA oversights, new upcoming technologies and sustainable consumer engagements approaches. We help them refine their business models by leveraging our members' expertise and networks to answer questions like: What are the pain points being solved? Who are the stakeholders? Why would they pay? How will we prove the value proposition? What are the regulatory/FDA oversights? Why is it unique? How can they defend against existing and future competitors? How will you scale up?
Q: Of which Halloween costume you've worn in the past are you most proud?
A: Being born in Belgium, I usually have a European flavor theme ... with a Belgian chocolate twist