Physician entrepreneurs come in many assorted flavors, like technopreneurs, social entrepreneurs, intrapreneurs and consultant/freelancer/service providers. Another role they play in the medical innovation supply chain is as a physician investor. Like any other investor, they use different platforms to achieve their financial goals, using mutual fund portfolios, investing as an angel, or participating in angel networks or investment syndicates.
A more recent trend is doctors becoming investment bankers or venture capital general or limited partners, consultants and advisors.
Many biomedical and clinical startups target health professionals for early seed stage investment. However, the doctor funded startup comes with some baggage and risks beyond the unusual ones.
If you are considering raising money from doctors, dentists, nurses, pharmacists or other health professionals, here are some tips:
- As an outsider (non-MD or medical professional degree holder) , it is difficult sometimes to be a trusted member of the inner sanctum, particularly when others think you are only there to get their money. Relationships take time to develop, time you might not have as your burn rate meter is running out. Be strategic and honest but focus on the few investors who show a genuine interest. Even better, develop the networks beforehand so you have some comfort level when it’s time to make the ask.
- Find a reputable navigator, mentor, connector, or maven to introduce you those who might have an interest in your idea based on previous investment history or record of accomplishment
- Do your homework on national angel networks that specialize in biomedical clinical or digital health investments and are composed of members in the health professions. Some specialize in creating investor networks that include just doctors investing in ideas from other doctors. Check www.angelcapitalassociation.org or www.gust.com or www.ii4change.com (Tell them SoPE (The Society of Physician Entrepreneurs) sent you)
- Some doctors are angels, investment bankers or work with private equity firms or advise family offices, so expand your universe of sources as part of your research. Secondary sources might include wealth managers or others in the financial services industry.
- Join and participate in interdisciplinary, eclectic regional innovation ecosystems where you are more likely to meet and interact with investor physicians.
- Go where the money is. Many physician investors like to stay off the radar. Some, on the other hand, make their investment propensities more public. You might find more success in vacation, or second home communities or social events supported by high-net-worth individuals
- Attend hospital or community resource fundraisers to show your support and find a seat next to your new investor. Consider college alumni events as another way to link. Get more involved in voluntary activities.
- Find companies like yours that were able to raise money in early seed rounds from doctors. Contact the CEO and pick their brains for tips on technique and ways to access their network.
- Be sure your investment pitch is ready for prime time since you will only have one chance to make a first impression. Here are the biggest reasons why it might not be. You never know when and where you might meet your next investor, doctor or not.
- Be sure you understand the issues around raising private money and the impact of recent equity-crowdfunding regulations. Talk to your legal and accounting advisors and plan.
Many people think that doctors are willing and eager to give you their money because 1) they have a firm understanding of the clinical challenge you are trying to solve or the opportunity you are trying to pursue, 2) they are savvy investors or 3) they have networks and connections and can help spread the word and create buzz around your idea. Think again. While I vigorously disagree with the conventional wisdom that “doctors are lousy business people”, in most cases they are like every other investor who is looking for the quickest return on investment with commensurate risk. Connecting and building a trusted relationship is the first step. Success or failure sits on that foundation.
