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Double Whammy
3 takeaways from my conversation with entrepreneur and biomedical professor, Dr. John Criscione.
A new technology and a new indication is a double whammy. So for 10 years we were basically pursuing something that couldn't be done.
Today, I’m breaking down 3 takeaways from my discussion with Dr. John Criscione, Professor of Biomedical Engineering at Texas A&M University, Co-Founder and CTO of CorInnova, and expert climber.
Check out our full conversation + how to connect with Dr. Criscione here:
The Observer Express
Don’t have time to read the entire post right now? No worries, here are today’s 3 takeaways:
Medical Device Investments Cook for a Loooooong Time. Investors should plan to be in for the long haul, and be prepared to support subsequent funding rounds.
New Indication + New Technology = Expert Difficulty. There’s a huge difference in difficulty commercializing a new vs old technology and a new vs old indication.
Pediatric Devices are Really Hard Basically Impossible to Commercialize. The liabilities are enormous and the profits are low.
1. Medical Device Investments Cook for a Loooooong Time
Funding is so so so important for medical devices, and that funding must have expectations that align with reality - it’s not going to be a quick turnaround.
To get to market takes a lot of money. So every dollar you're receiving contributes to the gap in revenue. You're in the red for a very long time.
For medical devices, it's extremely challenging because your milestones are often “Raise more money.” So you hit a milestone right with manufacturing and you're still not on the market. So you need to raise money for a trial. Okay. Your next milestone is, this company can now be invested in for series A or series B or something.
And that's frustrating because the only way out is to get more investment. So you still can't exit. You still can't do any revenue generating activities until the clinical trial is done. So it's it makes the early money very important. You need people in for the long haul.
2. New Indication + New Technology = Really Hard
Buzzwords for medical device investors: “new device” and “new indication.” Here’s what those mean, according to Dr. Criscione.
A new indication:
The indication is how you use it. So how you use the devices for what patients to treat what diseases would be the indication.
With new indications, there's market risk because if some other device is selling in that indication, you're like, well, there's a market there, right? We know there's a market there because this device is selling. And for this indication. And they're not going out of business. So there's definitely a market there.
A new device is, well, pretty much exactly what it sounds like.
Here’s what each scenario means:
And then if you have a new device for an old indication, that's pretty good because you can steal market, right? You can say there's existing market. And with this new technology you may be able to steal some market share.
Now, if you have, an old device, you can think of a new indication. So you can take something you're already treating one disease with. And say, I want to expand the indication.
3. Pediatric Devices are Really Hard Basically Impossible to Commercialize
I hadn’t really thought about this before, but it makes sense. As a new father, I have a whole new appreciation for pediatric innovation. There’s no easy solution, but I’m grateful that organizations like the SWPDC and other pediatric consortiums are working on it.
The liabilities are enormous and the profits are low. Which is the complete opposite of what you want for a successful business.
You can't charge enough to cover the liabilities. There'd have to be a lot more sick kids. Then there'd be more potential to price the technology appropriately and make up on numbers, but right now the price… would be such that insurance companies wouldn't cover it and people couldn't pay out of pocket.
So, in a nutshell, it's it's a fortunate problem that there's not a lot of sick kids. Unfortunately, kids that are sick just don't have the devices that they need.
3 Lessons Learned
Mechanical keyboards are like typing on butter.⌨️I had no idea what I was missing out on. This week I upgraded to a mechanical keyboard and tested out several different options before landing on a winner. It’s like typing on butter. Here’s my new setup.
Communication hack: say the other person’s name.👂Over the last couple years I’ve listed to over 1,000 startup pitches. Listening to a fantastic one today from an experienced entrepreneur in the skincare space, and this observation hit me: “He keeps saying his conversation partner’s name.”This has 3 benefits: 1) Grabs listener’s attention. 2) Shows that the message is tailored. 3) Invites a response.I’ve noticed great communicators do this constantly.
“You can’t expect to be great every day, but you can show up every day.”⏳My wife gave this brilliant advice to a friend this week, and it’s stuck with me. Just. Keep. Showing. Up.
3 Interesting Links
Tune in next week for a breakdown of my conversation with a partner at a Washington D.C.-based VC that just closed a $60M fund IV.
Until then, thanks for reading - have a great week.
-Andrew
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About Me
I cultivate flourishing.
I'm also the CEO of PitchFact, where our mission is to cultivate flourishing specifically through efficient and collaborative early-stage diligence. I'm a proud husband, grateful father, and honest friend. My love languages include brisket, bourbon, and espresso.