MedTech startups and innovators, this one’s for you. What Avanos looks for in an investable young MedTech company.
With Shyam Parekh, Ph.D., Director, Strategy & Business Development, Avanos Medical. Inc..
Shyam Parekh’s role, as part of the Avanos’s corporate strategy group is to support the senior leaders in their strategic alliances and technology acquisitions needs.. In other words, this gentleman would play a leading role on the team evaluating the value and suitability of your MedTech innovation if you wanted to sell it, or your company, to Avanos.
Shyam describes his role as focused more on open innovation and pre-revenue opportunities. Here’s what Shyam told Write2Market VP of Healthcare Paul Snyder during a recent visit to Avanos’ Alpharetta, Ga., headquarters.
Has your perception of what makes a young medtech company ‘investable’ changed recently?
“Not significantly. The strength of your IP, the quality of your people, your credibility, and the presence of other reputable investors all increase investability in young companies. Now, in the early-stage exploratory work we do, human data is another significant advantage.
“A key question for us is whether a company has sufficiently considered available versus addressable versus currently served market. If a startup tells us, ‘It’s a billion dollars market opportunity,’ they can lose credibility fast. Credible investors will do their own diligence. Those financial data will never be, and do not need to be, anywhere near as precise as any claims. Any market potential numbers will be taken as guidance only. They need to be ‘directionally correct and precisely inaccurate.’
“Also, be prepared to validate your addressable market. This needs appropriate exposure to considerations a large strategic [MedTech company] has. When you say health economic impact is in the tens of billions of dollars for diabetics on injectable insulin regimens, that is not a questionable number. If your widget is automated and portable, then what’s the addressable market? Just as important, how large is the available market versus the market already being served?”
Where are your top areas of innovation interest?
“Pain management and nutrition delivery. We look at investment or acquisition opportunities two ways. Is it a procedural enhancement or is it outcomes improving? From a procedural standpoint, where can technology help with placement confirmation, short of direct visualization for nasal gastric tubes, for example?
“For outcomes improvements, how can devices reduce the number of days a patient stays on a ventilator? Then, once in the home care environment, how can medical technology reduce, or improve, underlying conditions or exacerbations that accompany COPD, chronic bronchitis or emphysema for example?”
How many investments might you make this year in young companies?
“We have publicly stated we are open to innovation acquisitions and are looking for disruptive solutions that are consistent with our value proposition in acute and chronic pain management and digestive health.”
What advice would you give a young company when preparing for an event like SEMDA?
“Keep your pitch crisp.
“Provide a high level of clarity on what are you doing and why is it better.
“Know your audience. Are you talking with true investors or am I talking with intermediaries? Are the people in the audience technology scouts or are they actually investors? In many cases, innovators will find themselves presenting to marketers, researchers or associates of a corporate innovation entity.
“Another question is, how are you changing my health economic equation? We look at that closely. If that isn’t the case and the story isn’t crisp, a pitch for investment in a young medtech company or startup does not score high.”
Does a device have to generate data to be investible?
“Data is becoming central to all, but if data doesn’t change outcomes or drive decisions, data for the sake of data has no bearing, particularly when looking at a quick procedural intervention.
“If you are leveraging diagnoses as evidence generation for reimbursement support, those data are valuable.”
The SEMDA 2019 Medtech Conference – where the Southeast Medtech Ecosystem Connects
The SEMDA 2019 Medtech Conference is April 8 – 10 in Alpharetta, Georgia. Register today to join hundreds of investors, entrepreneurs, researchers and representatives from large strategic companies like Avanos whose CEO, Joe Woody, will deliver the opening keynote on Tuesday, April 9 at 9:30 a.m.