CEO Paul Grand interview with Device Talks: How Can Startups Move Forward During a Pandemic?
MedTech Innovator’s CEO Paul Grand did a podcast interview with Tom Salemi of Device Talks. Among other topics, they discussed how MedTech Innovator program is adapting to the times and creating new ways for startups to get in front of investors during the pandemic. He also explains how MedTech Innovator is working to keep startups connected to capital. Listen to the podcast using the player above or read the transcript below.
Tom Salemi:
Hey everyone, this is Tom Salemi. Welcome back to DeviceTalks Weekly, episode five. I am in my recording closet. Chris Newmarker is hanging out at a daycare center somewhere outside in a hidden location outside of Minneapolis.
Chris Newmarker:
That’s right.
Tom Salemi:
Have the inmates taken over the asylum yet, Chris?
Chris Newmarker:
We’re holding the line, Tom. We’re the line.
Tom Salemi:
Well, hang in there. Hang in there. We’ll get through this together, you and me. So, this week-
Chris Newmarker:
We’ll get through this.
Tom Salemi:
We will. We will. There’s light at the end of the tunnel. So, we’re here to talk about devices. Sorry folks. This week we’re actually looking at innovation because we’ve been focusing a lot on manufacturing and some of the here and now of medical devices, but I had two interesting conversations about where we’re headed for the future and where innovation is heading and where funding is heading. So, talked to an old friend of mine, Paul Grand, formerly of RCT Technologies, but now he’s in charge of the MedTech Innovator program, which is very impressive. I don’t know, have you caught any other presentations at meetings, Chris?
Chris Newmarker:
Oh, yes. They run all kinds of start up contests and we’ve written a lot about the different start-ups that have interacted with them. So yeah, Paul’s really active with a lot of start-ups and young companies in the space.
Tom Salemi:
So, we talked to him. He had a great perspective, not only on what entrepreneurs are doing to raise money, and he’ll give some advice at the end of our interview, but also he and I talked a bit about events and where those are headed. MedTech Innovator has been present at AdvaMed and some of the larger medtech meetings, but now they’re starting to run more. They, this week started a virtual meeting and did a virtual pitch contest there. So we talked about the value of that and where the opportunities to network might be headed going forward. So, Paul has an interesting take on that.
Tom Salemi:
And also I’m going to speak with a gentleman who is in Israel, and his name is Shai Policker, and he’s with MEDX Xcelerator, which is a medtech incubator. He’s actually optimistic about innovation and about funding. He says they’re still looking at deals. So hopefully it will also be an interesting and uplifting episode of DeviceTalks Weekly.
Tom Salemi:
First, let’s visit with Paul Grand. Paul and I knew each other back in the day when he was at VC. And as we’ll learn in this interview, Paul saw a gap that needed to be filled. So he has created this really, well, we’ll say innovative, innovative program called MedTech Innovator that is giving start-ups the boost they need to succeed. So let’s hear from Paul. Well, Paul Grand, welcome to the podcast.
Paul Grand:
Thank you very much, Tom. I’m very happy to be here.
Tom Salemi:
I’m trying to remember how long we’ve known each other. It’s been a very long time when you were investing on behalf of RCT. And now you’re the MedTech Innovator guru. So it’s been a good transition for you. I want to get a little more about your background and a very quick synopsis as to what MedTech Innovator is. It’s a really fascinating program and I’m not sure if all of our listeners are really up to date into what you’re trying to do with the MedTech Innovator program.
Paul Grand:
Sure. Thank you very much Tom. Yes, we have known each other for a while. It’s been quite some time, probably a decade or so, I have to imagine. And MedTech Innovator, as you mentioned, started as a program while I was a venture capitalist at RCT Ventures. Before that, I was an entrepreneur starting companies in tech, medtech and bio-pharma. So I’ve done quite a bit in terms of the start-up world. And I guess I would say from a general perspective, if you were to think about MedTech Innovator, it is an industry effort to find technologies that as an industry we believe can really make a difference in healthcare in terms of bending the cost curve, in improving outcomes for patients, in making a difference for giving people the ability to live longer, healthier lives. As an industry, we want to find those companies and make sure that when we find them, we give them the assistance needed so that their technologies reach the market, reach patients and offer the appropriate value so that those products actually can be purchased.
Paul Grand:
So it’s definitely an industry pipeline initiative, if you want to call it that, to make sure we’ve got a healthy pipeline of companies.
Tom Salemi:
Did you see some inefficiencies in the venture model that you created this to smooth out?
Paul Grand:
Well, what I saw was this big impact that had still been continuing as a result of the financial crisis and the subsequent exit of most brand name venture investors from the medtech space. And as a result, we had all these start-ups out there who were still innovating, but were no longer showing up at conferences. I remember talking to Casey McGlynn at Wilson Sonsini about that. He said, “You’re right. We’re not seeing these start-ups at the conferences anymore. What are we going to do about that?” And I said, “Well, we could do something like American Idol for medical technology. And we could put the start-ups on the main stage and in front of the audience.” And he said, “That sounds great, let’s do it.” So that was the first time we did MedTech Idol back in 2013. We then transitioned after that to be MedTech Innovator.
Paul Grand:
But it was really an opportunity to bring the start-ups together with the people that I thought needed to know about them and to be helping them. And what I’ve seen since then is a continued problem. So going back to what I observed in 2013 still remains today, which is that the people who were supporting and funding start-ups in medtech, and broader I would say in health tech, tend to not be people who have a lot of experience in bringing medical products to market. They might be family offices or angel investors or tech investors classically, but as I said, most of the sophisticated medtech investors left the early stage space a long time ago and they really haven’t come back.
Tom Salemi:
So how have you sought to remedy that? Talk us through quickly just what you’re doing with MedTech Innovator.
Paul Grand:
Yeah, so the microphone and talking on stage is really the smallest part I would say of what we do. It’s important, it’s a nice carrot, but it’s really the program we’ve put together, the accelerator that we run in partnership with 20 corporate partners, companies like Johnson and Johnson and Baxter and Olympus and so on, we have really a great group of corporate partners, as I said, who are very aligned with the outcomes for these products. We want to make sure these products are actually products that would fit very well into one of those organizations ultimately and be usable and not have to be ripped apart and rebuilt or redesigned or the economics rethought. We want to make sure these products can be deployed. And so we work together with those corporate partners to identify the needs that they have, and then go out and source companies that would fulfill those needs.
Paul Grand:
And then once we find those companies, we invite them to pitch at in-person events where they have an opportunity to get feedback from our partners, as well as from people like investors and providers and others who are stakeholders in the industry. It could be FDA, it could be others who are participating in that, and to give them that opportunity. And then from that, we advance companies to be part of our program, which is 50 companies in our main program, another 10 companies in a pediatric track that we do as part of a FDA funded pediatric consortium. Then we also have, in addition to our US program, we have an Asia Pacific focused program that does the same thing in the Asia Pacific region with 20 start-ups there. So, 80 start-ups a year are part of that program and they’re getting mentorship, they’re getting guidance, they’re getting access to the strategics, they’re getting the feedback they need, and in some cases, resources they need in terms of co-development or other assets to bring these products to market.
Tom Salemi:
How has the fundraising process changed post COVID-19? From your perspective, how are things shifting in the fundraising world?
Paul Grand:
Well, I think in the fundraising world, there’s always a little bit of a lag until people react and really adapt to the new environment, the new normal. I don’t think we’re at the new normal quite yet. So I think there’s been a scramble since the crisis I think became clear that it was a crisis. And so investors that we’ve spoken to have started looking inwardly at their portfolio and thinking about how they’re going to support those companies. And that support is sometimes in financial resources, sometimes that support is just really well needed guidance. So it’s not, the gut check, the gut reaction is always like, “Oh quick, cut your burn rate and do things so you can survive longer.” But sometimes that’s not the right thing to do.
Paul Grand:
And so, I think there’s a lot of thoughtful discussions going on from what I’ve heard with start-ups about whether to slow down, whether to accelerate. Obviously clinical studies are on hold for a lot of companies, not all of them. So they’re still happening in oncology, for example. Cancer patients are still going in for therapy and for supportive care, and so those clinical studies are continuing. And there are other people who are at home and who can’t do their studies anymore and who are thinking about how they’re going to raise capital. So it’s the extremes of people. And of course there’s a lot of start-ups who are pivoting and who are providing solutions specific to COVID and seeking support, whether it’s financial or co-development, to pivot their products or people who have products that were ready to go and maybe are already approved and deployed in some way, but are now aggressively deploying those for COVID.
Paul Grand:
So there’s major extremes, and I think just the COVID opportunity, if you want to call it that, is providing financial support for a lot of companies. We’re seeing organizations like BARDA, MedTech Innovator is an accelerator for BARDA. And for those of your listeners who don’t know BARDA, it’s an agency that has been preparing for a crisis like this since its inception. The whole idea of BARDA was to provide medical countermeasures for things like bio-terrorism and biohazards and pandemics. They’re very actively funding everything from vaccines and other treatments to technologies that can monitor patients, whether they’re in the acute setting or post-discharge or hopefully detect people getting sick before they even know they’re sick and other things.
Paul Grand:
So there’s a lot of great work going on there, but the things that we’re seeing on the funding side are some investors who are, as I said, inwardly looking at supporting their portfolio and putting other investments on pause. So, they’re not out there taking meetings, I mean, whether from home or otherwise. They’re not actively seeking new investments at all. There are other investors who have maybe recently raised a fund and have a lot of capital to deploy and who are still are very aggressively talking to entrepreneurs and taking meetings. And then there are people who are in between, who are looking at maybe having to rethink their portfolio allocations, where they were planning on holding off on maybe committing additional capital to their existing portfolio and were just going to focus on new investments, but now they’re reallocating their portfolio. So there’s a lot of that kind of thinking happening that’s going on.
Paul Grand:
I know people are taking virtual board meetings and I think there’s going to be maybe a long-term impact that I’m hoping is going to be very positive and that people who used to only want to regionally invest in companies where they could get to a board meeting with a drive may get used to virtual board meetings and be willing to go a little further. So, there’s a lot of opportunity.
Tom Salemi:
Well, speaking of virtual, you had a virtual event this week. We’re obviously seeing a lot of those in the industry. Do you see virtual events like this lasting beyond the COVID-19 crisis or is it more of a stop gap?
Paul Grand:
Well for most people, I think it’s a stop gap. A lot of the people who are doing virtual events really aren’t set up for that and would much prefer to do them in person. And I’d include us in that category. While we run a virtual accelerator, in our accelerator program, the entire thing is done virtually, our preference is to get together in person and to have a chance to really get to know the entrepreneurs and for our partners to get to know the entrepreneurs and others who are there, because a lot of this really does come down to do we want to work with these people? And it’s not just is it an important technology, but is this start-up going to be receptive to our feedback? We’re going to give them all this guidance and access and resource. Are they going to do anything with it or is it a waste of time?
Paul Grand:
And it’s kind of hard to do that over Zoom frankly. We’re adapting and we’re figuring out how to do it and it’s just requiring more diligence and more calls and more one-on-one time in addition to our initial pitch events. But I will say it’s more efficient to do that in person.
Tom Salemi:
Just final question, and I didn’t really prepare you for this one, but if someone is out there and they need to raise money, what kind advice would you give them? Is it best to wait until things warm up again and get back to some sort of normal or what would you advise them to do to reach out, I guess, and keep their idea moving forward?
Paul Grand:
Well, I definitely suggest they continue reaching out to investors. What’s very clear to me is that there are investors who are absolutely making investments right now. So you definitely want to be reaching out. We’re actually putting up a resource on MedTech Innovator’s website for people to give us their status in terms of fundraising rounds right now. So in addition to, we had over a thousand companies apply this year for MedTech Innovator, which is pretty amazing. That’s certainly a record for us. But in addition to those companies, we’re surveying those companies for their latest updates in terms of fundraising, and then we’re also asking others to let us know what their status is in terms of fundraising. So that’ll be on https://medtechInnovator.org. It’ll be a link right off the homepage shortly. And that, it’s basically a survey where they can tell us their current [fundraising] status.
Paul Grand:
So, we’re actually reaching out with updates. We’re taking a consolidation of that information and sending that to investors. We have hundreds of investors who we’re in contact with. So we’re just going to send them updates on who’s fundraising and what they’re seeking, and is there a lead investor identified and so on. So, I think you should actually be reaching out. You definitely have to be doing things like looking at PPP loans and other opportunities, but once you get your house in order remotely and you get your short term needs taken care of, then I think the fundraising has to continue.
Paul Grand:
And frankly, as you know, Tom, as I said before, most of these brand name investors have left the early stage space anyways. So, this kind of fragmented investor ecosystem isn’t changing as a result of COVID. Maybe some of the angels are reevaluating their own personal portfolios and maybe not writing $50,000 checks as quickly, but people who have capital still want to make investments and the short term crisis of COVID, and when I say short term, it could be three months or two years until we have vaccines and things in place, whatever that timeline is, that will pass. And the long-term needs that we all have in healthcare aren’t going away. And the need for supporting innovation is as important now and maybe even more important now than ever before. So entrepreneurs, keep reaching out, keep contacting investors. There’s a lot of people sitting at home who might take your cold emails, who formerly only would take an introduction email [i.e. warm intro]. So this is definitely a time to continue that outreach.
Tom Salemi:
That’s great advice. Paul, thank you for joining us on the podcast.
Paul Grand:
Thank you very much, Tom. It’s been a pleasure.
Tom Salemi:
Excellent. Well that wraps up our discussion on innovation. Before we close things out, Paul Grand and I did talk a bit about events. We obviously do events here, our DeviceTalks events are coming up and we’ll have some news on our June events very shortly and some exciting new programs that we’re rolling out to help the medtech world remain connected at this time when in person events are very, very challenging. So, stay tuned. We’ll probably have news on our next DeviceTalks Weekly podcast and let you know what we’re doing there. All right, well that’s a wrap. Chris Newmarker, where are you on social media? How can people find you?
Chris Newmarker:
Feel free to email me at CNewmarker, just like a new marker, @wtwhmedia.com or you can reach out to me on LinkedIn or at Twitter, @Newmarker. Happy to hear from people.
Tom Salemi:
And I can be reached on Twitter @MedTechTom. I’m on LinkedIn as my name and you can reach me at TSalemi@wtwhmedia.com. And that’s a wrap, folks. Thanks for tuning in. Please remember to subscribe to this, to share this with your friends on social media and tag Chris and I. We’d love to be part of that conversation and of course, tune in next week. We’ll another great episode of DeviceTalks Weekly available to you.
Chris Newmarker:
Yep. Always great to be here. Stay safe.
Chris Newmarker:
Awesome. I’ll find out what that giant crash upstairs was.
