Most of these caveats also apply to medical device companies. On the flip side, startup CEOs should be forewarned and forearmed to not make the same mistakes when pitching and/or structuring their companies. They are on to you…
Here are a few of my favorite caveats:
[from Luke Timmerman at Xconomy]
- Watch out for weak science or results that can’t be reproduced by third party researchers.
- The company story is too complicated and can’t be reduced to an elevator pitch.
- “There is no competition.”
- No plan to demonstrate outcomes or show clinical and financial benefits to the healthcare system.
- “Rent-a-luminaries” make up the Medical/Clinical/Scientific Advisory Boards.
[from David Sable, physician and venture capitalist]
- CEO is clueless around investors
- CEO is inflexible and won’t deviate from the rehearsed pitch
[from Christopher Henney, co-founder of Immunex, Icos, and Dendreon]
- Too many VCs on the board
- Family members in key management or board positions
I’m sure these three veterans have seen and/or interviewed dozens, if not hundreds of startup CEOs and their pitches.
Takeaways: Simple is best. Use a template to develop your pitch – they are easily found. Don’t deviate (at least not too much) from standard practices for startups in your industry segment and in your geographic area. It’s easier than ever to get a negative reputation. You may be able to get past one round with a sketchy pitch or objectionable governance. The stakes keep going up, however, and you risk everything by not being able to secure financing all the way to market launch. Do yourself and all of your stakeholders a huge favor and address the red flags before the investors see them.