Building Your Regulatory Strategy for Commercialization

What should early-stage entrepreneurs and medtech companies consider with commercialization in relation to how regulatory strategy affects business roadmap, pitfalls companies fall into, and fundraising efforts?

In this episode of the Global Medical Device Podcast, Etienne Nichols talks to Duane Mancini, CEO and Managing Partner at Project Medtech. Duane has experience in go-to-market strategy, including regulatory and reimbursement, biocompatibility, pre-clinical efficacy testing, and clinical trial design and execution. He has developed a comprehensive understanding of what early-stage startups need to do to be successful.

With all of the complexities of running a medtech company and taking a product to the market, Duane has seen a huge variation in how startups develop strategies and milestones. In this episode, we discuss how early decisions impact other aspects in the future and how companies can create a blueprint to build and grow long-term.

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Some highlights of this episode include:

• Fundraising: Figure out who you want to raise capital from, what should be in your pitch deck, and what questions will investors ask about problems/solutions.

• When trying to raise money, startups need to know that there are three types of investors—good, neutral, and bad. Sometimes, bad investors are hard to spot.

• When considering acquiring a company, some of the top things strategics look at is how you capture more clients, build your team, incorporate a quality management system (QMS), and handle regulatory challenges.

• If you are selling products to a hospital system, you will need to check three things—physician/clinician (especially nurses) ownership, patient improvement, and economic benefit.

• Build, develop, and invest in your team by finding people who complement your weaknesses. Don’t be afraid to fractionalize. One of the most important thing you can do for your company is to find advisors, partners, and mentors with large professional networks.

• When people are raising money, unless you are raising from a high net worth individual or angel group, be strategic with who you want to raise money. Venture Capitalists have a responsibility to spend (invest) their money just like you have a responsibility to raise it.

• Clients need to understand that regulatory fits into their business, clinical, reimbursement, and commercialization strategies—all those things work together and overlap, so make sure to ask the right questions to the right expert.

Links:

Duane Mancini on LinkedIn

Project Medtech

Project Medtech Podcast

Etienne Nichols on LinkedIn

FDA - Overview of Device Regulation

FDA - 510(k) Clearances

FDA - Premarket Approval (PMA)

Build by Tony Fadell

GG Academy

MedTech Nation

Greenlight Guru

Memorable quotes from Duane Mancini:

“The #1 thing we try to tell all of our startups when they’re going out to raise money is there’s three types of investors. There’s good, neutral, and bad. You really want to avoid bad.”

“For those first few investors, you want to find a good investor. Someone who’s going to bring something else to the table. Fill a knowledge or network gap that you don’t have. Understand what your mission is for the company and how they are going to support it.”

“We talk to a lot of investors and a lot of entrepreneurs, and the one thing we’ve learned is that there is more than one way to raise money. However, there are patterns.”

 “Regulatory fits into your business strategy, fits into your clinical strategy, fits into your commercialization strategy—all those things work together and overlap.”

Transcript

Announcer: Welcome to the Global Medical Device Podcast, where today's brightest minds in the medical device industry go to get their most useful and actionable insider knowledge direct from some of the world's leading medical device experts and companies.

Etienne: Hey, everyone. This is Etienne, the host of the Global Medical Device Podcast. Today's episode is one for the early stage entrepreneur. We go into detail about what MedTech companies should be thinking about in relation to commercialization and how your regulatory strategy is going to affect the roadmap of your business. So it's a little more high level, but kind of in the planning stage. What kind of fundraising should you be doing? How should you be doing it? What are some of the pitfalls that companies fall into when it comes to building out that commercialization strategy? Today's guest is Duane Mancini or Mancini if you're in Italy. Duane is the CEO and managing partner of Project MedTech. Duane has experience in go- to- market strategy, including regulatory and reimbursement, biocompatibility, preclinical efficacy testing and clinical trial design and execution. So he has a lot of boots on the ground experience, but as a result of Duane's unique background, he's developed a comprehensive understanding of what early stage startups need to do in order to be successful. So with all the complexities of running a med tech company and taking a product to the market, Duane partners with those startups to develop strategies and milestones. He evaluates the early decisions and various aspects of the company, and he supports in creating the blueprint to build and grow those companies. As a chemist by trade, Duane enjoys the innovative science that goes into every company. He's proud to be a nerd of the med tech company, and that's just demonstrated by his hosting of the podcast called Project MedTech. So that is a podcast where you can go check out, where he and guests share stories, advice, pitfalls, trends and innovations in the med tech space. It's a lot of fun. I've appeared on his podcast and glad to have him on our podcast today. So love to hear what your thoughts are on the episode. If you have any feedback at all, please send it to podcast @ greenlight. guru. And now onto the show. Hey everyone, welcome back to the Global Medical Device Podcast. This is Etienne, the host of today's show. Good to be with you all today. With me is Duane Mancini. Am I pronouncing your last name right?

Duane Mancini: Yeah. That's it.

Etienne: It's amazing how many people I've been talking to recently that I don't even know their last name, but I feel like I know them really well. I don't know if you're that way.

Duane Mancini: Yeah. No, that's it. Like when we went to Italy, everyone said Mancini, which is how you'd pronounce it, but at this point we've been in America long enough, it's been Americanized.

Etienne: Well it's great to be with you again. I know we did a podcast a while back and that was fun. So I'm excited to do another one with you. Today's topic, we were kind of kicking the topic around before we hit record. Today, what I'd like to do is kind of dive into, if I'm talking to an early stage startup and what are the things they need to know about maybe raising capital and also the things that they need to be thinking about and playing for when it comes to commercialization?

Duane Mancini: Yes, thanks for having me again. This is a lot of fun. You've been on ours, John's been on ours. I've done an interview with John on this one, so this is exciting to continue to do it. So just as an asterisk here for a technical side, my partner, Rich Mazzola, is much more qualified to answer the real technical side of investing and how to prepare your company to take on investment. And that's a whole separate conversation. A lot of where I support our startup companies is figuring out the strategy behind who you want to raise from and what needs to be in that pitch deck and what they're going to ask you and those types of things. So the number one thing we try to tell all of our startups when they're going out to raise money is there's three types of investors. There's good, neutral and bad, and you really want to avoid bad. Neutral is okay, which for those first few investors, you want to find a good investor, someone who's going to bring something else to the table, fill a gap you don't have, understand what your mission is for the company and how they're going to support it. It's really easy to give examples of good investors and then there're neutral investors that," Hey, it's just money." They're probably going to be hands off. But bad investors are hard to spot sometimes. They might have some alterative motives. An example is do due diligence on the investor. Where are they at in the fund? If it's a venture capital fund, is this towards the end? Have they had any exits? Because what might happen is they're that last money in and the first offer that comes to buy your company, they might want to take because hey, they have to return money to their investors. The other thing is, do they have experience in your space? We've seen a lot of companies where they raise money from some investors who aren't maybe familiar with the fact that devices take time to get to market and ask for things that you just... We've had investors be like,"Oh, are you going to pay a dividend?" No, we're a seed stage company. And so I think those are just some ideas, but you got to be aware of good, neutral, bad money and the type of investor.

Etienne: That makes sense. Okay. So those investors, one of the things that I think about when we have these conversations is we could talk about investing in a broad sense, but what I'm curious about, what are the specifics when it comes to med tech, med tech investment, what are the unique aspects when it comes to being a med... And you kind of alluded to one, the length and the time to market, but what are some other things to be thinking about as I go through these conversations?

Duane Mancini: So I think that's one thing is a lot of the early stage investment dollars aren't for commercialization. If you're a tech company, let's say I'm writing a check to you, you're probably selling tomorrow. Once the product's done, you're on the market, you're selling. In this scenario, okay, well you got to get FDA clearance or approval or wherever regulatory body you're at and then you can start commercializing. And even then it's probably more of a test market and even those commercialization pathways can be long. If you're selling to a hospital, I don't know it's 12 months, 18 months on a good cycle. Some people get in fast, but it takes a long time to get a few customers. So I just think there's a lot of nuances in device where that length of time people probably just don't get. And also I think the number of companies that exit in device is really high. So that, how investors are getting their money back a lot of times is through an exit. So I think there's just some nuances there. And the length of time is the biggest one. So you hit a head on.

Etienne: I've heard different things from different people. I'm curious your perspective on this. When it comes to that exit, a lot of companies they may be thinking or even planning for that exit to occur, pre- commercialization sell to Medtronic or sell to whoever before we hit the market. But is that the case? Is it really more of no, you probably are going to get to market and that's likely when you'll be acquired? Have you seen any patterns emerging?

Duane Mancini: Yeah, I mean, well the data from Silicon Valley Bank, the last time I had seen an article, a PMA product actually exits sooner than a 510( k). I mean, you're a regulatory expert. I could be misspeaking, but it does make sense, in the fact that if you have a PMA product, there's probably not a lot like you on the market. You're probably getting into a new space. It's a crucial product. It's class three medical device. And so that exit, you can see Medtronics, the Johnson& Johnson's of the world, the other strategics are willing to kind of buy that because commercialization's probably not going to be overly difficult because you're not really competing against anything. And that's a broad stroke, broad generic stroke. But a 510( k), again, you're a me too product by definition. You can only be so much different and better. And so I think with the 510( k), those strategics want to see, hey, you can get on the market, you can capture some market share regionally or somewhere, and then hey, let's talk about maybe incorporating that into our portfolio and our sales team. And so I think that's why you see the length of 510( k) exit take a little bit longer than maybe a PMA. And again, assuming that's what the startup wants to get to. There're some startups who are like," Hey, I want this out as soon as I can because I want to move on to my next product." And others are like," Well I want to get the biggest bang for my buck." And in that scenario, there's different valuation points that increase a company's valuation or different milestones and regulatory approvals, one, but then commercialization and even at a regional level or on a pilot level, that gets you that next big one. So a lot of people are waiting to that one because it gets you a bigger valuation.

Etienne: And the question I'm about to ask is probably going to be dependent on every different company, different product, but something you said there was if a company, maybe they want to just get it out quickly so they can move on to the next product or maybe they want to get their biggest bang for their buck. And this is a general question, but when you have those conversations with those companies, what do you think is a more realistic and more advisable approach? Or is there any, I know it's probably not any one, but what are your thoughts?

Duane Mancini: You mean advisable approach in terms of how to get to that point?

Etienne: Yeah.

Duane Mancini: You know, you think the best advice we give is operate the company and that milestone as if you're going to have to go beyond that. Because if you're hoping for an exit, you'll do a few different things. One, it's like from a commercialization sense, you're always going to try to capture more customers. So I'm not so much concerned there. But the building of your team, your quality management system, your regulatory strategy, where you're going next, I mean those are all things that strategics to look at when they're acquiring a company. And I could tell you this is not just a plug for Greenlight, but quality system is a massive issue because they have to incorporate that quality system into theirs. And by then you're manufacturing and you're doing things. So if you've said," Hey, I'm just going to get to that pilot commercialization phase and I'm going to shoestring my quality system and kind of take some shortcuts here." You're going to get dinged there and that's going to lower your valuation. And then all of a sudden by that time you've raised money, you've got diluted, and now people are buying you out and you didn't do as well as you thought you were going to do now at this point. So I would say assume you have to go further.

Etienne: And that kind of speaks to the question we asked earlier, I suppose. The specific things that are related to medical device industry, time to market specific regulatory challenges or even aspects and components of your business that you need to have installed such as the quality management system. Great point. If we kind of shift gears and go back to some of the early things you were saying about the pitch decks and things that you recommend customers having in that more broad approach as their journey through or throughout, whether it's the fundraising, what are some of those things that you typically recommend your people?

Duane Mancini: Yeah, so we have our Project MedTech host another podcast series. We have Project MedTech, we have MedTech Money. Our MedTech Money series, Giovanni Lauricella hosts that. And we've done 78 episodes, I just edited the 79th today. And I'll tell you that we've talked to a lot of investors and a lot of entrepreneurs and the one thing we've learned is that there's more than one way to raise money. However, there are patterns. And doing this has enabled us to gather some of these patterns. And I can tell you that from an investor standpoint, the number one thing that they all pretty much agree on is they want to invest in a team and a problem, the product is third. And there might even be a little gap between those first two. So those first two are just so important. And so if you're building a pitch deck, you really want to hit on those two. And so you don't really lead with team generally. When you're pitching, they get that. But what we see in a lot of pitch decks is it's the introduction, they have a problem and then they're onto their solution. And we try to push them to, hey, expand the problem. Really make sure they're understanding why this is a really big problem from a patient's side, from a clinician side, from an economic side, you really want to pinpoint those. And just throwing those all up in one slide and talking about that for one minute might not be the best idea. So from a design perspective, that's not me, that's my other partner, Aaron. He's very good at these things and he's very good at storytelling. But from the content of what the investor wants to see, we really try to paint that holistic problem. And then you want to talk about your solution and that sort of thing. And then I would argue you want to show that you've given some regulatory thought and that you obviously have your budget of where you're spending your money and that sort of thing. But you want to spend some time talking about commercialization. And it doesn't have to be this in depth... Well, it depends when you're raising, I guess. If it's really early on like a seed round, it doesn't have to be this in depth plan of, hey, we're going to do W- 2s versus 1099s versus distributors. But it needs to be, if you're selling to a hospital, there's like three things you should probably check. It used to be you're going to have to have physician ownership to get through a hospital. Now it's more clinician, it could be a nurse, it could be a doctor. And actually the voices of nurses bringing technology through and saying," Hey, we need, this"-

Etienne: Really?

Duane Mancini: ...is much higher than before. And actually, so one of our advisors, Sean McKibben within Project MedTech, he supports some of our companies. He was a former executive at some of the hospitals within Ohio here, Mount Carmel and some of the regional UH ones, university hospitals. And he kind of shares the stat, 29% of nurses want to leave their job. And hospitals are aware of this. And there's obviously a big problem in retaining nurses. So like I said, in the past, you needed a physician to champion your product and take it through. Now clinician, it could be a nurse, nurse practitioner, PA, tech. Whoever it is, they have a bigger voice within that hospital system now. So you got to check that. You got to check patient, obviously. It has to be improving patient. And then there has to be some economical, you have to be able to sell to the revenue cycle, the CFO. You've got to be able to articulate that story. Now if you only check two out of three of those boxes, it's not the end of the world. If you check all three of those dynamite, that's excellent. But you just want to make sure that you've given it thought because the investors know how hard it is. And so you want to make sure you've given that some serious thought, some serious planning of how are you going to sell to these people? What's the value proposition in an early stage? And I think you start in those three areas, I'm sure there's more. But those are three that when we're looking at technology and talking to clients, we're really trying to figure that out.

Etienne: I want to go back to the team that you mentioned because you mentioned that first as if it's perhaps most important, because it really is the team that you're investing in. And so if we go upstream from the pitch tech really accentuating and pulling out their strengths, if we go upstream from that, obviously first you got to build the team. And maybe that's where we should start. If someone's listening who just has an idea, thinking about starting a business or is in the very early stages, him and his partner need to start building a few other people out. What should they be looking for? Is it that looks good on paper resume, the accomplishments, the accolades? What do they really look for?

Duane Mancini: Yeah, our advice, it's just our advice. It might not be right. I'm not saying it's-

Etienne: Well, you've done 79 episodes, congratulations, by the way. That's so cool.

Duane Mancini: Yeah. Well 79 on MedTech Money. We're 96 on Project MedTech.

Etienne: Yeah, absolutely.

Duane Mancini: Yeah. So I would say that you want to find people who are going to compliment you. And also when you're in the early stage of med tech, don't be afraid to fractionalize and don't be afraid to consider those people a part of your team. Investors know this, the team you need in a seed, an early stage startup is way different than who's going to make this commercially successful. And so it's okay to fractionalize, but you just want to find people who are going to compliment your weaknesses as maybe the leader of the company. And then I think the other major point when you're developing this team is find some people, some advisors, some partners who have big networks, The value of your network and the network people are going to bring in to you is so undervalued to some people. Other people get it right away. They're like," Hey, we understand the network, it's a big deal." And others are like," Ah, I'm not sure if we need it." It is a huge deal because I could tell you that for project Med Tech, we know what we know, we know what we don't know. And if we don't know it, we're the first ones to say," Hey, I don't think I can get that answer, but I bet I can find 10 people in my network who can get us an answer." So I think that is a big help for startups, especially these really early startups that are babies, that are so fragile. So that's how we, now that I'm a new dad, I guess for the last year and a half and watching my daughter grow up, I equate most startups to babies because they're just so fragile.

Etienne: No. Yeah, and it's funny, there's a lot of similarities there. I can see that. Because you do not want anyone to insult your baby. And no one wants their company insulted. We don't want that feedback necessarily, but sometimes we need it.

Duane Mancini: Oh yeah, my wife makes fun of me because I have just the worst analogies, at least she says. And one of the ones I used was some of these young startups, I talk about bad investors or bad partners or bad consultants, whatever it is, they're like if the uncle at the table has too much to drink at Thanksgiving and is like," Hey, can I hold your daughter?" You're like," No." It's a very similar thing. So I use that analogy a lot and she's like," Duane, that makes sense, but not really."

Etienne: It's close enough to me. Yeah, that makes sense.

Duane Mancini: Right. Right.

Etienne: Okay. So we got to the point where you've got your team, you've built out your pitch deck. The problem, do you have any suggestions or advice on how you really do flesh out that problem? Because you're right to your point, we tend to jump to solutions. So thoughts?

Duane Mancini: Yeah, Lance Black, episode four of our podcast, he was with Texas Medical Center Innovations at the time. He said something that, and I'm sure you get this from your podcast, you take little tidbits from every episode. And this is one that I've held on since episode four, which was be a historian of the problem. Don't just study the problem and understand the problem, but understand how the problem was tried to be solved before. And you can pull a lot of examples where things like that have actually come back. Maybe it wasn't ready for it in the eighties, but 40 years later, hey, it's a really good fit now. We find a way to make that, or the world just wasn't ready for that solution. So I think that's a big thing for us. And don't be afraid to go back and say," Well, why didn't it work this time? Could it work now?" There's a great example. Episode 40 of our podcast was Memic, which is a publicly traded company now, and they do hysterectomies, but they do vaginal hysterectomies with a robot. And in the hysterectomy world, vaginal hysterectomies kind of went to the wayside with minimally invasive surgeries. And now they took it, added a robotic feel and now it's coming back a little bit. And so when I brought up being historian to the problem, both of them were like, that's exactly what we did. And so I think that's probably what you want to do for your pitch deck, but also to just as general innovators as well.

Etienne: Wow. So I hear people talk about understanding the problem, but I don't know that it's quite pushed itself into my brain to the point where I would understand the problem as well as I understand my solution. And that really sounds like what you're saying. You have to understand as well, if not better than the product that you're using to fix it.

Duane Mancini: Yep, exactly. Yeah.

Etienne: So okay, now we've worked through this pitch deck. You know what, I'm going to ask a very trivial detail, I guess it seems like, but every pitch deck I've seen is different. Some have lots of information, some have lots of slides, and maybe it goes into the human psychology, how many slides and how much information?

Duane Mancini: Yeah, we've heard so much about this. Some investors are 20 slides, others are 10. And I'm not sure if they're answering it because we're asking the question and they don't actually care. I don't know. I'm also not a good person to ask for this because I just want the information. You can just give me a paper and that's what I would like to read. However, I'm almost 100% certain right now if Aaron was listening in, he'd be like Wing in his chair trying to jump in here. So I think it's a lot on story, the pitch decks that we've helped support. We try to reduce how much word words are on there. We'd rather have someone tell the story. So yeah, I guess that's probably different for different purposes. If you're just sending it and hoping that they open it and read it, then that's maybe different than if you're actually getting a chance to present.

Etienne: Yeah, yeah. I was listening to something by Tony Fadell, he was, Steve Jobs' right hand man. He wrote a book, Build: An Orthodox Guide to Making Things worth making. And I thought that was interesting. One point he said, similar to what you said, and that was that," Really you want to be able to tell that story, but it's not really about telling the story, it's about knowing the story before you even build the product." So you build a product to that story. But anyway, that's a different story, but it was a unique take on that. Anyway, so let's go to a different part of the process. So you had mentioned there are certain things you're going to have to understand with commercialization. What are those aspects that you need to understand early on?

Duane Mancini: Yeah, like I said, for the hospital, it's unique. Those three things I had mentioned before are really important. And then I also think it's a basic strategy of how are you going to sell this and what makes sense? Are you going to bring on an internal person, a W2 and try to go that route? Are you going to use a 1099 model where you're using some sales agents in different areas? Are you going to go with a distributor model? And I think understanding those and the positives and negatives of those are really important. And not one way is right and not one way is wrong. It depends on the situation. And just as a side note, when I host podcasts, if I can get a person to say, it depends, I asked a really good question because I'm trying to get their thought process. So I just said it's depends, so good question. Something that a lot of people say," Oh, I'm just going to use a distributor." And I'll just use this as an example. Or maybe," Hey, I'm going to license this to one of the strategics." Okay, that's fine. And obviously those distributors, strategics, they have inroads already at all these places and that is a huge benefit. The negative is if they're asking for exclusivity, like you are 100% reliant on their sales force to sell that product. And you're 100% reliant on the fact that if you are selling for one of the strategics or at a distributor, you're a salesperson. So you get commission and you want to make money. And so if your new product is being integrated and it's not an easy sell for them, or the economics of it doesn't make sense, that means your product's sitting on the shelf. And if you have an exclusivity deal, it might be on the shelf for one, two, three years and that's it. You're not getting any more investment, you're not getting extra money from investors if you're like," Yeah, I have an exclusivity deal with this strategic."" Oh, what are your sales like?" And they're dismal, you're not getting more money. So I think, again, there's a lot of positives there, but hey, just be aware of the pitfalls. It's the same thing with 1099s. 1099s, the positive is it's probably commission only. You don't owe benefits. Again, already in the hospitals or wherever they're selling, but they don't work for you. They are probably carrying other things in their bags, so their focus isn't just on yours. So there're positives and negatives there. W- 2s positive is that's all they're doing. They're working for you. They're going to sell just for you. Negative is you owe them a pretty hefty salary generally, you probably owe them benefits. They're probably taking equity if they're the first commercial person. So there's a lot you're giving up for that. And again, none of these ones are right. It's just there're different models. You need to be aware of these models. So you should probably give that a little thought as well and be able to articulate what your plan is and why you chose the plan to investors. I mean, you could pivot no doubt down the road. It's just, you've got to be aware of it.

Etienne: Yeah. Okay. That makes sense. And I've heard one thing that tactics fail, principles last. And so I'm always curious, when I talk to somebody who talks with lots of companies, is there any thread of advice that you consistently find yourself giving to them at different points in the game? And I'll let you think if you-

Duane Mancini: Yeah, that's a great question. When people are raising money, the one we always give is, unless you're raising from a high net worth individual or you're raising from an angel group, but if you're raising from a fund like a VC or anything like that, we see a lot of people are just like," Hey, we just got to put a bunch of shots on goal." And that is the name of the game to a certain extent. However, be a little more strategic with who you want to raise money from. And also don't forget that they have to spend their money. They are raising money just like you, so you don't need to put them on a pedestal. They have to put their capital to use as well. And so just people get desperate. I understand those are situations like that, but if you can afford to be strategic, just be strategic in who you want to raise money from, you don't just need to go throwing darts all over the place. That's one of the pieces we generally give to those. The other thing I think is we spend a lot of time trying to help clients understand that regulatory fits into your business strategy, fits into your clinical strategy, fits into your commercialization strategy. All those things work together and overlap. You're going to have experts in each individual category, but having an understanding of how, hey, maybe a regulatory consultant, you're asking them the wrong questions. Maybe you're saying," Hey, I need to know the easiest pathway to market." Well, that's what they're going to give you. Does that line up with your commercialization strategy, with your reimbursement strategy, with your clinical strategy? It might not. And so I think making sure that you're not diving too individual into these different pillars and thinking about them at the base, the structure or the foundation is really important. So we try to do a lot of that too. I think those are two big ones. The third one in commercialization I think is just like, it's the valley of death. And we always liken it to that. You might know, I don't know how many 510(k)s are cleared by the FDA every year.

Etienne: I don't have a hard number on me right now, but yeah, it's-

Duane Mancini: A lot, right?

Etienne: ...it's a lot.

Duane Mancini: Do you had a ballpark?

Etienne: I have a slide on this somewhere, but I'm blanking right now. But it's a lot. Yeah.

Duane Mancini: Regardless, let's say it's 100, 90 of those companies fail. And that's that commercialization side. And so I think what we always say is commercialization is the value of death. And other people use this phrase, I'm sure I took it from someone, if you're going to run a marathon, you don't get to the start line and go," Okay, I guess I'll start preparing for this." You prepare for it way in advance. And so I think that's the biggest thing with commercialization is it's so far off generally, and there's so many things you have to do to get there, but you have to continuously prepare for it so that when you get to the point, you're ready to run that race and kind of get through that.

Etienne: Yeah. Okay. I started to just kind of Google that to see, but I didn't get to it quick enough. But I'll get that number. I may just put that in the show notes. I think that'd be an interesting number to have out there. One other thing that I've thought about, and we've actually talked about this on the podcast previously, well, not necessarily you and I, but a lot of people who are fundraising, or at least when I talk to people early in the game, they may not want to give up equity. They want to hold onto as much as possible for as long as possible, which I guess that would be ideal. But at some point you got to give it up. Do you run across that with people who don't really want to give up equity? And how do you talk people through that?

Duane Mancini: Yeah, we have both. Both scenarios. People who are very liberal with their equity and others who are very conservative. I will say, again, I don't know what's right, what's wrong. I will just say that your equity is worth nothing unless you exit. There's the classic argument of do you want 100% of a company that is worth 10 bucks or do you want 10% of a company that's worth 100 million? I mean, most people are going to choose the second. And so again, that's a gross exaggeration. But I would say my philosophy is I want the best team around me from the very beginning. I mean, it's how we structured Project MedTech, right? I mean, I have two founding partners who have an equal seat at the table. And that's because that's by design, right? I know my weaknesses. And they fill those gaps. And I think anyone who thinks that they're the best at all of this, it's a little egomaniac. And I don't know, I mean, that's just my opinion, is that-

Etienne: No, that's a good point. So I want to ask you something about that, because oftentimes when I've heard that conversation play out, they talk about the economic side typically, and of course that's just one aspect of almost like a diamond facet. There's so many different ways to look into it. One of the others, you kind of hit on it, and one of the arguments, I hear people saying," Well, I don't want to give up equity because I want to do it this way because I think this is the best way." But you kind of debunked that a little bit when you said," Well, I want the best people around me." So if you don't give up some of that equity, you may not have the best people, you may not even have the best way forward.

Duane Mancini: Yeah, 100%. I mean, I think that if you talk to some solo entrepreneurs, I'm sure it's worked out very well for them. There's definitely those stories out there, but I think some of them that you would talk to would say,"Ah, boy, I wish I did it with someone." So I think it's a little bit of philosophy, but my thing is just there's no way I know everything and I'm the best at everything. And so I need really, really smart people around me. And generally speaking, that's going to come at a price, and it's probably equity. And so yeah, I sit in that camp, but I know others who sit in the camp of like, I'm going to retain 80% and then 70 and then 60, and that's great. But yeah, it's just not my philosophy.

Etienne: So while we're on team, we already talked a little bit about the champion, and you blew my mind a little bit when you talked about the nursing side of things and it makes a lot of sense when you talk about how many nurses want to quit their jobs. So that was really interesting to me. So the reason I want to go back to it though, is I think I can imagine how to go about finding some of these other team members, provided you have a network of some kind. And of course you mentioned you want to unearth those people who have the greatest network so you're building network upon network. But maybe that's not the same case with the champion, or is it? How do you go about, or how have successful companies gone about finding those champions?

Duane Mancini: Yeah, that's probably a pretty difficult question. There's a lot of key opinion leaders out there. Those kind of conferences that are about the disease you are trying to treat are a great place to start and kind of get your name out there as well. One of the other advisors at Project MedTech, Tim Blair, he gives a lot of really good advice in this space in terms of no where those people publish in your space, read those magazines, try to be around them as much as possible, and they'll see your product and own it and champion it and that kind of thing. So maybe it's not too hard, actually. You just got to be around it. And generally speaking, those people are pretty eager to get involved in that kind of stuff. It's a low commitment. So I think that that's probably not too difficult, I guess

Etienne: Maybe just broadening your horizon to think, not so much focused on the physician anymore, and just more broader clinician, that's where-

Duane Mancini: Oh, yeah, for sure. For sure. Yeah, I think so. I mean, there's probably still some hospital systems that require some type of physician ownership. But again, I think what we're seeing is that the nurses, the nurse practitioners, the PAs, the others, they have seats at that table now. They're on that value analysis committee. They're bringing technology to the value analysis committee within hospitals.

Etienne: Yeah. I'm curious, can you talk a little bit more about the value analysis committee or how you get involved in that group?

Duane Mancini: Yeah. Yeah. That is made up of physicians, the leadership of a hospital, the financial group of the hospital. So there's a lot that goes into there, but that's what you need to get into to get into a hospital. And even if you get past, so they have to say," Okay, hey, we're going to do a trial with your product." Okay, great, you're in the door. The trial went good, now you got to go back to value analysis committee and they got to go thumbs up. And then a lot of people think, once you're through there, okay, well then you got to go to purchasing and that could be a train wreck as well, another three to four months. So there's a big process to get in there. Value analysis committee is that first door, I guess, if you will. I'm sure there're more doors, but that's the first big milestone to get through. And then I'd also say that hospitals are big. They are pretty bureaucratic, generally. Things don't happen quickly. And so the value analysis committee might meet once every month or every other month or every quarter. So if you miss that, there's more time to that timeframe. And in startups, timing is everything and so is time to sell. So yeah, there's a lot there. That's probably a whole nother episode.

Etienne: And I can certainly see there's always companies that are just a few steps ahead of you, and those entrepreneurs have the same... they want to reach back and help, typically. If you're not competing directly, of course, they want to help you out. So those would be the people to also get in touch with.

Duane Mancini: Oh yeah.

Etienne: For back networking.

Duane Mancini: Yeah, networking, raising money, selling, forming a team, contract, manufacturing. Those are the best people to get some advice from on that. And also, I think the other big thing is to ask them how they built their team. And a lot of startups really fractionalize pre- seed, seed, series A, like I said, because it's just easier. You have your core team, your co- founder, yourself, maybe an engineer, developer, whatever you might have, you have that core team, but then most of the other people on your team are fractional and they're going to go away as you grow. And then you'll start bringing on more full- time people. I think a big mistakes some people make is they go out and hire this full team thinking everyone needs to be full time. Well that's going to be a quick burn. And also it might not be the best talent that you can get.

Etienne: Yeah, that makes sense. The last thing I might ask about would be, as you're going through that funding, as you're thinking through all those things, we talked about the team, the solution, the product, I want to think about the product a little bit, because obviously that is, that's pretty important. At what point do you start going out looking for that funding? And maybe it's an it depends answer here, just by default. But are there any more recommended stages or how far along you are when you start going to do those things?

Duane Mancini: Yeah, it's probably a little outside of my wheelhouse and one of my partners, Aaron's. So I don't want to answer too much there, just because I'm not 100% sure. But we see a lot of people out there raising money who aren't even at a... They might be at an MVP or something like that, even sometimes before that to get to that point. And so I think depending on who you raise from that stage matters a lot. You're not going to go to a VC with a back of the napkin idea, most likely. You might go to an angel investor, you might go to a family office or something like that. So I think that probably, where you're at in that development process and iteration, it's definitely not design freeze. But yeah.

Etienne: That's really valuable information, even just what you said about the team and the problem. I want to just keep highlighting that because the solution itself, third place I would not have... That interesting.

Duane Mancini: Yeah. Yeah. I think, and most of the investors would say, because I've pushed back on the same thing, and they'll all say," Look, there's a lot of really good solutions, just not good fits." And so I think that's the real play here. They, more than one, I don't get it, I don't know if investors are big horse racers or whatever, but a lot of them have used a B horse with an A jockey. And then I had one other person flip it around and say," I'll take an A jockey, and then I want bet on the course and then the horse." And I was like," Oh yeah, now they're"... So like, yeah right. And I just sit there and I'm like, I mean, I'm not a horse racer, but I understand.

Etienne: I got to get to the track.

Duane Mancini: Yeah, right.

Etienne: Oh, wow.

Duane Mancini: Right. Oh, God.

Etienne: That's interesting. Okay, well, I think we covered a lot of ground. Any last piece of advice or how people can find you to learn more about you, your podcast and so forth?

Duane Mancini: Yeah, yeah. So projectmedtech. com is fantastic. A fantastic way to see what we're doing. Not fantastic to do. Fantastic way to see what we're doing. We have both podcasts on there. We have virtual events, we have our in- person events on there. Anything else we're doing. Most of us are in Cleveland, Ohio, so we have some local events that we do, but we are geographically agnostic. We support companies globally. So we have all those free resources that people can take advantage of. There's also paid events you can go to and that kind of thing, but there's a lot of free information there. And then we also have our consulting group where we focus on pre- seed, seed, series A stage companies. We provide fractional CFO services, COO services. We help with corporate strategy. We help with fundraising strategy. We help with milestone development. And so we kind of really service as a more hands on executive consultant for some of these companies. But there, and then LinkedIn, we're extremely active. Project MedTech. And then also my personal page, Duane Mancini, we share a lot of... Again, there's a lot of free information and then there's also our consulting company. They're both separate, but LinkedIn and our website.

Etienne: And I'm looking forward to being at your startup symposium next week. Now, I'm sure that'll be over by the time this episode releases June, what was it 14th and 15th, right?

Duane Mancini: Yeah.

Etienne: But yeah, I'm looking forward to that.

Duane Mancini: And our next one, I'm assuming this will be out before October, is at Texas Medical Center in Houston, Texas. It'll be October 6th and 7th. And I would also just plug too, for startup companies, investors, service providers, this is not an expensive event when you compare it to maybe some of the others in the industry. So if you're looking to come to Houston or in Houston, sign up.

Etienne: Awesome. Well thank you, Duane. Look forward to seeing you next week. And yeah, I think that's great. For those of you listening, thank you for listening. You've been listened to the Global Medical Device Podcast, and we will see you next time.

About the Global Medical Device Podcast:

The Global Medical Device Podcast powered by Greenlight Guru is where today's brightest minds in the medical device industry go to get their most useful and actionable insider knowledge, direct from some of the world's leading medical device experts and companies.

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