On May 19th, Katherine O’Neill, seasoned angel investor and Executive Director of JumpStart New Jersey Angel Network, one of the state’s most prominent angel networks, moderated an informative panel on funding at the New Jersey Technology Council’s 6th Annual HealthTech Conference. O’Neill is a distinguished financial executive and investor who sits on the Board of the Angel Capital Association as a representative of angel investor groups across North America.
In the past several years, the Executive Director has spoken on numerous panels and judged at national business plan competitions such as Microsoft Bizspark and the Princeton University Jumpstart Innovation Forum. However, as the moderator of the funding panel at the NJTC HealthTech Conference, an event which seeks to educate healthcare providers, entrepreneurs and innovators about the steadfast technological transition in healthcare, O’Neill dropped a few significant pieces of wisdom for the funding hungry entrepreneurs to mull over.
What gets funding in the “early, early stage”
O’Neill’s Angel Network, JumpStart New Jersey, is a group which invests in early stage companies across the region; in fact, the Executive Director notes that JumpStart New Jersey is particularly interested in companies in the “early, early stage.” However, she drops a golden nugget of advice to entrepreneurs eager to get into the healthcare technology industry; most angel investor groups, even the “early, early stage” groups, are wary of investing in new drugs, for such investments are simply too capital intensive. Nevertheless, O’Neill reassures the aspiring healthcare technology entrepreneurs in attendance, “We do love devices for diagnostics,” stated O’Neill, “So those are a real focus for us [JumpStart New Jersey].”
Polishing your “shiny object”
The panel moderator delved into the topic of the “shiny object” and forewarns entrepreneurs that the glisten of a product is not enough to woo investors. Ultimately, investors are not concerned with the “ooh and ahh” of your product, rather, O’Neill insists, entrepreneurs seeking funding must explicitly state the value of their product. Will the product save time? Will it save lives? Will it reduce costs? Most importantly, what attributes of your product will bring a return on investment? The Executive Director then stressed the importance of informing investors of your company’s intentions; “You’ll identify where you’re going in your next steps,” O’Neill said, referring to the adept entrepreneur.
Entrepreneurial serendipity
The active angel and financial executive also assured entrepreneurs that there are fortunate instances of serendipity, for she has seen many young companies receive substantial funding through nothing more than inexplicable chance. “I know a company in Philadelphia that received $2 million,” began O’Neill in her real-life account of entrepreneurial serendipity, “And it came from a mailbox conversation with a neighbor!” A simple conversation with a neighbor connected the founder of a Philadelphia venture to an investor who had a family member suffering from the disease the company was developing a treatment for. This interaction of pure chance resulted in the company receiving a good sum of funding. Thus, entrepreneurs, in healthcare technology and any industry, must always network their product, for there may be serendipity just around the corner.
Family teams beware
O’Neill provided a valuable piece of advice for all family business teams: buy-sell agreements are must. “Smart founders will use buy-sell agreements,” stated the moderator, “Some individuals in funds will not invest in husband-wife teams or brother-brother, sister-sister teams unless there are buy-sell agreements.” Leading the panel, O’Neill extended this to insist that angels are cautious about investing in family business teams without buy-sell agreements, for they can never be completely aware of the family dynamic, which can tear apart businesses and ruin investments.
Speak to the right investor
The Executive Director also stressed the importance of entrepreneurs speaking to the right investors, a more prevalent error than one may expect. “If you’re in healthcare and you are talking to an investor who says to you ‘I don’t invest in healthcare,’ say thank you and do something else,” urged O’Neill, “I have seen too many people try to convert somebody because they have something wonderful in healthcare, but if you’re talking to the wrong person, it is a waste of your time and their time.”
Overall, JumpStart’s director offered a myriad of valuable advice for the entrepreneurs attending the NJTC HealthTech panel.
Of course, entrepreneurs seeking funding and taking their venture to the next step should visit JumpStart New Jersey’s website, but when doing so, remember the Director’s points and do your homework to make sure you learn the investor’s industry preferences when pitching.
