In health tech, you’d be hard pressed to find someone better positioned to advise entrepreneurs than Jeff Tangney. In 1999, he launched the now-public Epocrates , a maker of mobile health apps for doctors. And then in 2010, he founded the “LinkedIn for doctors,” formally known as Doximity.
With twelve years as a health tech entrepreneur under his belt, he’s been around the block, so to speak, when it comes to raising capital ($100 million in total), working with venture capitalists and building a company. This week during Morgenthaler Ventures’ DC to VC health tech startup showcase at the Health 2.0 conference in San Francisco, he spoke about his experience to a crowd of entrepreneurs, investors and health IT professionals.
Even though the complicated and regulation-heavy nature of the field has traditionally kept more investors and entrepreneurs out of health, he said, he’s starting to see that change.
More investors paying attention to health
Not only is the bloom coming off the rose a bit for consumer internet companies that produce a few hits but may not generate overall positive returns, he said, more investors are realizing that health is ripe for technological disruption. Public offerings from companies like Epocrates, Vocera and Athena Health give investors additional reasons to pay attention to health, he said.
He acknowledged that interest in health from traditionally consumer-focused investors tends to peak every five years or so, but said it still seems as though interest is higher than it’s ever been.
“Because it’s complicated, fewer people want to make the investment in really learning it, but if you do as an entrepreneur or investor, it’s a good place to be,” Tangney told me. “[In my experience], there are more investors than there has been, and more money, because people realize the delivery of health services is a big problem and needs better technology. Software may be eating the world, but it hasn’t even taken a nibble yet out of healthcare.”
In addition to sharing a broad view of health tech at the conference this week, he offered health tech entrepreneurs a few pointers. Different companies might find success with different approaches, but here are four tips to consider.
If you want money, ask for advice. If you want advice, ask for money.
As students at Stanford Business School, Tangney and his co-founders started Epocrates as a class project and benefited from the guidance of advisors. But when the project became a company, those advisors became investors.
Asking for advice, he said, lets people feel like they’re contributing in a meaningful way and doesn’t put their guard up. If they already feel personally invested, they might be more likely to contribute financially, too. But if what you want is real advice and not “soft pandering,” he said, ask for money, as it’s the best way to get real candor.
As you talk to investors, focus on the people, not the money.
When founders start fundraising, it might be easy to focus on the number, Tangney said, but you’re better off in the long run by focusing on the people. As people often say, taking money from investors is like entering into a marriage and, since you could be dealing with them for the better part of a decade, he said trusting and valuing their input is important.
Be aware that the market right now seems to favor monetization.
At Epocrates, Tangney and his co-founders focused on making money right off the bat, but realized that their network needed to reach a critical mass of doctors before they could really advertise against it. With Doximity, he said, he took that realization to heart and focused on building the network first. But, possibly in reaction to Facebook and the recognition that engagement doesn’t necessarily translate into dollars, he said, engagement metrics seem to count less for venture capitalists these days. While the right time to start monetizing varies on the kind of company, he said, the market is pushing for monetization more than it has before.
If you’re targeting doctors, focus on these three things.
Given the changing health landscape, he said, it’s a tough time to be a physician. There are more demands on their time and more technology thrown at them that doesn’t necessarily help doctors but executives in the C-suite. So, if you’re a startup focusing on doctors, Tangney said, offer them something that saves them time, makes them money and improves the quality of care (in that order).