There’s something about the word ‘routine’ in the medical profession that’s soothing. A ‘routine operation’ instantly settles any nerves. However, for the healthcare sector, there’s been nothing routine about the past 18 months.
From the outset of the pandemic, the industry rose to the challenge and returned to its innovative and pioneering roots, re-embracing the cutting-edge foundations that companies are built on.
As such, certain areas of healthcare boomed, including diagnostics, antimicrobials and healthcare access firms. Inevitably, where the industry goes next is a source of extreme debate – and excitement.
As an investor, future-gazing is part of the job. Given the level of change we’ve witnessed over the past year and half, you’d think there would be few people willing to gamble on a prediction and put their money where their mouth is. And while all bets may be off in a global pandemic, some sub-sectors will come crashing forward out of necessity.
The healthcare industry has proven that it has a level of adaptability and fortitude, and the pandemic has lowered the barriers to entry for start-ups and young businesses, who tend to pioneer change and lead the trends worth following.
One of the main winners from those lowered barriers are businesses operating in diagnostics – they’re now at the front line of a revolution in how we access healthcare.
Unsurprisingly, access to healthcare has previously sat well in the domain of bricks and mortar. The process of diagnosis and consulting with a patient is something that was broadly viewed pre-pandemic as an in-person-only activity. And that’s completely understandable. There’s a unique level of trust required, and it’s usually only found face-to-face.
We have since learned, however, that this doesn’t have to be the case. Lockdown restrictions effectively opened the floodgates for remote diagnostics and consultation, as patients could only check-in with their doctors or consultants via Zoom, Google or Teams. With this enforced, it’s generated a trust around digital check-ups and diagnoses that’s led to increased adoption.
While this may seem quite a simple evolution, it paves the way for some significant developments that will change the future of healthcare. An obvious one is that GPs and consultants will be able to see more patients, helping to reduce backlogs and treat patients sooner. Those with chronic or long-term conditions should no longer need to make the regular journeys to the hospital or surgery. And it’s easier to tailor check-ups and treatments for patients as appointments are given more time.
Over time, the benefits of this will accrue to the point where healthcare itself transitions from being focused on prevention rather than treatment. This shift puts doctors on the front foot and will in turn save countless lives. For example, spotting the signs of strokes or heart attack earlier will not only save lives, but it will also reduce the burden on the health service as treatment can be extensive.
The magnitude of the shift witnessed during the pandemic cannot be underestimated. However, capitalising on this shift is easier said than done. The early-stage businesses that represent the green shoots of growth for the industry still need nurturing, with expertise, personal support and some old-fashioned TLC.
Best foot forward
So where does venture capital support fit into all this? Well, it’s on us to support the founders of early-stage businesses as they bring their products or services to market, which ultimately help make these shifts in healthcare a reality. The disparity between the small and the large in science is well-known and the larger the gap gets, the harder it becomes for smaller companies to access the funding and resources needed to grow.
For founders of early-stage businesses reading this now, they’ll know that attracting investment and support is key, but tough. And they’ll also see that slightly larger businesses, who’ve spent a few years building their revenues, are able to attract investment far more easily and as a result widen that gap.
The business journey in healthcare can be far longer than other industries, as development times, regulatory hurdles and timescales can make it seem like a drawn-out process to revenue. Convincing investors to join you from the start is often difficult, as it takes time for your business to generate a profit and, in turn, for investors to make returns. This is where it pays to do your homework. Simply put, it’s crucial to find investors who are committed and right for your business.
Attracting this sort of investment is a lot like putting your best foot forward in an interview: it’s always good to present the best version of yourself, and your business. Naturally, presentation isn’t always a scientist’s strongest suit. Luckily, investors aren’t looking for those who have a polished presentation – they’re looking for authentic founders who have a focus on the key deliverables, the route to market and who know their customer space.
This means having an inside-out knowledge of your business plan. While your ability to spin a soundbite won’t be assessed so closely, how well you communicate what you and your proposition is about will be.
Another string that investors look for in your bow is not just you and your business’ qualities, but who you surround yourself with. Any investor worth their salt will tell you that they back the team as much as they back the founder. Having talented people on-board is close to a godsend – the expertise to help that team develop and grown is what can then be supplied by the right partner.
In many cases, this personal aspect of business is more important. Ideas can come and go, but even great ideas will struggle with poor execution. A quality team will have the ability to pivot and be agile to what’s working at the time, which usually requires a certain level of realism too. And this also forms the crux of another crucial trait: honesty.
Investors speak to founders and entrepreneurs day-in and day-out – they’ll spot in an instant when someone is trying to fudge it. Being honest is the first foundation for a thriving partnership, as trust always goes a lot further – certainly in the long-term – than an extra bit of cash.
This trust and a strong relationship with your investment partner will pay dividends – metaphorically and often literally – further down the line, as it grants access to a wealth of resources, not just capital.
This is something founders should expect from their investors. As I mentioned before, the journey to making the tech or product viable and the business a success can be rather more stretched, so it’s here that expert guidance, know-how and an investment of personal time are crucial.
For example, we will support founders we’ve backed with everything from strategy, corporate finance and HR support – as when businesses begin to grow rapidly, changing contracts and bringing on new recruits can often be a minefield – to simply being a sounding board for frustrations. It isn’t easy being at the cutting-edge of a growing industry, so having someone to talk to and who understands your frustrations is the best first step for problem solving.
Knowledge is power for founders and their businesses, and industry experts with a few grey hairs who’ve been around the block can often provide the advice and support you need.
Bridging the gap
As the spotlight continues to shine on the healthcare industry, founders have a once-in-a-lifetime opportunity to ride a wave of optimism, which looks to be leading to something of a golden age. How they make the most of the opportunity is something they will have to give extensive thought to.
But there’s no doubt that securing the support of an experienced partner offers something of a surfboard in this analogy. Tapping into their knowledge and expertise will give businesses strong foundations, a chance to flourish and, perhaps more importantly, a chance to bridge that gap and gain ground on the bigger players in the market.
Dr Andy Round is life sciences specialist and director at Praetura Ventures