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About Tasneem Dohadwala
Tasneem Dohadwala is the Founding Partner of Excelestar Ventures, where she and her team are active investors in founders that exhibit compelling promise in medical technology, deep technology and beyond. Previously, her experience included working in financial services on the sell-side at Lehman Brothers and Matrix Partners. Notable investments during her time at Excelestar Ventures include Augmenix (acq. by Boston Scientific), nVision (acq. by Boston Scientific), Altiostar Networks (acq. by Rakuten), Conformal Medical, Instylla, Brixton Biosciences and Terecircuits.
At her helm, Excelestar Ventures has been named one of the top 100 Women-Led Businesses in Massachusetts by The Boston Globe. Tasneem is also the Managing Partner of the Golden Seeds Boston Chapter. She is a graduate of Wellesley College and Harvard Business School.
Episode Highlights
- The categories of med-tech ventures, and how they differ
- Why large markets have outsize importance in med-tech relative to other verticals
- What factors drive fundability in med-tech, and why it’s so challenging to build successful ventures in med-tech
- Not all med-tech is made equal – categories within med-tech
- How AI will change the game in therapeutics
- How to tell if your med-tech startup has what it takes to be funded
- How the regulatory and reimbursement pathways make or break your startup’s success
- How to be a CEO investors want to bet on
- What to watch for as a woman founder in med-tech
Links and resources
- Excelestar Ventures: The VC firm that Tasneem founded and leads
- FDA– The official site for the U.S. Food and Drug Administration provides comprehensive information on medical device regulations, approval processes, and guidelines for clinical trials.
- CMS – The Centers for Medicare & Medicaid Services offers resources related to reimbursement policies, which are crucial for understanding how medical devices will be funded and billed in healthcare settings.
Interview Transcript
Shubha K. Chakravarthy: Hello Tasneem, we’re so excited to have you. Thank you so much for coming here today.
Tasneem Dohadwala: Hi Shubha, thank you so much for having me as a guest. I’m looking forward to chatting with you today.
Shubha K. Chakravarthy: So we have a lot to talk about but given your unique background and focus, can you just give us a brief overview of what you do and where your focus is in the VC landscape?
Tasneem Dohadwala: I run a venture capital firm. I’ve been doing it for about a decade. I started in financial services and then I went to business school. Right after that I started the fund. The fund focuses on early stage medical devices. And we really focus on therapeutic devices.
We also invest in high tech companies. We like to be on the earlier side. We’re not really your series Seed round investor but maybe a Series A or Series B
Shubha K. Chakravarthy: Got it. And when you say both sides, just for clarification, what does that mean?
Tasneem Dohadwala: As in I do medical devices and technology based companies. So, high tech companies as well and then on the tech side, we do hardware as well as software.
Shubha K. Chakravarthy: Awesome. I want to dive into that medical devices landscape. Broadly, what would you call, challenges as well as the opportunities within the medical devices space that maybe sets it apart from the broader healthcare space?
Tasneem Dohadwala: I think with medical devices, you can really have technological innovation. Therefore differentiation and the medical devices that we focus on are very therapeutic in nature. Instead of taking medication or having a much more invasive surgery, one of our devices may be able to replace that.
So that’s what I mean, therapeutic devices. It’s not a guide. It’s not an aid. It’s not instrumentation. I think the unique challenges are that there are lots of things that you have to consider. One is the market size, right? There needs to be a large enough patient population initially, that is going to be able to benefit from the device, number one.
Number two, you’re going to have to deal with FDA and the clinical work, preclinical as well as clinical work for the FDA and you need to chart out that pathway. For every company, it’s going to be a little different based on what else is already in the market, what they need to do for safety.
But you need to think about trial size, how many centers you’re going to have, who are going to be the implanters, are you going to start in the US for your preclinical work? Are you going to be abroad? That’s the regulatory pathway.
Then there’s also commercialization. Commercialization, not necessarily. It’s not easy. You have to consider reimbursement in that process because in the medical landscape, we don’t really invest in companies that are sort of the pay-out-of-pocket model and really investing in companies that are going to get reimbursed.
The thing that you cannot lose sight of in this whole journey is how the company works with the physicians that are actually going to become the gatekeepers. It’s not patients. It’s really the physicians. You just think about their workflow. You have to think about the type of data that they’re going to want to see to start adopting their device.
You have to talk about engaging them in the trials. You have to make sure that you’re creating a clinical body of evidence that they feel compelled. They’re always going to think about safety first and they really feel that the device that you are sort of pitching to them or marketing to them eventually when you become commercialized, is safe and efficacious.
Shubha K. Chakravarthy: First of all, healthcare, particularly from a therapy side, is challenging. It feels to me like you picked the hardest possible part of the healthcare landscape and then you tackled deep tech as a second focus. What led to that and why did you pick such a hard pun intended, such a hard space to play in?
Tasneem Dohadwala: I actually think medical device is not that. I think it’s hard for the entrepreneurs doing it and I have a huge amount of respect for all of them and not just the CEOs but the whole team. I think changing, bringing innovation to the market and changing the way doctors practice medicine is not easy. However, I think if you invest in enough medical devices, you can start seeing a pattern and you can start seeing a very clear signal on which teams and which sort of product areas and market areas are exciting.
Once that pattern is recognizable, it’s actually as an investor, you’re able to kind of really pick out the ones that are sort of what you believe should be successful and those that may struggle a little bit more. And of course, we don’t have a crystal ball and the ones that we may think are successful will all have bumps in the road. Every company has almost a near death experience and it’s really about how does the team move through those challenges, as well as how does the board come together to support the team during those difficult times.
Shubha K. Chakravarthy: Awesome. I know we’re going to dive into that because that’s like the most juicy part of this conversation for me. But before we do that, just very quickly, an overview of the medical devices landscape would be helpful. I know not all are created equal. You alluded to therapeutics versus aids and instrumentations. Can you just expand on that briefly?
Tasneem Dohadwala: There’s lots of niches. First of all, there’s software-based companies and then there’s hardware-based companies. Then there’s the companies that are a combination of all of them. There’s lots of stuff that’s out there in the software side. Stuff that helps mine data in the EHR. So, kind of creating trends that we see, technologies that are focused on sort of streamlining operations at medical practices as well as hospitals.
That means about saving time or maybe saving money or creating sort of pattern recognition to have better information for physicians when they’re treating their patients. That’s sort of like the software side of the companies. And there’s the hardware side of the companies. I would say most of our companies have a hardware component. It is a physical device that is going to be in the patient, on the patient, somewhere within the patient, right? There is a physical device that is delivering a therapy, whatever it may be to the patient.
That’s sort of the side we’re on. Now, you’re seeing a lot of these devices. These physical devices also have sensors embedded in them. That sensor data is now being run through sophisticated machine learning algorithms or in some cases, AI algorithms. And I said, I’m very specific about that because not everything is AI. Some of it is just deep machine learning. So, I just want to be clear
And that information from the sensing data is allowing physicians to have more insight on the performance of the device within the patient and then being able to potentially tailor their medical therapies or exercise therapies, whatever it may be. That information allows the physician to be able to better treat the patient. There’s also a lot of sort of proliferation of AI-generated companies and these are sort of software-based companies that are taking a look at really complex imaging that we’re doing on our patient and sort of running algorithms through all those images and doing a better job at diagnosing the patient.
I say that very thoughtfully because physicians are still very important. I don’t think that we’re at a place where these AI algorithms are running on their own. In my opinion, they’re guides for physicians to be able to almost have like a sounding board when they’re looking at these images as well as potentially be able to review and process the images faster based on the support of the AI algorithms.
Shubha K. Chakravarthy: I take your point very well on the difference between deep learning, machine learning versus AI. On that one quick question is, usually they say there’s opportunity where there’s big disruption happening, right? In addition to the advances in AI or machine learning, are there some other factors specific to medical devices that makes it particularly attractive to you or to entrepreneurs potentially to be exploring the space now versus at any other time?
Tasneem Dohadwala: I think that we’re getting much better at using AI algorithms in general. In my opinion, we’re not still at a point where I think a lot of this stuff is scalable. I think just someone recently was telling me the impact of one search that we do on ChatGPT, the environmental impact because the amount of processing and computing power that it requires to support.
I think we need to be really careful. There’s all sorts of hosts of issues that are coming out of this sort of proliferation and adoption of AI which are environmental issues in medical devices. There’s a lot of regulatory issues, like who owns that data, who’s responsible for that data. Are we sending data into the body, i.e., like in neuro-tech, are we sending information into the brain now?
Who owns that data that goes into the brain? When the information comes out of the brain, who owns that data? There’s all sorts of ethical and regulatory concerns that are coming up that in my opinion, we’re still at the very nascent stage of understanding the implications of this. We still have a lot of work to do. In terms of where we see opportunities in AI, we’ve made inroads into AI-assisted image diagnosis. As I was mentioning before, AI-assisted work on the diagnosis side.
We aren’t necessarily there in the therapeutic side where AI is actually giving doctors information that changes the way they manage a patient. Is there AI information that can be given about heart failure patients that then we can manage differently? Now you do have some new devices that are being used, and I think we’re getting there, which is CardioMems as well as Endotronics. They have sensing capability within the heart and that gives information to the physicians that then allows them to change medical therapies and manage the patient’s disease.
But I think we’re still in the early stages of that because we also need to be very careful in the sense that physicians find they’re getting a lot of this. They can receive all this data but they have to be able to manage and process it in a way that doesn’t overwhelm them because in the end, they are liable for that data. If they have that data, they need to be able to process that data. If we’re just giving physicians lots and lots of data, it’s not really fair if we don’t package it and bundle it in a way where it becomes digestible rather than just sort of a deluge of data which is what when I look at companies.
I talk to companies. I always talk about like, how are you going to make this fit into the physician’s workflow? These physicians are already sort of overburdened and they’re working very hard. They don’t have extra time. I think we need to think about ways that we’re streamlining their work processes rather than sort of adding to theirs. We want to make them work better and more efficiently and do better managing their patients. We don’t want to make them work harder. That isn’t the goal here.
Shubha K. Chakravarthy: Awesome. That brings me to the next set of questions. It’s all about the deep dive into startups that are doing therapeutics. So just to clarify on that one interesting point. You would consider as a therapeutic some kind of a hard product that went into a patient’s body but they didn’t actually deliver the therapy itself.
In other words, it might do the sensing and deliver data back to a physician who might say, I’m going to change my treatment course from X to Y and that would be within your scope, just to clarify, correct? Even though it didn’t actually do anything.
Tasneem Dohadwala: I think it may be but we have never invested in anything like that.
Shubha K. Chakravarthy: Good point. So then coming down into the micro of like a specific med device startup, you talked about a few factors. You talked about market size, regulatory impacts and all that. Can we just do a little deep dive in terms of maybe the top three that would be your screening factors before you even consider it and what specifically you look for in those factors?
Tasneem Dohadwala: This one is always really hard because there are so many different ways you can slice it and dice it but the market size is really important to me. So, if a company comes to me with a small market size—and I mean $750 million or a billion dollars, south of that, less than that—we’re not going to invest.
These companies take 8 to 10 years to come to market. They’re going to need sizable capital along the way and therefore, it just mathematically doesn’t work. Because the amount that most of the acquirers are willing to pay for these companies, you need a market size that is large enough to sort of command that exit price in the end.
Therefore, we’re really looking for that market size. Now, the issue there is we’re not investing in pediatrics, right? The market sizes there are not large enough for a lot of these devices. The population most of the time—which is a fortunate thing—children are generally quite healthy.
That’s one thing that generally never kind of makes the cutoff. And unfortunately, rare diseases also don’t make the cutoff because the market size is really hard. To run a clinical trial with rare diseases, you can’t do that rapid clinical enrollment because you’re not going to have enough frequency of patients coming in with whatever that disease set is. While that is really unfortunate, I think there are lots and lots of other companies and business models that could work for that. It’s just not a venture model, at least not for us.
Shubha K. Chakravarthy: So you talked about market size, right? I’m sure you’ve seen this. I’ve seen plenty of pitch decks where there’s like three bubbles. I’d say here’s like a 20 billion market. How do you do the deep dive on that? And how do you do the scrubbing to make sure that it’s real?
Tasneem Dohadwala: We do it ourselves then. So, we’ll take what the company has given us and we’ll use that as sort of a one point. Then, we’ll actually really work through our diligence to figure out what’s your beachhead? Where are you first? Like, what is your FDA? What are you going for with the FDA? What’s that indication? What’s that label going to look like? Because that will tell us how big the market size is.
So, somebody may say, for example, this is going to be applicable to all musculoskeletal issues—whatever, maybe knees, shoulders, backs but when you dive into the company, you’re going to know they’re going to have to start somewhere. They’re going to start with one joint. They’re not starting with the whole body in general; most companies won’t.
You’re going to start with the shoulder, let’s just say. Now, I’m going to look within the shoulder, which type of procedures are you going to look at? Where are you going to address? Are you laparoscopic, tears, open, whatever it may be? There’s a specific indication that you’re going to get from the FDA and that is your market size.
Now, it could be that the initial market size is like 500 million. Then, within the next one or two years, they have a very thought-out approach to building their clinical pipeline. Like we’re going to do these post-market clinical studies with PIs (principal investigators, the primary scientists leading the study – ed.) and then apply for sort of a supplemental or an expansion of our indication with the FDA. Those are things that are going to happen and we will look at that. But in general, if you come to me and in the next 10 years all I see is a 200 million market size, it’s just not going to work for us.
Shubha K. Chakravarthy: That brings up an important point because of these long gestation periods that you have before you, you can really commercialize these therapies or how do you project the growth? So it has to be some unit projection, right? There are this many surgeries or these many procedures.
Tasneem Dohadwala: Yeah, we can normally find that out. We can normally find out what the projections of the market size are like a CAGR (Compounded Annual Growth Rate – ed.). And sometimes you obviously have to do some digging. You have to take some educated guesses but there’s some idea around how big of a market it could be.
Shubha K. Chakravarthy: Then I’m assuming that because you’re an expert in this area and this is all you focus on, that you have some informed perspective on what the pricing is, because that’s what you need to get the total revenue number.
Tasneem Dohadwala: So for example, a lot of times they are going to give us a regulatory pathway as well as a reimbursement pathway. We’re going to look at that. If they’re going to be a second generation or a third generation iteration of a specific therapy, we know what the market is sort of paying for the devices that are already out there.
We have a good sense of it. If it’s something very novel, that’s not even out there. You can get a sense there’s enough data out there to say, well, this is sort of similar to this. So it’s probably going to come in and ASB. Most of our companies at this point have some sort of sense of what an ASB is. Then it’s our job to sort of figure out, does that make sense based on the market data that’s out there considering what CMS is reimbursing other similar procedures for.
Shubha K. Chakravarthy: Then is there any example that comes to mind of some founder or startup that did a particularly good job of the market sizing and someone who was good but didn’t quite make the cut? You can just disguise it but I’m looking for just themes that stand out.
Tasneem Dohadwala: I can’t think of one that was good and didn’t make the cut. Unfortunately we see a lot of companies, so it’s hard for me to specifically. I think the theme that stands out is really more of a philosophical theme. Strong teams will only want to dedicate their time to big problems.
So a strong CEO will only generally want to dedicate their time to what normally tends to be a large impactful market. A very seasoned or experienced CEO will generally not pick a niche market because they understand the dynamics of medical devices and they are going after the big problems.
Shubha K. Chakravarthy: Got it. So what does it mean in terms of first time founders versus experienced founders for your funding implications?
Tasneem Dohadwala: I’m not going to lie; it is hard being a first-time founder. We have some and I think it’s hard, right? I think the bar in general is hard for a first-time founder because your second- or third-time founders understand the recipe.
So, I think first-time founders, the ones that do really well, need to surround themselves with people—advisors that are really hands-on and really good. And, generally, when you see that type of support for a first-time founder, they do well because they sort of know the recipe. They’ve done all their homework and they do well in diligence.
Shubha K. Chakravarthy: So what is the typical profile? Let’s say I’m a first time founder right? There has to be some spike that makes me able to attract this kind of support because everybody likes successful people and successful people have a track record but they should have started somewhere.
Tasneem Dohadwala: Well, number one, go after a big problem, right? If you’re going after a big problem, you will even excite your advisors. You’ll excite people to come and join your team because they can see how large the problem is. So again, it sort of fits right into that same narrative, right?
Strong companies pick large markets. And if you pick a large market, you’re going to attract attention and your idea has to be really novel and exciting. So, it doesn’t have to be novel in the sense that no one has ever heard of this before. Yet, it could be a better mousetrap but it cannot be incrementally better.
It really has to be disruptively better. We definitely have invested and made large investments in companies that are not kind of moving into a sort of white space market. They’re doing something that’s already out there but they have a better approach to doing it. You’ll see that a lot in medical devices. But when you say better, you need to have spent time with the customers i.e., the physicians, to understand what all their pain points are and you better make sure that you’re addressing them in your new device.
Shubha K. Chakravarthy: Let’s say I pick a big market. That’s fantastic advice. So chances are others are already attacking this problem because it’s big, right? You said it has to be significantly better. Are there dimensions of what that better means? So for example, there’s a therapeutic aspect for sure. Are there other aspects of how you evaluate significantly better?
Tasneem Dohadwala: Ease of use. Are you really going to change the way the physician is able to implant it—either much faster, much easier or much more safely? The other things we look at are efficacy. How are your improvements going to change the efficacy of the procedure or the efficacy of the therapy given to the patient?
The other thing is, are you going to be bringing more information to the provider? Are you going to be giving more functionality to the device? For example, one of our companies is focused on bringing a product that can dynamically change size based on the way the disease progresses. The devices ahead of them—sort of first-generation devices are a static size. They’re not able to change the size of the device over time.
Heart failure is a very complex disease state and as heart failure progresses in each patient, there’s a lot of heterogeneity among patients. You need a device that is more adaptable and that increased functionality is really a big value-add.
Shubha K. Chakravarthy: One other question in terms of where the big market issue is this question of niches and to what extent they’re even relevant to your space can you comment on, is that a factor? And if so, what would your comments be on how to pick which ones are good and what a founder can actually use from your perspective?
Let’s speak about the same thing you gave me earlier, right? Like a musculoskeletal application for some device, right? So you talked about joints, shoulders and even within a shoulder. Is it laparoscopy? Is it something else? There’s a choice I have to make. Obviously, I have a certain level of expertise.
I’m not going to go from one area of therapy to something completely different because it requires years of training within that field. There are options for me, as a founder and as a scientist to explore this. What advice would you give or what have you seen work better in terms of picking that beachhead or that entry point so that I may maximize my chances of success?
Tasneem Dohadwala: One thing you want to think about is how many patients are in that segment that you’re looking at first because you’re going to have to run a clinical trial. Chances are whether it be before FDA or after for commercialization. You want to make sure there’s a sufficient number of patients that are flowing through the system because you will need to make sure that you have significant volume to get them into your clinical trials.
If you don’t have a lot of patients in that specific disease set, it is really hard to run a clinical trial because there’s going to be a certain sample size or a certain powering of the trial you’re going to have to do. You don’t want the trial to take three or four or five years just because you just don’t have a frequency of patients, right?So that’s going to be important.
The other thing I think you want to look at is follow-up. How long is your trial going to have to be, right? Is your trial going to have a 45-day follow-up, a 90-day follow-up, or are you doing an OB (obstetrics – ed) trial and you’re going to have to wait till the mom delivers? That’s a much longer trial, right?
If you’re thinking about cancer recurrence, how long does it take for the cancer to recur? Two years or three years? Well, then you’re going to have to run a trial. Think about how long you’re going to have to run the trial to show efficacy. You need to think about that really hard because as an investor, if you tell me that your trial is going to be three, four years long— sort of the follow-up period because that’s how long it’s going to take to see if whatever your intervention was works. It’s really hard to invest in. I think that’s really important.
Shubha K. Chakravarthy: This may or may not work because I’m not a specialist obviously in medical devices but do you ever see a potential conflict between market size and some of these factors you mentioned and where this therapy might be most effective? Do you ever have to make that trade off?
Tasneem Dohadwala: Of course. As I said, there’s pediatric heart disease or pediatric surgical interventions, cardiac surgical interventions. Those are serious. Those children are really sick and shouldn’t those children have the very best therapies? They should. But as an investor, it’s really hard to invest in those because of the economics and so that is hard, right? I think that’s hard to say because, as a mother, I want the very best for pediatrics.
But on the flip side, it economically is a very difficult thing to do. Just as I said, right? To run a trial, the follow-up is different with children because of their pattern of health and their disease state. And there’s just not that many of them that are going to be impacted by whatever disease state you’re probably doing. Should they deserve the very best? Should they deserve innovation? They should. But it’s probably not going to be best from a venture-backed company I hope.
Shubha K. Chakravarthy: Before we move on— like a lot of the founders that I speak to, especially in this field are very impact- and mission-driven. They understand the economics but I talked to one who had a very successful exit who was initially driven by bringing this non-invasive cardio treatment to people in India or other low-income countries.
Is it a viable path where you keep that in mind and design for that in the later stage but you commercialize your product in a bigger market and then back-work it to a market where it might still work?
Tasneem Dohadwala: So, because everybody deserves access to the best healthcare and best innovation, there are actually companies that are working on sort of creating that bridge and helping startups do that. We need to do that.
But I will say that a lot of times what happens is that you kind of get into your beachhead market. You are able to commercialize and then you get acquired, which as an investor who’s been investing in the company for eight to ten years you want to get acquired. However, then it’s really the responsibility of the acquirer to kind of make sure that everybody has access to their device.
It’s sort of out of the investors’, as well as the startup’s hands. I actually think that this is a really critical point. I think CEOs should keep that in mind. They should try to make that a pathway. I wish I could say that we’re so progressive that we should be starting with those markets but I think you have to start with the large market because it’s got to all commercially make sense to the investors. Otherwise, those companies will struggle to raise money.
Shubha K. Chakravarthy: You’re exactly right. I take your point very well because she had the exact same problem. She sold it. She was successful and it was not a top priority for the company. I don’t know that this is really resolvable at this point but given your experience, I wanted to hear what you thought about it, and I appreciate your thoughts.
We talked about the market. We talked about the niche, the regulatory pathway, and about prior experience. Is there anything else in terms of your selection criteria that you would screen for before you decided to do a deep dive?
Tasneem Dohadwala: So, super simple. These are pretty technically challenging devices. You need to be able to explain the mechanism to me really simply. If I cannot understand the mechanism or I do not know what the company is doing and why it’s significant within the first five minutes of the pitch, you are not doing a good job. I know that seems like such a basic thing to say but it isn’t. I have been in many pitches where by the end of the pitch, I still don’t quite know what the product is and what market it is going into.
That is a big problem because as an investor, we’re going to give you a 30-minute intro pitch. You’ve got to kind of hook me right then because it’s really hard. If you don’t hook me, I’m probably not going to circle back. I think as a little advice to entrepreneurs—look at investors’ websites. See what they’re investing in. Does it match what you are presenting to them?
If there’s an investor that just does imaging, right? Don’t present an oral medication. That is not good. It’s probably not going to work, right? If there’s a company that says, I only do software-based companies, well then don’t bring a hardware solution to them. I know this sounds super basic but entrepreneurs don’t always do their homework. They just want to get a connection. They feel like, Oh, you’re in Boston. I’m in Boston. This doesn’t work like that.We have a thesis for a reason and our thesis is very evident on our website based on the type of companies we invest in. So, make sure that your company has synergies with the companies that the investor is invested in.
Shubha K. Chakravarthy: And then, just a couple of questions on that. First is— obviously, they have to be scientifically or, from a domain perspective, they have to be experts for you to be able to trust that they know what they’re doing. They have to have prior experience. Then, they have to be able to explain how they do this. You have to have confidence that they can navigate this.
From my perspective, one other important point is just the economic and financial expertise that they bring to the table. So, as CEO, they are the stewards of the money that you’re going to give them. What do you look for in those terms when you’re screening a founder CEO from a financial acumen, fluency and ability to steward?
Tasneem Dohadwala: So, we do. We look at their projections, right? A lot of the companies that we’re investing in, they are not going to have revenue for many years, which is again why that market size is so important, right? Because if you have a large market and you’re only going to take 5 percent of it, you’re probably going to be okay because you have such a large market.
That’s one thing we look at. The second thing is, we do look at our budget like how much are you spending on clinical trials? How much are you going to spend on regulatory? How much are you going to spend on reimbursement analysis? We look at all of those factors: marketing, sales, and it has to be believable. You have to be able to explain it.
If we think that your clinical trial is totally underpriced or overpriced, we’re going to be able to see it in general. That type of financial acumen is really important. The other thing we look at is: What is this money going to achieve? What milestones? You have to be able to articulate that this is the source that we’re giving the sources of the money.
Now, these are the uses of the cash and these uses of the cash provide results. What is the result? And why do you believe that result will be sufficiently compelling to raise more money on? Why is that sufficient progress that another investor is going to be excited by what you just produced from the money that I invested that is going to want them to come to the table to invest more money?
Shubha K. Chakravarthy: So are you looking for fluency in terms of, for example, I come in and say, do you want me to talk to you about things like, well, I expect my valuation to go up by X?
Tasneem Dohadwala: I don’t want you to talk to me about your valuation. I want you to tell me that if you’re raising 10 million, what are you going to do with that 10 million and why is another investor going to think that what you accomplished with that 10 million, compelling for them to put in more money.
Shubha K. Chakravarthy: And those will be in terms of what?
Tasneem Dohadwala: So clinical milestones. Are you, how many patients have you done? How many large animal studies have you done? Who have you put on the team? What are they going to be doing? What preparatory work are they going to be doing? Are they going to be working with the FDA? Do you have a regulatory consultant? Do you have a reimbursement consultant? Do you need them now? Do you need them in a few more rounds? All those things are what we look for.
Shubha K. Chakravarthy: Got it. Thank you. That’s super helpful. Then once you get the funding, obviously there’s still a huge risk. Obviously the most important thing is that they need to achieve what they told you they were going to achieve, what are the biggest causes of failure that you see after that first funding or that funding?
Tasneem Dohadwala: So I think the biggest failure is that they didn’t really spend a lot of time understanding what the customer or the physician wants in the device. They missed a major part of the market needs and designed a device that is just either very hard to use, not deemed as safe or not exciting enough to move the market.
Shubha K. Chakravarthy: It comes back to not being thorough enough in understanding at a very granular level your points about why this is 10x better. How exactly this is going to integrate into the workflow the physician is going to be excited to say, I want this instead of the method that I’m using. And which means you’re looking at those points of validation and evidence. Let’s say I’ve talked to 45 physicians or I’ve talked to whatever the case might be.
Tasneem Dohadwala: Yeah. Or you’ve talked to a few physicians and they’re willing to be your advisor and they’re willing to talk to investors and talk about how excited they are about what you’re doing.
Shubha K. Chakravarthy: Got it. Any other points of failure that may not be obvious up front, that you’ve seen?
Tasneem Dohadwala: Yeah. So a CEO that really doesn’t understand the market,
Shubha K. Chakravarthy: Meaning?
Tasneem Dohadwala: Meaning, they don’t understand the way the doctors think. They don’t know how their technical team thinks. They’re not able to support their technical team. A CEO doesn’t have to be in engineering, doesn’t even need to be somebody that created the device. But they need to be able to understand that when the engineering team comes with a problem, are they able to be a resource that can help them think through that just even if it’s just creating scaffolding for the engineering team to think through?
Another thing that’s really important for CEOs is that they need to know what they don’t know and then build a team that supports them in those gaps. For example, if they know they’re not super technical then their CTO or their VP of engineering needs to be very strong. If they know that they’ve never really engaged in strategic conversations with large acquirers, they need to then get maybe some advice from advisors. They need to get advice from the board members on how to engage with strategics.
Shubha K. Chakravarthy: Awesome. For the last section of our conversation, I want to talk briefly about women founders in this space because that’s a special area of focus for us. What themes do you see or trends broadly speaking, in terms of women founders in the space that you’re focused on that are noteworthy?
Tasneem Dohadwala: First of all, I think female founders are amazing. I think that women have a very different leadership style than men do and I think that can be as powerful as men can be. There’s no reason why female founders shouldn’t be getting more money. There’s no reason why they shouldn’t be going after the big problems. But I do find that sometimes they go after smaller markets. I don’t know why. Sometimes they go into very sort of female-specific markets.
While I want to support women’s health as much as the next female does, the issue is that sometimes those companies really struggle in raising money as well as the acquirers. If they don’t have a sales team that sells female medical devices, it is very hard to get them convinced that they should purchase that company because then they’d have to build out a whole sales team to sell that device.
It is unfortunate and it’s not something that we should be proud of as a society. But because there’s a lot of commercial gains in improving women’s health and yet the structures and the purse that need to be sort of attached to that aren’t quite there yet.
Shubha K. Chakravarthy: That is pretty interesting because what I’m hearing you say unless I’m misunderstood is that a downstream driven infrastructure issue is driving investment in fundamental healthcare improvements. It’s just a function of how an economy works essentially, right? There’s no judgment attached to it. The second comment you made was that you saw women going after smaller markets, leaving aside the female markets for devices, is there any other aspect of smaller that has struck you?
Tasneem Dohadwala: For whatever reason, a lot of the female founders that have come to me and I don’t think it’s bad. It hasn’t fit with what we do. I’m sure there are funds out there that want to invest in it. They’re much more like widget-like products. They’re like instrumentation. I haven’t had a lot of female founders present me devices that deliver therapy.
Shubha K. Chakravarthy: So in other words, those that are at the bullseye of what you’re looking to invest in.
Tasneem Dohadwala: Yeah. For whatever reason, I don’t have an answer why I think that is but I’m seeing a lot of that.
Shubha K. Chakravarthy: And do you have any observations in terms of generally leaving aside the specific products that they do but looking at the founders themselves, right? Agnostic to what exactly they’re doing. Are you noticing themes or trends women founders that would be helpful for them to be aware of relative to male founders that they can then work on or do a better job of?
Tasneem Dohadwala: I think that sometimes female founders don’t raise enough money.
Shubha K. Chakravarthy: And is that a function of me wanting to raise or seeking to raise?
Tasneem Dohadwala: Sometimes, it’s that they can’t raise enough money. And sometimes it’s, they’re not asking for enough money.
Shubha K. Chakravarthy: And is there like a tilt towards one or the other like, are they evenly distributed?
Tasneem Dohadwala: I don’t know. I don’t have a good feeling around that. But I will say that I think raising money takes a long time and it requires a lot of relationship building. For whatever reason, I don’t know if women are not giving it enough time because they sort of believe in the merits of their product that it should sort of speak for itself or what it may be. I’m not sure.
I think one of the reasons, which is pretty much documented, is that there are a lot of funds that now have females within the firm working for the firm but they are not the main decision-makers. And so, the ones actually holding the purse strings are men.
And I wonder if that sort of in general discourages funding in women. I think people say that you like to invest in people that kind of look like you that are mirrors of yourself. You feel more comfortable with that. And therefore, one would assume that men get more money because the people writing the checks more often than not are men.
Shubha K. Chakravarthy: Yeah. And so, they look like them. Then to round this back out to your specific space, what are the top three to five pieces of advice you would give to any founder who’s looking to build something in the medical devices landscape to find the right product and then take it to commercial success?
Tasneem Dohadwala: Personally, just be prepared to be tenacious and hustle, right? If somebody doesn’t call you back, call them back. Do your homework. Do the cold calls. Hustle. Everybody appreciates the hustle. And so, be willing to do that—number one. Number two is, we’ve talked a lot about it: pick that big market. Pick that exciting, big, large and economically large market—that big patient unmet need.
The other thing is, if you are on the medical device side, spend time talking to people that are going to use your device. Spend time talking to people that are going to buy your device before you start talking to investors, before you dedicate 8 to 10 years of your life. Make sure the path you’re going down has enough momentum that all tides will rise.
Like, “Rising tides will rise the boat,” or whatever. You’re going to have to redo that one. But basically, make sure you pick something where there’s momentum behind it. So investors will come, advisors will come and the team will come. I think that’s really critical advice.
Shubha K. Chakravarthy: So, what I’m hearing and taking away not just from this response you gave me but from the entirety of the conversation is if I’m a founder in this space, I’m getting the clear message that you need to focus on the right market.
You need to prepare for a long haul of at least eight to ten years. Then you may not be revenue generating, but you might be acquired by people who are excited enough to acquire you and gain value from the device that you’re inventing and rolling out.
To hustle. Talk to the doctors or physicians or people who are going to use it to make sure that you have your facts absolutely right. And you have at least a small cadre that are excited about what you’re doing, and if they want to actually use it themselves, but at least willing to advocate for you or advise you.
And then be a master of the nitty gritty and the specifics of what you’re going to achieve, it’s kind of like the main themes that I took away from this.
Tasneem Dohadwala: Yes. That is very well summarized.
Shubha K. Chakravarthy: Awesome. Is there anything that you wished I’d asked you but I didn’t?
Tasneem Dohadwala: No, I think we covered it.
Shubha K. Chakravarthy: Awesome. This has been an amazing conversation Tasneem. I learned a lot. I know that many of our founders will as well. We really appreciate the time and thank you so much for being here.
Tasneem Dohadwala: Of course, it was really my pleasure. Thanks so much for having me on.
