One-Sentence Summary: Using Partners In Health as an example, the post highlights five genuine ways healthcare startups can capture investor attention without resorting to fraudulent practices.
Close on the heels of a 30-year-old fintech founder who fooled America's largest bank, JPMorgan Chase, for a whopping $175 million using fake data, another startup is in the news for forging financial records to raise funds.
GoMechanic, a 7-year-old startup, is at crossroads today. It has laid off almost 70% of its staff. Those employees who are still on the company roster are unlikely to receive their salaries for the next few months.
The question is: How did this car service app get to this point?
Partly by burning all the cash that VCs invested - almost $55 million in this case and partly by forging books to show fake investors and customers. Yikes!
Of all the blunders committed by the company, the most bizarre part was when the Co-founder of GoMechanic, Amit Bhasin, admitted on LinkedIn that there were "errors in judgment" on his part.
The result: Investors lost trust in the company.
This is a live example of the phrase "fake it until you make it", taken in a completely wrong sense of the word.
Well, the goal of faking it, according to conventional wisdom, is to feel empowered and energized when things are not going as planned for you. So, it's about putting on a brave face in the face of difficult circumstances. It has nothing to do with cooking books or ripping off investors.
But then, like it or not, con artists are on the rise, whether in the crypto or startup markets, which means potential investors will want to be doubly sure they fund promising startups with a genuine 'Fake it Until you Make it" attitude, not fraudsters.
So how do you persuade potential investors to fund your healthcare mobile app startup in the face of recession, rising frauds, and layoffs? Don't worry; there's no need to press the panic button yet.
Grounded in reality, here we present five genuine strategies that Partners In Health (PIH) - a non-profit organization - leveraged to capture investor attention that you could apply in your upcoming healthcare startup or any startup for that matter. These five strategies will help you press the right investor buttons with minimal effort.
So, without further delay, let's dive in.
1] Get Some Good, Solid Leg Work Done Before You Pitch
Like a magnetized rod that attracts iron fillings, trust me when I say, good solid leg work is good enough to draw investors’ attention.
No, I am not joking. Take the case of Paul Farmer, a physician, humanitarian, and co-founder of Partners In Health (PIH). This non-profit, global health organization runs healthcare programs in 11 countries today, such as Haiti, Lesotho, Malawi, Peru, Russia, Rwanda, the United States, the Dominican Republic, Kazakhstan, Mexico, Guatemala, and Burundi.
For the unversed, Farmer was still pursuing his medical degree from Harvard Medical School when he started a one-room clinic in Cange, Haiti using his own money. Today it has grown into a colossal facility, “Zanmi Lasante,” that treats over 1 million patients every year, thanks to the investors like Tom White, who took a personal interest in the project.
As Pulitzer-prize winning author, Tracy Kidder recounts in his phenomenal book, “Mountains Beyond Mountains: The Quest of Dr. Paul Farmer, a Man Who Would Cure the World,” let alone the health issues, it was Haiti’s overall poverty that shook Dr. Farmer to the core. And as much as Farmer’s heart was in the project, he was not a ‘fully formed’ medic, was in his early twenties, and had limited experience as a fundraiser.
Nevertheless, his leg work and 24/7 commitment to the people of Cange, Haiti, impressed White so much so that he not only bought sandwiches for the famished-looking Farmer once at a restaurant inside the hospital but eventually gave away his own house to fund Farmer’s healthcare projects, globally.
Dr. Paul Farmer, Global Health Champion, began a small one-room clinic in Cange, Haiti, in 1983 and has grown it into a colossal hospital facility, “Zanmi Lasante,” which now treats nearly 1 million patients every year. Source: moneycontrol
The story has it that one day White came looking for Farmer, who seemed unusually pale.
White asked Farmer, “You eatin’ enough.”
“Oh, I’m fine,” said Farmer.
“Need any money?”
“No,” said Farmer. “Well, maybe forty dollars?”
“You look hungry to me.”
Saying this, White reached into his pocket and tossed a few hundred dollars to Farmer. “Please, for God’s sake, eat,” he said, giving Farmer another hundred. Farmer admitted that he had no money because he had given away all he had to an AIDS patient in Brigham who was on the verge of being evicted to Haiti.
“Jeez, Paul, don’t you think that’s impractical?” White questioned.
Farmer smiled. “Well,” he said. “God sent you today.”
Further, when Farmer wanted a Bread Oven built in Cange, as women walked nearly 20 miles for bread, he requested White to visit Cange and get a first-hand account of the conditions there. This meant White got to see the deplorable conditions that people in Cange were living in.
The result: Not just a Bread Oven got built, but White helped PIH in every way possible after that. In addition to Bread Oven, White constructed a hospital, purchased a microscope, and even paid $30,000 for every patient for PIH’s first multidrug-resistant tuberculosis program.
Tom White, the owner of the biggest construction company in Boston, got so much involved with PIH that he not just gave away his first 1 million dollars as a donation, but he even continually aided PIH with tens of millions for projects in Haiti, Peru, Rwanda, and other locations. For this, he sold his company, assets, and eventually his house.
My point? Peddling grandiose facts and figures won’t cut it with your investor as much as solid, sound groundwork could do. It helps build a just case for your dream project while also highlighting your passion, commitment, and grit.
In short, groundwork inspires, captivates, mesmerizes, and convinces. More importantly, it assures the investor that her money is going into able hands.
Today, PIH is funded by the Melinda and Bill Gates Foundation as well. Gates Foundation gave a significant grant of $44.7 million that PIH uses to create specific drug-therapy initiatives for people in Haiti, Peru, and Russia.
The Moral: Before pitching your investors for your healthcare startup, ask yourself: Have you thoroughly researched your addressable audience and their health concerns?
(Taking a small detour here to clarify a pertinent question that must be crossing your mind as you are reading this post. That is, are donors and investors the same in the case of a non-profit? In the non-profit world, the word investor is gaining traction and is defined as people who continually invest in a cause and are more inclined toward the outcomes of their investment as opposed to donors who fund projects sporadically and are not really connected to the project mission. Investors show more interest in alleviating the problems of their target audience. The ROI part doesn’t bother them.)
2] Let them Know You are the Jockey they can Blindly Bet On
Get this: Investors bet on the jockey, not the horse.
Circling back to Dr. Farmer's case, the investors could sense that Farmer would put the money where his heart was: that is with the world’s poor and the downtrodden.
While most non-profits use up the donor money to run their operations and in employee salaries, in the case of PIH, investors knew for sure, with Farmer at the helm of PIH affairs, their money will majorly, if not entirely, be used for the betterment of the poor.
Investors could, in other words, vouch for Farmer’s character, which stood out as one of the isolated blips on the graph of human nature, offsetting their fears of financial irregularities.
In short, they knew Farmer was the right jockey they were betting on.
By the same token, you need to show that you are in full control of the situation and fully committed like the pig(bacon-egg breakfast story) to the startup.
No, I am not saying those colorful, to-the-point, well-organized, powerful power-point presentations don't matter. In fact, they do. But then, power-point presentations can do only so much.
Why, if you ask? Well, the answer is that investors are only partially interested in your presentations, as they are keener on eyeballing you right from the start to the end of the presentation.
"Angel investors— follow the adage: "Bet the jockey, not the horse." If I have to choose between a great business idea and a great entrepreneur, I'll take the entrepreneur every time," writes Angel investor and author David S. Rose in his bestseller Angel Investing, The Gust Guide to Making Money & Having Fun Investing in Startups.
If you still can't wrap your head around this proverbial "jockey and horse" concept, then let me explain with another example.
Think of Steve Jobs. He ensured that his presentations were all about him, which meant his presentation screens only had minimal elements, maybe an Apple logo, a headline, or a word. Apple presentations were never about iPhone or iPad launches; it was all about Steve Jobs and his magic. Think about it!
My point? A great entrepreneur with great team backing is sure to bring an average concept to fruition, while a mediocre one will likely quit a brilliant concept midway.
Concurring with Rose's viewpoint is his colleague, writer, and angel investor Brian Cohen as he mentions in his bestseller, "What Every Angel Investor Wants you to Know," "Business cases and financials are important, but they come later. You've more than likely lost me if you fail to signal your integrity and entrepreneurial efficiency in the first 45 seconds."
So, how do investors define integrity and entrepreneurial efficiency in the first place?
Integrity: While Merriam-webster defines integrity as being totally honest and sincere, investors look for entrepreneurs with a clean track record. If not, it's almost impossible to persuade investors to invest in your healthcare startup.
Past Experience: Have you run a voluntary healthcare startup before? Or, have you run any voluntary activities in college? All that matters for an investor is your ability to lead and organize a team and run it successfully. While still in medical school, Farmer started working with villages in Haiti, helping them incorporate modern healthcare practices in their communities. Dr. Farmer had his colleagues from Harvard, Ophelia Dahl, and Jim Yong Kim, on his side.
Dr. Farmer and his Harvard Medical School colleagues, Ophelia Dahl, and Jim Yong Kim who become co-founders of Partners in Health. Source: bendingthearcfilm
24/7 Commitment: It goes without saying. Investors are looking for people ready to invest every moment of their waking hour working or thinking about their business. It's a 24/7 thing. In Farmer's case, it's said that he hardly slept and was always there for his patients around the clock.
Leadership Skills: Startups are the ideal ground to test your team-building skills, that is, your ability to hire quality people and form small yet, powerful teams that deliver on their promises. In short, investors would like to know whether you have it in you to pull off a complex idea into reality.
Get your business down cold: It goes without saying. If you plan to develop healthcare apps for kids in India, you better know what healthcare issues are particularly hurting kids in India. You better know what features the kids and the caregivers, specifically the parents, are looking for in the app. And, you better have an idea of the kind of apps currently dominant in the healthcare space. The bottom line is that you need to spend time researching your space so that the investors find you well-prepared during the pitch.
The Moral: Early start-ups often focus more on the idea of their businesses, while what matters more in the longer run, which investors recognize too, is the founder and what they bring to the table. That makes sense, right? A good idea can easily be lost in the hands of a bad founder and a good founder can give wings to a bad idea.
3] Get Like-Minded Investors on your Side
Tom White loved to say, “I have two gifts from God: the gift of compassion and the gift of making money. I just put them together, so they are hand in hand.”
White was always compassionate towards the poor, carrying wads of bills in his pocket to give away to beggars where ever he went. So, it is no surprise when White decided to fund PIH and found Farmer to be the perfect guy to hang his cap on.
Interestingly as Dr. Farmer’s work gained momentum, Bill and Melinda Gates Foundation came forward and expressed their interest in doing their bit. One could say that this collaboration was always on the cards given that the Gates foundation was equally devoted, if not more, to the cause of improving health care globally, especially in third-world nations. Aside from that Farmer and Melinda were both Duke University alums - two common threads that brokered a sense of ease and comfort into the collaboration.
Tom White, who was a lifelong supporter of Partners in Health has said to have sold his company, assets, and eventually his house to fund PIH projects, globally. Source: archive.boston.com
My point? Look for personal connections more often while pitching investors, as it leads you to an investor that matches your interests, talents, background, and so forth. In fact, you could dig into your LinkedIn connections for investors or network with someone who knows an investor personally and introduce you to the latter. This introduction could be sine-qua-non for a first-time entrepreneur because investors favor startups where a known, trusted, a third-party source has vouched for the former’s credentials.
Moreover, every angel investor out there tends to invest in more than one startup. So, there are cent percent chances that you’ll find the investor of your liking, no matter where you are based, Ahmedabad or Mumbai, provided you already have done some solid groundwork that convinces your potential investor of the worthwhileness of your project.
The moral: Often times healthcare startups aren't necessarily focused on turning a profit, their underlying objective is service. So before you get a potential investor on board make sure your “objective of service” is properly aligned, which could encourage your startup to pursue its true goal more freely.
4] Bring More Women On Board
It could be a pure coincidence that Ophelia Dahl was one of the co-founders of PIH. But the fact is just like Farmer Dahl was fully committed to saving lives by serving the world’s poorest communities and improving the healthcare systems globally.
After Farmer’s death in 2022 in Rawanda, several women have come forward to take the PIH mission forward including Farmer’s wife Didi Bertrand, and Sheila Davis who is currently heading Partners In Health in the capacity of CEO.
Davis, who previously held dual roles as PIH’s Chief Nursing Officer and Chief of Clinical Operations, was instrumental in opening a 300-bed hospital Hôpital Universitaire de Mirebalais, and also led the organization’s Ebola response when the epidemic raised it ugly head in West Africa.
Known for her activism, pragmatism, and implementation skills she has the woman behind PIH’s nursing strategies and all of its clinical operations. Plus nearly 18000 staff members (mostly locals) including nurses, midwives, and community health workers, across 10 countries count on her for the success of PIH initiatives.
My point? A growing body of empirical research suggests that companies with women in more significant leadership roles tend to perform much better than male-dominant startups. This could be partly because women generally are more emotional than men, which in turn, helps brands build great company culture and profits.
It’s worth noting that investor-backed companies with female founders recorded a 63% better return on investment than their male founders. Source: bcg.com
So, what stopping you from bringing more women on board?
Okay! Still can’t make up your mind?
To help you decide here are three more reasons why you should have more women on your healthcare startup board.
Women have a Greater Hunger for Growth
One of the desirable traits of an entrepreneur is the hunger for growth. Growth in any form, in short. It could be in the form of expansions, new ventures, new markets, or anything. According to a survey, 32% of women-led businesses are in active expansion mode over male-led companies. Despite the overwhelming growth rate provided by women-led organizations, and despite making up 60% of the healthcare workforce, women in senior roles are declining in the healthcare industry, with approximately 30% holding C-suite positions.
Despite making up 60% of the healthcare workforce, women in senior roles are declining in the healthcare industry, with about 30% in the C-suite roles.
Women Build Better Company Culture
Besides building successful businesses, women are excellent at cultivating company culture. According to the Journal of Organizational Behavior, women-led companies are generally more communicative and collaborative. Additionally, at least half of America would prefer to work for a female-led company because they find them more purpose-driven and sensitive to childcare needs, not to mention believe in equal pay.
Women are Leading More and More Unicorns
According to a report, women entrepreneurs will lead more unicorn startups in the future. Unicorns are those that have a valuation of over 1 billion dollars. According to Crunchbase data, of the 100 new unicorns set up last year, nearly 10 have at least one female co-founder.
Peakon, a real-time HR insights platform, identified five key areas wherein women-led companies outperformed their male counterparts. These five areas were identified as mission, strategy, belief, communication, and autonomy.
Both men and women-led companies were on equal footing when it came to peer relationships, rewards, management support, compensation, employee growth, cultural fit, recognition, and workload. As in, no one surpassed the other.
The problem? Despite the rise in women-led businesses, only 2% of the investor funds go to women-led startups, according to JP Morgan Chase CEO Caryn Seidman-Becker. An Arabian news site corroborates the sad state of affairs of women-led startups. They stated that as of 2022, only 1 percent of the $2.2 billion of funds in MENA has been invested in startups that were founded or co-founded by women.
Not surprisingly, Serena Ventures Fund, led by legendary tennis player Serena Williams invests in female-founded firms when she found that a paltry 2% of VC money went to women entrepreneurs.
"Sometimes, like attracts like. Men are writing those big cheques to one another, and for us to change that, more people who look like me need to be in that position, giving money back to themselves," says Tennis legend Serena Williams -
If I making this point sound like a women VS men thing, then sorry, no, that isn’t my purpose. It’s not about superiority, and it’s not something like being a woman I like supporting a woman’s cause. My point, conversely, is about balance, about getting the world to notice how disproportionate the male-dominant VC ecosystem is.
Some people may even suggest that the skewed investment ratio towards women startups could be because women, as such, aren’t interested in becoming entrepreneurs. However, the ground reality is different.
Consider this: Of the ten male founders in the USA, 7 are women.
During the pandemic female entrepreneurship in the UAE grew almost by 68%.
The long story short is that despite woman’s growing entrepreneurial interest, globally, the investor interest is missing.
Recognizing the benefits of women-led businesses the startup funding world is slowly but steadily shifting its focus to female founders.
The Moral: It’s a stated, in fact, overstated fact that the female founders are comparatively more successful than their male counterparts. It’s high time investors start investing in female founders.
5] Represent the Patients' Side of the Story
If getting the investor on the field seems too much of a task for you, then here's another route to capturing investor attention - Represent the Patient's Side of the story. Pitching to investors from the patient's point of view is far more fruitful and thought-provoking because it contains the right emotions to convince the investor about your health project.
"You want to be able to get them to such an emotional high that they are ready to write you a check, throw money at you, right there before you leave," says Rose.
Such pitches could be considered the fastest way to convince the investor about the existence of your target audience and how they have taken a liking to your product or services.
Some of the Elements of the Patient’s Side of the Story. (These PIH case study strategy is pure hypothesis as this non-profit may or may not have used it, nonetheless it's a tried and true strategy leveraged by startups.)
Case Study of Leukemia Patient Martha Cassmand
1] Meet Martha Cassmand in Cange, Haiti. She is a young leukemia patient
2] Haiti suffers from extreme poverty and sickness.
3] Until she learns about Dr. Paul Farmer and his hospital "Zanmi Lasante."
4] She is happy that she's got a doctor to care for her medical needs and overall health.
Dr. Farmer with leukemia patient Martha Cassmand. Source: ncronline.org
Here’s another patient’s side that is sure to tug at the investor’s heartstrings.
Case Study of Cancer Patient John
1] Meet John, who has rare facial cancer and is in critical condition
2] Farmer’s assistant Serena Koenig plans to fly him out to Boston for emergency treatment. However, she knows the air ambulance will cost almost 20, 000 dollars.
3] The commute from Zanmi Lasante to the airport is agonizing for John because the truck he was traveling is dilapidated and the roads are bad.
4] Somehow, he reaches Boston but can barely breathe. In Boston, John is given the best medical care, but he dies anyway.
Air Ambulance is operated by Partners in Health in Haiti. Source: facebook.com/haitiairambulance
The moral:Any potential investor is interested in a startup only when they fully understand and believe in the service or product. Likewise, in healthcare start-ups, investors need to understand and realize the impact and difference they are creating in the patient's life to be fully invested in.
Wrapping Up
It may seem more straightforward to raise money through unfair practices initially. But as you can see for yourself, the consequences are severe as you play with investor trust. In short, there’s no shortcut to gaining investor attention for a startup. Instead, bet on a few genuine strategies, do a lot, a lot that is, of leg work, show that you know what you are doing, get in touch with like-minded potential investors, and, more importantly, build on the patient’s side of the story. That’s about it! I’ll admit that building a case for investors is easier said than done. But I don’t see any other way of doing it other than making it a labor of pure joy, just like Dr. Farmer did.
