BoneChat #71 - Raising capital for an early stage company - stand out from the crowd.

So welcome to Bone Chat 71. We're excited to have Colleen Gray. Um, she's going to go over funding tips, um, how to stand out from the crowd. Probably one of the hottest topics for startups is raising money right now, and Colleen's one of the few people I know that's been on both sides of the table. She was a CEO of a couple startups, uh, Consensus and TrackPatch, and now she's on the other side of the table as a capital allocator at US Capital. So she has a rare perspective. And so I am turning it over to Colleen. It's all yours.

Well, thank you, Tiger, and thank you everyone for hopping on the, uh, call today. I'm gonna share a brief presentation It's meant to be interactive. Ask questions whenever they come to mind. But let me share screen.

We see it.

And I will put it in presentation mode. Hopefully that'll make it a little bit better. Okay. All right, kicking it off. So the capital raise environment, I mean, if it wasn't hard enough, we all had these expectations at the beginning of this year in, you know, the banking community that it was going to be, you know, a better year for raising capital from private markets than investors were going to be writing checks. And we didn't think it was going to turn around, you know, 90 degrees on January 1st. But, you know, I think it's fair to say there's been a fair amount of, you know, kind of volatility injected into the market over the last couple of months, and it just doesn't help, right? You know, I think the sentiment is still pretty positive, but we got to get through, you know, this kind of period of uncertainty. Which just compounds our task ahead to raise funds. This is a statistic that I got from a conference I attended with a JPMorgan speaker that they estimate there's 58,000 privately held companies that are out there raising capital. That is staggering to me. I'm shocked by that. And, you know, I think the challenge that we have is that some of the larger investors and even middle-sized, you know, funds, you know, they're not seeing the exits. So the M&A activity relative to small and mid-sized companies remains low. There were some signs in Q4 that that was starting to turn around. So hopefully that'll continue. And then, you know, from my experience, the first institutional rounds that a company is raising really can take longer. The investors are looking at, you know, you know, the cap table, the ownership structure, and it just takes longer to get that, you know, first institution to say yes. And once they do, they will typically attract others to the round as well. And then this last stat, you know, certainly money is not raised until it's in your bank account. So about only 72% of companies that received term sheets last year actually closed the round, which, you know, I guess just reminds us all that it's not done until it's done. You know, when I've talked to a lot of early-stage companies that are raising funds over the last year and a half, And I, I say preparation is the key. It sounds so kind of obvious, but somehow it isn't. It seems in practice, you know, I think that it is so easy to establish a data room these days, whether you outsource it to one of, I don't know how many different software platforms there are, or just set it up yourself on a you know, on a OneDrive or a link. But it's really helpful when you're trying to be as efficient as possible in getting an investor interested in actually looking at your data. And then I know you've heard this before from other presenters, but it is so important to weave an interesting story throughout your presentation. You know, why the company was founded, why you're doing what you're doing, and just to have that theme throughout just holds everybody's interest and they remember your presentation versus the next one they looked at an hour later. This next item is really— we're finding, we're getting a lot of feedback from investors when they decline a deal. They're saying, you know, the company's raised and they'll say, you know, whatever it is, $5 million, they haven't really accomplished anything, or it's not obvious what they've accomplished. And so I think that is important to highlight in a, in a deck you put together that, you know, this is what you've done with the funds that you have raised. And then, you know, if you're organizing a raise on your own, I think taking some time to actually research the investors appropriate for your company with regard to sector and stage, it'll basically, I think, be to your benefit. You won't get as many, you know, non-return emails. So it'll be a little more encouraging if you can find those investors that write the check sizes that you need and that invest in your stage. Having said that, early stage is a tough deal right now, and it has been for 3 years. But there are still investors out there that will do early stage. Unfortunately, it seems to take them longer to get to a yes. I know one of the things that I learned early on in my career was Putting together the deck and the content is one thing, but delivering it in hopefully less than 15 or 20 minutes and allowing for Q&A and being able to do that succinctly and in a way that flows is actually so important. So for me, it's always been practice. And obviously you get better at it the more you do it. And, and actually leveraging the 1 or 2 individuals on your team to help you with the presentation, if they are great speakers, is, is really, you know, I, I'd say highly recommended. Certainly I think having 2 people present during a short presentation can be easily managed. And then I think it's, it's good to remember that the first meeting with an investor is likely to be with a junior person, whether it's an analyst or somebody else, but they're pretty much the gatekeepers. And that's, you know, their role, go out and talk to as many companies as you can and bring back to the partners, you know, those that are the most promising. And the other thing I would say is don't overly focus on your technology. I think, you know, while you're developing the product or service, you know, really it's the management team that's the difference maker. So I think emphasizing the management team's ability to execute by doing a brief intro at the beginning of a presentation, letting each person talk about their background, even if it's only the two of you, you can also mention on that part of the presentation. Anyone else that isn't speaking, you know, what they bring to the table. And then, you know, I know this, most people get this, but you gotta have what problems am I solving, what's my market I'm addressing. And I can't tell you how much, um, scrutiny the sales model will get. I mean, it is amazing to me how many meetings that I've had personally with one particular potential investor time after time that really wants to dig into the sales model. They want to dig into Excel sheets. They want to really understand what's going to drive revenues. And, um, you know, I think I kind of learned the hard way over my career, um, be as conservative as you think, um, it makes sense to be. Don't overpromise and be able to discuss risks and how you'll respond if those risks materialize. All of those things, you know, it seems that you only got maybe 30 minutes to have this first meeting, but if you can, you know, put together a presentation that flows, you can normally cover them all. And then, you know, I think use of funds and tying it to your overall strategy and company vision, getting back to that storyline, This is how it's, you know, a cohesive story and vision is important. Timeline to commercialization if you're not already there. And, you know, regulatory strategy I think is something that people understand quite well. I think reimbursement is super important to just, you know, mention what that is. If it's existing DRG codes, if, you know, whatever the case may be, it's important to have that, you know, really highlighted. And then obviously key milestones to be accomplished with the current raise, including things like when does the company become cash flow neutral? Is this current round enough to get you to cash flow neutral? And those types of things usually are going to come up in the— anticipate those questions, know how you're going to answer them. You know, certainly I never liked to lead with valuation, whether I was raising money or working with a client to raise money, but it always comes up at some point. And I think being able to support your perspective on valuation is really important. If there's comps out there, if there's, you know, companies that have been acquired at, you know, similar stages as you are in, or in stages that are, you know, going to be reached with the milestones just ahead of you, What do those comps look like? What's been the activity over the last several years? Um, if you had a round that was priced by a third party, what was that post-money? And what milestones have you achieved since then that would really be valuation builders and inflection points? I think all of those things and just being able to talk about them really will demonstrate to investors that, you know, you've really thought through this, you're really on top of it. And realistic about where you're heading. So, you know, I, one of the things that I would say, you know, now especially is the time to get a capital raise launched and going through the process and funds closed is probably going to be longer than you anticipate and longer than you'd like. So I think really understanding your cash runway and what you're going to do to extend it if you need to, whether that's, you know, an internal round, some friends and family, or slowing down on some of the expenses that you'd really like to be able to tackle. Just have a plan for it because, you know, you might be caught, you know, kind of flat-footed otherwise. And you know, early stage, harder to do. I think that you also have to set realistic expectations, not just with your board, your board probably knows, but with your team. And I mean the whole team, not just the senior members of the team, but you know, the whole company's gonna know you're raising money and they're gonna be, you know, really hoping that it happens as quick as possible. But I found that just providing fairly transparent updates on a regular basis really was the best approach. And then following up each investor meeting with a prompt thank you and actually, you know, asking for their feedback and questions. And, you know, incorporate that feedback if you think it's, you know, really pertinent into your next presentation. Raising capital is a huge time commitment. I know for me, I probably spent, you know, so much time. It was hard to also run the company. It wasn't just my time on the capital raise. It was my team's time because typically each call that I would have with a potential investor group, was followed by requests for follow-on information, a deeper dive. Can I talk with, you know, your sales manager in region X, Y, or Z, or your marketing person? So it really does pull in a large team if you're getting a lot of meetings with investors, which is exactly what you want. You know, and I think Being flexible when it comes down to someone starting to talk about terms, whether it's valuation or, you know, if you're raising a priced round, if it's a convertible note, what kind of terms come along with that convertible note, how and when does it convert, what kind of discount is associated with it. And then I think Certainly, it matters who you accept capital from. I mean, sometimes we don't have the luxury of picking and choosing, but, but, you know, when you do, I think finding someone who shares the company's vision that you really can relate to, because clearly this investor is going to be in your life for a really long time. And, you know, investors say the same thing, you know, when we talk to them at US Capital, They say, we're really looking at team members that we can relate to because we're going to be side by side with them. And then, you know, your interaction with a lead investor is likely going to unfold over weeks and months. Wish it could be faster, but I think one thing to keep in mind since you're going to be, you know, speaking with them over several meetings is to establish some Milestones that will generate some positive momentum. You know, the investor, it might, they might be small, but the investor will see, oh yeah, they met that milestone that they had ahead of them, um, that they thought they were going to meet, you know, last month. They met it, check the box. It gives them confidence. And then, you know, some additional considerations. I think it really is, um, you know, leverage your whole network. Whether it's personal or business-related, research groups that invested in companies in similar sectors, having as much data at your fingertips as possible, whether it's early clinical data, how your solution is integrated into hospitals or physician workflow. And if you are— one of your benefits is cost savings, have some documentation around that. If you've been able to accomplish that. I can't tell you how much attention the financial model is going to get. It is going to get— the analysts are going to ask for it. They're going to say, send me your Excel version of it. They're not going to want to see the PDF version. They're going to want to be able to play with it and do a lot of what-ifs. So a well-structured Excel document is, you know, the best thing that you can provide to them. That lets them go through it. I've been on calls with the analysts and the partners, and we go through a financial model, and a lot of time is spent on, you know, how the revenue forecast is built up, and, you know, also on cost of goods or services is where most of the time is spent. And then be kind of aware of the fact that If you're early stage, you know, being frugal when it comes to salaries and other expenses is pretty important in an investor's eyes. I've had lots of companies I've seen who come in with, you know, salaries that are just, you'd say, geez, this company must be, you know, you know, already recording, you know, $10 million of revenue a year, but still the salaries are quite high. And so In this environment, investors are pretty sensitive to that. And then modify your, your model and your deck as, as necessary. I mean, you can really keep improving it because, you know, these people are pretty smart that are looking at your models and they're going to give you some really good feedback. They may decline to invest, but it could help you with the next investor. And then the other thing I would say, Raise the company and the team's profile. You know, establish a budget for the fundraising process. It's, you know, it's gonna cost something. Consistent LinkedIn and Instagram postings from both the company and the executives, I think, is a, is a good thing to do. Review and improve profiles before you launch a fundraising activity. Attend as many industry and networking events that you think will be useful. And then present at investor conferences. I know some can be costly. You know, I just attended the LSI MedTech and it's pretty pricey. And then also to the extent that you've got some news to get out there to the community, press releases. I think all of that just helps. You never know when that one investor group is going to see it and be intrigued by it. So that's the, you know, my thoughts to share, but happy to answer any questions that you might have.

Oh yeah, that's great, Colleen. There's a lot of good stuff in there. Kyle's up.

58,000 startups, is that spanning all industries across the United States?

That is spanning all industries. Thankfully they're not all in orthopedics. Okay.

And that's US only or that's global?

You know, it is actually more of a global perspective. I'd say it's the US and Europe primarily. Let's put it that way.

How familiar are you with Plug and Play?

I am not familiar with Plug and Play.

So Plug and Play is like a— it's hard to describe. So like they're an investment company, but they also have this gigantic database of startups. And what they do is they locate Plug and Play offices throughout the world that are in a geographical region where there's a specialty to build a vertical. So they've got a plug-and-play office in Warsaw, Indiana for orthopedics, but they've got it out in Silicon Valley for tech. They've got, they're, they're putting one in Indianapolis for manufacturing and they've got 'em scattered all over the world. They claim to have a database of 60,000 startups that are just in the plug-and-play ecosystem. And those are scattered all over the place. So I, I'm sure there is plenty of overlap and how you can keep track of, you know, the 1,000 startups that start every day and the 995 of them that die every day. Is a, is an adventure, but that's a big number.

Yeah, it is. I, I was surprised by it personally, that especially coming from JP Morgan, because, you know, they're not focused on small transactions, but, but clearly, you know, they've given some thought to this.

Do you have any sense of at all of how that breaks down? Is that a, is there a bell curve associated with early stage pre-seed versus Series E?

No, I don't have a breakdown of that. You might be able to dig it up, but I don't have it.

Yeah, good questions. Well, I've got a lot of thoughts when you were presenting. The storytelling thing seems to be underrated. You have to make a connection, you know, with investors somehow. I mean, Shark Tank is really, you know, it's obviously a little bit contrived, but if you watch the best Shark Tank pitches, I mean, they just lock the people in in the first 30 seconds before, you know, before the real data comes. I think that's really important.

Well, yeah, because most of these investor groups, they're on calls you know, many days out of the week, one right after another. So it literally, you have to give them something to remember.

Yeah, that's a good point.

So how have you seen a pitch go horribly wrong or maybe go perfect? What are some things that have been part of that?

So, you know, not, so first of all, I would say, you know, in a good pitch, right, you're gonna spend maybe half the time going through the deck and hopefully the second half answering questions. And not that, you know, there could come a time where you can say, hey, I don't have the answer to that, but I'll get back to you. But not being able to answer the basic questions that an investor has, I think, is where it starts to go horribly wrong. And then not having a presenter that can hold the attention of the audience. You know, if it's super technical and you're not talking about, you know, how the commercial success will evolve, that's another way I've seen them go really, really wrong. Where, you know, what happens is there's a presentation, you get to the end of it, it maybe took half the time or two-thirds of the time, but then there's like no questions and you know, that's never good. And then the ones that go well, I think are just balanced. You know, they, they have, you know, a speaker that's good enough. They have, you know, a, a story to tell and it's got all the basic data in the presentation. They're able to answer questions. And they get it done in the allotted time. I mean, that's really— maybe you get a half an hour. And sometimes if it's going really well, you'll get 45 minutes. So I think when you get extra time, you know it's gone well.

Christina's got a comment, CEO of Reach Orthopedics. She's right in the middle of this.

Yeah, I certainly am. Thanks, Colleen. This has been great. I was wondering, so you mentioned basically about, you know, even having answers for, you know, your go-to-market strategy and things like that. Um, especially, you know, if a company is doing a pre-seed, seed, even Series A, how much are they expected to know about their go-to-market strategy? I mean, a lot have put some thought into it, but It's also, I mean, typically at startups, if they are starting quite lean, um, then, you know, they don't have that time and resources to dedicate to having someone necessarily drive down what their go-to-market strategy is, and it's likely to change over their growth as well. So how much effort should be put into it and how much— I know you had mentioned that, you know, they might have analysts looking at it over and over again and changing metrics, but how much weight is actually put on that?

Well, I think that, you know, while your actual detailed strategy might evolve over time, I think things like knowing who's going to pay for your product or service, you know, how much, you know, do you think they're going to pay for it? And, you know, what do you base that on? I think those are kind of the questions, even at an early stage, that an investor would expect you to have given some thought to.

Okay, great. And that, that makes perfect sense. Like, those are the sorts of answers that I, I think a lot of startups do have. It's kind of when you're looking into more what like a sales model will look— would look like necessarily, where it's, um, that seems just a little advanced for a startup that's, you know, at a seed round. And still, especially in orthopedics, where if they're not a 510, they could be a few years away from being able to get into market as well.

Right, right. You're right. No, I totally agree with you. You won't know everything when you're at the seed round. That— absolutely not.

Okay.

Thanks. Good question. What about— I noticed you mentioned the cash flow neutral date. That used to be an afterthought, but in the last 5 years or last 3 years, investors really want to— it's become more important, right, to be able to sustain yourself.

It has become more important. You know, I think the— from an investor perspective, you know, there is a thought that, okay, is this the last round? You know, if you're raising a seed round, everyone knows it's not the last round. But if you're raising, you know, a Series B, for instance, well, you know, I think that investors want to understand What's the risk that there's going to be, you know, kind of a down round or a round in the future where, you know, I could suffer, you know, some, you know, dilution and, you know, just talk through that, right? So if this round is the one that gets you to cash flow neutral, then, you know, that is generally a positive thing. You know, investors will poke at what's the risks associated. Can you really, you know, get there with this round. But if, if it's an earlier round, I think then you just have to focus on the inflection points that you meet this milestone. And now there might be a follow-on round, but guess what? It's at a much higher valuation. And I think that's how you get by the— this is, you know, just one, this is the first institutional round, but there'll be at least one more or two more. And this is why it won't be overly dilutive.

Got it. Makes sense.

Andrea?

Yeah, I'm wondering about IP, especially in orthopedics and spine. At what point does that become important to investors? And does it ever—

is it always—

is the onus always on the company raising or startup raising money to show freedom to operate? Or possibility of owning IP, or, and do the investors trust whatever the applicant is saying, or do the investors sometimes take on their own due diligence, IP due diligence separately, no matter what the startup is saying?

So I think IP is critically important. I think it's important from any investor's perspective that the company has given some thought to what they're developing, that You know, getting an actual official freedom to operate opinion from a law firm is extremely expensive. So that's not typically, you know, something that startups can afford. I mean, it's, it's really expensive, but having the forethought to get, you know, the patent applications filed and maybe even issued is the most— is really critical. And, and that's something most startups have done when they're out talking with investors. At a minimum, they have the patent applications completed. And then, okay, so there's various kinds of investors. There are investors that will actually invest in a company because they feel the IP is so strong that if the company were to go out of business, and you know what, they typically— these investors will typically provide both debt and equity. So, so what they do is they provide an equity, you know, a large amount of equity, but a significant amount of debt. So if you wanted to raise, let's say, $7 million, maybe they'd provide $4 million of equity and $3 million of debt. Well, what does that do for them? If they've really analyzed your IP and decided that it's, you know, quite valuable, if the company goes out of business, then they own the IP because they were the lender.. And so there are investors that have that model and that approach. You know, I think long and hard about that, but sometimes that works.

I mean, I do come across patents that have— you can see the assignee has been transferred to that kind of a party.

But I was—

yes, so getting full FTO opinion from an attorney is very expensive, but there's sort of like steps. Like they can do the patent, you know, outsource the patent search and have a report. And but again, the quality is so different. You can get that done somewhere in India for pennies or like it's low cost, but it's not really accurate. So I'm always curious of how much trust they put in whatever data is being provided to them, especially from an IP perspective that can be so all over the map in terms of quality.

Well, I think having a recognizable IP law firm handling your IP does actually give investors some comfort. So if all of your IP was being handled by one of these firms in India, probably we wouldn't make as good of an impression as, you know, IP firms that specialize in certain areas, you know, whether it's technology or whether it's, you know, medical device, I think it's important to have a law firm with some credentials.

Okay, that's— yeah, it's interesting because some of those law firms then use, you know, they outsource the FTO due diligence to India or wherever. That's not really— even in the United States, there's plenty of companies that are not high quality, and then they provide the opinion based on the data that might not be 100% percent. Yeah, good. But yeah, anyways, I appreciate your, your insights.

It's interesting that you said that. My— when I was at Ellipse Technologies, the first thing I did in the first 2 weeks was move all our IP to a firm that was— had a great history of M&A. They'd been through so many acquisitions, and it really, it paid off. And 4 years later, All right, everybody's thinking. What's the next question? Colleen sort of insinuated that you can use people on your team that are really good at presentations. I know she did that with her head of commercialization because the salespeople in general are just great presenters. You know, they, they connect with the audience. So I think that's a really good tip.

Yeah, and so many of the questions, if you're, you know, certainly if you're raising a Series B, are surrounding that as well. You know, how are you going to ramp sales? What, you know, what does your channel look like? You know, how do you attract the best people? So I think that having the CEO and your, you know, chief commercial officer or whatever you, you know, title that position as a team works really well. Yeah.

Yeah.

I'm not on your side of the table, but I've been on the other side. And I, but I do get to see a lot of decks with startups recently, and they just, just overall point of view, they're just so dry. You know, it's like, here's our technology. Here's the problem. Here's the solution. Here's our technology. Here's, and it's like, it's just, there's, there's no emotion there. There's no connection. It's, it's very analytical. And, and I think a lot of that is because probably half the founders are technical-based founders. And they lead with the technology. But you have to show— I'd love to hear your thoughts. You have to show an investor how they're going to get their money back or, you know, with the return.

I think, I think, you know, investors, just, you just have to, you have to really be memorable. And so being able to articulate not just the solution and why it's going to be adopted, but, you know, how in fact, you know, enough people will adopt it that the company will become valuable. I mean, really, that's what you got to convey to them. And then what might an exit look like? You know, who else would be interested in owning this solution once you've shown you've gotten rid of the, you know, the R&D risk is maybe over, the regulatory risk is over, maybe reimbursement pathway is established. The only thing left is the market risk. And at that point, if you can demonstrate you know how to get through that last step, then that's clearly one of the last gates that investors want to see. And one of the last gates the strategics want to see if they're actually going to look at acquiring a company.

Are there different approaches depending on where your company is? Just say you have, you have IP, but, and you don't even have a regulatory clearance yet versus you have a regulatory clearance and you're preparing for commercialization. Are there—

yeah, I think you have to really think about if, if I'm If I'm really early stage, I'm probably going to be raising money from, you know, the network that you have personally or from angels, right? You're not going to get, you know, that's why I said match the stage and the sector you as a company are in to an investor's thesis, right? The investors that write, you know, $3 million checks are not going to invest in a million-dollar seed round. So in a way, other than, you know, maybe you can do some networking there, you know, that's not going to be the investor that you close. So, so I think you really have to give some thought to if, if you're a seed type, you know, stage company, look for those appropriate angel groups, high net worth individuals, industry insiders is where I had a lot of success. When we were raising money for TrackPatch early on, we got, you know, really the orthopedic surgeons that believed that monitoring patients pre- and post-op was going to make a difference. We got them to invest. And so that's, you know, was really helpful in getting us far enough along that we could then get others to invest.

That's a good story. All right, Christina's up and then Mauricio.

I just wanted to make a comment about getting orthopedic surgeons to invest as well because it's been my— and I understand that at an earlier stage that makes a lot of sense, but it's also my understanding that a lot of strategics will kind of frown upon having too much investment from orthopedic surgeons. Orthopedic surgeons, specifically if it's like greater than like 15 to 25%?

Well, I think when you're at a seed stage, it's a good option. You know, you would think that, you know, maybe early on the orthopedic surgeons might have a larger ownership percentage than 15 or 20%. But as you raise a Series A or a Series B, then, you know, you're going to dilute that ownership down to something more manageable. Okay, great.

Thanks. And what's that number, Colleen, when you get more mature, what surgeon ownership?

Well, okay.

So this is a very convoluted subject, right? Because I, at Consensus, there were hospital systems that if you were a privately held company and, you know, fairly small, just a surgeon owning one share was enough to cause them to not let you into the hospital. So, you know, it really, but on the other hand, you can't get there if you can't get the investments. So I think that you really have to give some thought to that. It wasn't across the board. It was, you know, Tennant Hospital System was the one that was the hardest to deal with when it came to surgeon investments. Others, we just had to demonstrate that they, you know, owned a de minimis amount of shares of the company and they weren't on the board. Those types of things. And we were able to overcome that. But there's a few hospital systems that we really couldn't overcome it.

So you lose customers, maybe. Okay, Mauricio.

Christina asked part 1 of my question, and then Colleen spontaneously answered part 2, which was the GPOs and health systems and surgeon ownership. So, I mean, there's nothing more that I have to say. Yeah. Yeah.

You got to be faster.

I was just going to say that the state-run VCs I found are quite a good source of both cash and support. So, you know, Connecticut Innovations is kind of our local team, and they're just a really good bunch of guys and girls, offer lots and lots of support. You know, they're obviously keen on bringing companies into the state. So, you know, they have a— they, they want to attract businesses, they want to support businesses, and they'll come in during the seed round. And, you know, having, uh, having the business kind of backed, um, you know, by, by companies like that as well, when you go for a bigger round and it's been supported by the state, that seems to, uh, that seems to go down well, you know, that there's already been a kind of a state level with you set up an investment, especially if it's a group that's well respected. So Just want to kind of share that. I know there's, you know, lots of different states that, that do it well. Not all of them do, but, you know, certainly I've found speaking to Connecticut Innovations has, has generally been a very positive experience, even just from an advice perspective. So I think they're a, a good source of information and potentially capital.

You know, I have seen that with the state of Connecticut. I've had a client who got an early investment from, you know, they're obviously located in Connecticut, but I've seen that in action and seen it work. That company is now, you know, raising a Series C. So I think that's, in the state of Texas, I've seen—

Yeah, Texas is really active.

Yeah. Interesting. We haven't talked about grants, but that's kind of, and maybe an early, earlier than this discussion. But there are a lot of state grants. We've discussed that before. So, I mean, Mark Viscoliosi was, he's a BONE CHOP member. He was, he gave one of the first presentations on fundraising and he made, he made a point that always stuck with me is, if you really believe in your company, then you would invest in your competitors in the same space. And I love that. So when you pitch, do you say, oh, our competitor, you know, ABC just got, you know, $5 million investment from this VC? Can you, can you sort of get momentum with the space that you're in?

Yeah, I mean, I think it's, it's clear that various spaces go through periods of being hotter than others. So yeah, I think there's absolutely some truth to that, you know, and then it's also helpful in, you know, depending on how much information you can find out about that deal, you know, what the terms were and those types of things. But yeah, I'd say so. Yeah, I think that's a good thing.

Yeah, that's a good point. The terms are not usually transparent. So it's really hard, really hard to get that information.

It is. It is.

Interesting. Yeah, I think, we, I wrote about this a few weeks ago. I think sports medicine is the hot area now in orthopedics. It's, you know, spine is sort of too competitive. You know, everybody wants a robot, but who cares? But sports medicine is just, well, I think we're on the forefront of new materials, new MIS, new, even robotics. I mean, soft tissue repair, there's new ways of doing it other than sutures and, you know, and anchors. And I really think— what, what does everybody think about that? Are you seeing the same thing?

I, I think you're on to it. And it's the way— one way I would describe it is it's starting to blend into traditional ortho. You're starting to see companies that are doing various resurfacing technologies of defects or reconstructive type of things that are meant to be intermediary things that are too much for sports medicine if you're just using anchors and sutures. But they're much less than, you know, doing a hemiarthroplasty or a total or a uni. So there's a lot, there's a lot going on in that space. There's also a lot where it is a blend of the new enabling technologies that are making their way into sports, smart anchors, patient monitoring things.

What's a smart anchor?

Well, I don't— I'm not sure I buy in on it, but there's a company that presented at Plug and Play called Indus, and their idea is to have a bone anchor similar to what's on the market that is suture attached for— they're going to start with the rotator cuff because everybody does, because it's the biggest market. And the idea is they will have constant monitoring of tension around the suture or tension on the suture. Compression around the anchor to tell the surgeon an ongoing report of what the stability is of the construct.

Fascinating. All right, Emanol, and then Mark.

Yeah, I was kind of similar note in terms of related industries. I got a deck this week. It was quite interesting, and it was, um, it was about wearables and, uh, wasn't, um, when, when individuals like, you know, can I send you the deck? I wasn't particularly interested, but I was a friend, so I took a look. And actually it was really to do with how to track athletes and try and understand what's driving sports injuries. So, you know, what is it that's driving the, you know, the increase in ACL injuries in female athletes and how the wearable can actually help, you know, track what's going on. And, you know, in both terms of both improving speed of rehab, but also trying to identify what's going wrong in the first place. As quite an interesting kind of adjacent area.

What's the name of that company, Immanuel?

Did you— I'll share the deck with you offline once I've got permission. I was asked to keep it to myself for the minute, but I'll see if I can get it. I'll see if I can get an okay and I'll whiz the deck over to you.

Perfect. We'll throw it up on Slack or Glue. All right, Mark, and then Christina.

Well, I first of all want to commend Colleen for that extraordinary presentation, uh, so complete. I had some visitors come to my office, I had to bail out, but I did record it. I intend to listen to all of it. Two things that I wanted to ask you real quick. One is, uh, what, what kind of— in your, all of your presentations that you've either been part of or observed, What kind of a personality tends to be the most effective? And is it, is it the content that they deliver, or is it the presentation that they make, or the style in which they use? Is it credibility, believability, or is it just completely objective material? That's one question.

So I'm going to try to answer that. So I think the way I would answer it is to say, you know, someone who can speak pretty openly and transparently, but holds your interest and is speaking about relevant data, right? You know, so I think that not being defensive because, you know, investors can ask questions that are a little annoying, but I think just kind of even keel and avoiding, I say avoiding being defensive is probably really important because it just sends the wrong signal. But, but yeah, I'd say, you know, open, transparent, smooth presenter, but also knows their stuff.

That makes a lot of sense. That makes a lot of sense. I've lined up a company that I'm on the board of. For the CEO to make a couple of presen— few presentations. And he always like defends his baby like it's the only thing. I mean, there's just no way but his highway and it just turns people off immediately. So anyway, thanks. So to Tiger Buford's question about sports medicine, I totally agree. The absolute best motto for any company is from that former East German company Bauerfeind is called Motion is Life. Just 3 words. And I think that just sums up sports medicine. And it's just, it's really a— that portfolio is super hot.

I agree.

For myself, a little bit on that, what you were saying, Tiger Buford, sports medicine, and then what Kyle then kind of mentioned himself in terms of like sort of that intermediary, that's obviously what Reach Orthopedics is doing. So what I think is really interesting is we were offered and asked to speak at ANA, so the Arthroscopy Association of North America, which we are clearly not a soft tissue treatment, you know, it is an actual metal device for massive irreparable rotator cuff tears, but And it's not even an arthroscopy either.

It's—

it is minimally invasive, but it's not arthroscopy. But both Reach Orthopedics and another company called Innovatus will both be presenting there, and neither of us are specifically arthroscopy. So it kind of shows where even looking at what is typically seen as sports medicine is going outside and staying at least within that minimally invasive area, but realizing that, you know, that soft tissue treatment itself specifically doesn't work for every patient.

Interesting. Yeah, the sports medicine nomenclature is kind of getting broader. I think it's like what Kyle was saying earlier. It's— when you think about it, orthopedics is all about motion. It's about pain-free motion. And pain-free motion is all about tendons and ligaments and muscles, you know, more than bones actually. Oh, go ahead, Eric.

So Tiger, I wanted to follow up on something that we talked about a few weeks ago that I thought was a really good idea and I know could, could really help some people that I know. And that's, that's the, the bone chat pitch deck evaluation.

Squad.

Yeah. And, you know, is it— yeah, just, just hearing, uh, you know, Colleen talk, I'm like, man, you know, she could, she could really teach, you know, my CEO some things. And I wish, wish they would learn some things. Um, I just want to follow up on that, see if that's something that, that, you know, is still doable, or how we could implement such a thing, or, you know, how I would even get, get them in front of Colleen such that you know, they could have someone who they'd listen to.

Yeah, so we, we've kind of, we have a straw man idea of having a sort of test your pitch on BoneChat maybe once a month. And Colleen and I talked about it. We thought it was a great idea. The problem it solves is startups don't get a lot of feedback sometimes. The venture capital group will just go silent. And they don't know what they did right, what they did wrong. So that's, that's the idea. I've got to promote it a little more and lock in some dates on the BoneChat schedule, and then we'll just invite anybody. The prerequisite is they'll have to join BoneChat first, and I have to upload their pitch deck ahead of time, and then they will choose a date, and then they'll lock in and We'll see where this goes. But, you know, with 58,000, there's probably, probably a few that would like, what am I doing wrong? Let me practice. You know, what would you change in the deck? Kyle?

Yeah, you can have the option for that to be like fully confidential.

Yeah, yeah, I would. Yeah, we can do that anytime anybody wants to present. Confidentially on BoneChat, they can do that. We just call it Unplugged. And, uh, even though it's recorded, we don't— I don't put it up on YouTube for everybody. Uh, it's available for BoneChat members. So, uh, all the confidential discussions are still on, uh, Slack, which we're moving everybody to Glue. So, um, if you haven't downloaded Glue yet, download Glue. It's better than Slack. And I'm moving all the conversations and people over. Right now. Good question. Yeah, you think this is something that's needed? Uh, there's a lot of people pitching and they don't get a lot of feedback. They don't know what they're doing wrong. And oh, I wanted to ask a question, Colleen. Uh, video versus in person. Um, so what percentage of pitches nowadays are video only? I mean, during COVID they were 100%, but now You're in the same room a lot of times. Is there a difference in the approach?

So I think that COVID taught us all something that we could certainly for a first interaction, video is fine. And I'd say still most of the first interaction are video and you know, you're going to be interacting with a, you know, certainly a lead investor over several months. So it will eventually get to in-person, even if it's not, you know, what typically I've seen more recently is that the investor will send someone to the company if they're not located close to the company, for the company to come to them. But yeah, eventually you're going to have an in-person meeting with, you know, enough of the investor group that they can make an informed decision.

And that's like second or third meeting usually?

Yeah, I would say it's down the road. I mean, it's— but really, I can't— I mean, everything, so much is done via Zoom calls these days that I, I would say, you know, maybe the final check is, um, you know, contingent on, uh, face-to-face and in-person meetings, but a lot of it's going to be done remotely.

Makes sense. Makes sense. I mean, John, you've been quiet. Um, your beard's been growing since we've been online.

Yeah, it's good to see everybody. Sorry we've been so busy. I've been struggling. I was excited to get on today, but I, I can say that from my experience, which is probably not as robust as Colleen's, that everything she says hits home and has been true to the experience that I have. I spend a lot of time— I live in kind of pre-seed, seed round world. And so I spend a lot of time working with clients that have slide decks that are so technical that— and I'm a technical person. That I really need to work on helping them tell the story, all those things that were said. So I think it just resonates to the real-world experience. There's one comment that I thought of that I wanted to say early on. I think somebody had talked about having your go-to-market plan. You know, when do you need to have that go-to-market plan? And my opinion is it's very important to have at least the bookends ready. So even at the very beginning, you're starting to sketch something out. Pretty early you're going to know, like, is there probability of market fit? How would we get this into the market? What is the coding? All of those things that are very commercially oriented probably need to take place sooner, much sooner than most people are comfortable with and are prepared to do. So I think it's a very, very— it's a, it's, it's that first book, bookend that's very, very critical because you can spend hundreds of thousands of dollars and then realize you're in a place with no market fit or smaller market size or things like that. So I would encourage go-to-market plan— building your go-to-market plan scaffolding really early and start thinking, you know, kind of let your dream go out, let your dream mind go out and see where that takes you into the commercialization planning. But other than that, I mean, not other than that, but I think Colleen did a great job. Thank you for the presentation and fits with the world I'm living in for sure.

Okay.

And I don't know what the beer's gonna say, so just, just soak it in everybody. This is, this is not a, I don't know about this thing.

All right, Mark, bring us home.

I wish Kyle was still here. He said something a while ago that really resonated on the active learning or information sharing anchors for the rotator cuff. I've always operated under the credo, going back to like the cavalry days, that all information has value and all information is useful. I was pitching that idea to Vinod Dasa at LSU last year on some new technology idea, and he just called bullshit. As a surgeon, he just said, you bring me information that I can't use, you bring me information that I can't operate on, you bring me information about my patient that I can't do anything about, I don't want to hear it. So it was just, you know, I don't think he was right, but I think it was insightful of that kind of an active personality. So if I'm pitching, I just said to myself, you know what, I'm going to be aware of that from now on.

Take care.

Thanks.

Yeah. Interesting insight. You almost have to know the needs of the investor, right? But it's really hard to know the needs of the investor. Do they just raise a round or they, are they, do they have a mature round? Go ahead, Colleen.

Well, you know, one of my experience with speaking with investors is quite frequently when you first get on the video call with them, they will introduce themselves and tell you this is the size of our fund. It's, we've got X number of portfolio companies. We've got this much dry powder. Um, and they'll tell you all of this typically. And there is actually, there's some tools out there, but they're not cheap, uh, where you can get more information about investors. Um, you know, what their typical check sizes are, and they'll tell you all of that if, if you get to the point where you're on a, on a call with them. But you know, there's a something called PitchBook, which is a company that publishes information, but it's expensive. It's a subscription, you know, and, and you have to pay for it. But you can find out a lot about investors and what, you know, type of investor they are, if they're early stage, later stage, you know, all of those types of things. But a lot of that you can find out just from good old-fashioned research and hitting up websites.

Cool. Well, we've gone a little bit over. This has been terrific. Yeah, this— you nailed it.