Editor’s note: This interview is based on a lecture by Joe Maristela presented in July 2016 during the First-Annual Future of Health: Telemedicine and AI Summit in Ho Chi Minh City, Vietnam.
The process of performing due diligence is quite basic and required for any founder seeking investors.
In as much as investors perform due diligence on founders—it goes both ways. Founders should perform due diligence on investors and consider the investor’s “whole package”. They should not just accept an offer from the first investor willing to put money down. Nor should the founder simply go with the investor that’s amenable to a startup’s highest valuation, or an investor willing to put the most money down. Cash and capital commitments are only part of the equation.
Profiling the Prospective Investor: Culture Fit
Perhaps the most important question to consider is an investor’s track record and background. Is there a culture fit? This is true for any stage of fundraising, be it seed money or the series A round—a company’s first significant round of venture capital financing.
From a founder and CEO’s perspective, a startup’s culture envelops more than its team, internally. It also includes its board of directors and formal advisers—some of whom may very well be their investors.
In telehealth and medicine, it is critical that the investor have expertise in the business niche that the startup is pursuing. Unlike other industries that are heavily regulated (such as finance), telehealth and medicine are especially sensitive niches to pursue. This is because actions taken in these spaces directly affect lives.
Profiling the Founder: Credentials and Experience
What I tried to convey during my lecture is that I require a generalist at the helm of the startup. This is an important characteristic of a founder. There should be no doubt in the prospective investor’s mind that the founder intimately understands and has experience in the business.
If the startup is all about providing telemedical care, I need an MD in the CEO seat to drive that startup. In the case of The Generics Pharmacy in the Philippines,1 I needed a licensed pharmacist at the helm, with appropriate credentials and experience.
Read more: http://www.telhealthandmedtoday.com/healthcare-startups-performing-a-comprehensive-appraisal-of-prospective-investors-in-digital-health/