‘We don’t invest in ideas; we invest in proof of ideas’
NEW ORLEANS – For entrepreneurs either entering the home health technology space or those who have put years into development, finding investors to help strengthen a business can be tricky.
A panel discussion at the recent Home Health Technology Summit looked at the market from the investor’s seat. Moderator Dan Gebremedhin, a partner at Flare Capital, led the conversation with F. Scott Moody, CEO and founder of K4Connect; and David Glickman, entrepreneur-in-residence at Nokia Growth Partners.
GEBREMEDHIN: What has been your experience in raising money?
MOODY: Raising money is really hard. You really have to be willing to swallow your pride because almost everybody says no. There are a bazillion people out there begging for money—and it is, literally, “begging.”
GLICKMAN: In venture capital, there are three possible answers to an ask: “yes,” a quick “no,” or a “maybe.” I think the worst answer is “maybe.” That means the investor doesn’t want to be the one to say “no” to something that could turn out to be great, but then you’re stuck waiting for them to decide.
GEBREMEDHIN: What does an entrepreneur need to know when preparing to go out and raise money?
MOODY: Investors really expect to see quite a bit of progress from you before they’ll give you any money. The real challenge today is this expectation to prove out what you’re doing before even angel investors or others will fund it. What’s critical to that is forming a team that will put blood, sweat and tears into the product. You also need to talk to smart people who know your space and know what you’re talking about.
GLICKMAN: You really have to do your own homework to figure out who the investors are, what’s their passion and what they are interested in.
GEBREMEDHIN: What are investors in home health technology companies looking for?
GLICKMAN: Sometimes you go on gut—you’re betting on the person as much as the idea—and then you dig into the financials and other areas. Venture is risk-averse, so if you have a great idea that gets market traction pretty quickly and you have market fit and it’s growing, you’re going to get a bunch of venture that will follow you because venture is a fast follower.
GEBREMEDHIN: We’re looking for entrepreneurs who have crystallized their value proposition for their customer. We’re looking for those companies who deliver a quantifiable value to a consumer. We might look at 1,500 companies in a given year only to invest in five. We don’t invest in ideas; we invest in proof of ideas.
GEBREMEDHIN: How big can home health technology companies become?
MOODY: I think home health technology is extremely scalable and there is an exceedingly large market within the U.S. and beyond.
GLICKMAN: I think the use of connected homes and connected technology is a huge area where it’s generationally going to change. It will eventually be ubiquitous, so there’s an opportunity for great growth, great consumer experiences and great products. You see the big guys like Apple and Fitbit looking at this space like crazy—they’re trying to figure it out, too. The fact that they’re looking at it helps in terms of venture because entrepreneurs can come up with ideas and move faster than those big companies.