Health care entrepreneurs and investors offer guidance for growth-stage companies

It’s a turbulent time for health care investments and transactions. For those navigating these difficult waters, entrepreneurs and investors delivered helpful insights and advice at a recent Nashville Health Care Council and Nashville Capital Network event.

The panel included Heritage Group Partner Lauren Brueggen; CareHarmony CEO Gokul Mohan; Echo Health Ventures Managing Partner, Strategic Investment, Jessica Zeaske; CareBridge CEO Mike Tudeen; and HW Healthcare Solutions Founder and President Herman Williams.

Panelists identified timely best practices for growth-stage companies to raise capital:

Build relationships early and often.

“We have several strategic investors, including four of the top five national MCOs who represent over 65% of the LTSS market. They made a determination prior to investing that CareBridge’s services will add value to their markets and improve care for their covered lives,” Tudeen said. “We’ve learned a lot of lessons. Beyond the money you need, you should consider what kind of help and strategic support an investor can give you.”

Define your customer journey.

“It’s not the same as selling a widget, but you have to be aware of your buyer — in this case, an investor. Consider their buying preferences and patterns; understand who you’re selling to. Lots of people are looking for great companies to invest in, but you won’t be the right fit for everyone,” Mohan said. “Plot out a detailed customer journey to highlight specific aspects of your product to buyers.”

Don’t be afraid of iteration.

“It’s also critical to get feedback about the product you are bringing to market and iterating quickly using the data you collect. Your product should undergo a continuous evolution throughout the process,” Mohan added.

Clean your data room.

“Investors and companies have been sloppy the last two years and that doesn’t fly anymore,” Zeaske said. “Your models have to be pristine. Link your pipeline to financials and hires. It will take the management team a while to put together, but it’s key to be really prepared and show proven ROI and how you’ll make cash last.”

Manage your expectations.

”As investors, we want to partner with a company that has a strong product market fit, a great team and an impressive growth profile. But in this current economic environment, we need to thread the needle with terms that work on both sides, and that can be challenging,” Brueggen said. “We’ve seen structure being negotiated – which we hadn’t seen for five or six years – such as having a liquidation preference or participating preferred [stock]. It takes a while for entrepreneurs and founders to lower their expectations and get to a valuation that everyone is comfortable with.”

Get insights like this and more by joining the Council’s upcoming virtual and in-person events. Register for Brass Tacks, Virtual Council-Wide Speed Networking or our Trends and Influencers events by visiting the Council’s website to view the full schedule of upcoming programs.