Pros of Angel Investors for Healthcare Tech Startups
Tech startups are, statistically, doomed to fail. If you layer on the regulatory nightmare and challenges of the healthcare sector – the outlook can seem bleak. That said healthcare tech is a critical sector that will only continue to grow as groundbreaking medical technologies improve patient diagnoses, treatment, and outcomes. As a human being, I find the impact of technology on healthcare to be one of the most important and consequential of any sector. That said, as a healthcare tech entrepreneur, I have experienced firsthand how challenging it can be to secure funding for your startup. Why? Traditional funding sources like banks and venture capitalists often shy away from investing in early-stage companies. That leaves healthcare tech startups with limited options for financing. That’s where angel investors come in – but funding isn’t the whole story. Here are some of the top benefits of partnering with angel investors to fund healthcare tech startups.
Top Benefits Angel Investors Can Bring to Healthcare Tech Startup Entrepreneurs
1. Increased Funding Opportunities
Angel investors, like me, are high-net-worth individuals who invest in early-stage companies in exchange for equity. Because we’re individuals who can make decisions about our own investments, we are typically more willing to take risks than traditional investors like banks and venture capitalists. This makes us a great option for healthcare tech startups in need of funding who have exhausted their own funds and friends-and-family funding rounds. Additionally, angel investors often invest smaller amounts of money than VCs, which can be a benefit for startups who don’t want to give up a large chunk of equity in exchange for funding.
Don’t forget capital isn’t the only investment that matters. Angel investors also tend to have a more hands-on approach to investing. They may offer guidance and mentorship to startups, helping them refine their business plans and strategies – especially valuable for healthcare tech startups, which require industry-specific knowledge to succeed.
2. Access to Expertise and Networks
I like to invest in what I know. My background in healthcare tech makes it easier for me to evaluate an investment and leverage my expertise in the healthcare sector to their benefit. That can mean capital, and it can also mean access to both my expertise and my network. If I don’t know the answer, I’m almost certain to know someone who does. This is especially useful for healthcare tech startups that are seeking partnerships with healthcare providers or access to key industry players. Angel investors can help introduce startups to potential partners, customers, and investors, opening up new opportunities for growth and success.
Networking is a necessary evil in our industry, so embrace it. As I’ve talked about before, networking opens doors with investors, but it also provides the opportunity to create strategic partnerships that can both streamline your business and boost your reputation and credibility in your industry. Part of any successful startup is building brand awareness and increasing your visibility, which can help offset the perception that yours is a risky, unproven startup.
3. Hands-on Support and Mentorship
Whether it’s from a board seat or ongoing collaboration and mentorship, one of the key advantages of working with angel investors is their willingness to be involved in the startups they invest in. Unlike traditional investors, who may take a more hands-off approach, angel investors are often actively involved in the companies they fund.
This hands-on approach can be particularly valuable for healthcare tech startups, which may face unique challenges in navigating the complex and highly regulated healthcare industry. When I invest in a healthcare tech startup, I leverage my experience in the sector to offer guidance and advice, help them avoid common pitfalls, and make informed decisions. Raising money is one thing, but saving yourself from making costly mistakes is just as critical.
4. Flexibility and Personalization
Flexibility in the funding structure (and investment timeline). These are magic words for a healthcare tech startup. Unlike venture capitalists, who often have strict requirements for funding rounds and may require startups to meet certain milestones before receiving additional funding, angel investors can be more flexible in their investment approach.
For example, in some cases, I am willing to invest smaller amounts of money over a longer period of time or offer more flexible terms in exchange for equity. Because of the regulatory nature of healthcare, the development timeline for healthcare startups can change at a moment’s notice, and they may have unique funding needs.
I’m also able to take a more personalized approach to investing. Because of my familiarity with healthcare tech startups and the tech space as a whole, I can be willing to invest in startups that may not meet the strict requirements of traditional investors, such as those with less established teams or unproven business models. This can be a major benefit for healthcare tech startups that may not fit the traditional mold of a successful startup.
It takes the right investor to go for early-stage healthcare tech startups.
In 2017, I exited my pharmacy benefits firm, MyMatrixx in a $250 million sale after growing the company from a scrappy healthcare tech startup to one of the largest privately held companies in Tampa Bay. This success has given me the opportunity to be a part of the promising, early-stage healthcare tech startups that are disrupting a sector plagued with legacy problems. If you’re a founder of a healthcare tech startup, partnering with an angel investor like me can help you gain access to increased funding opportunities, industry expertise, and networks as well as hands-on support and mentorship in a highly volatile sector. If you’ve got a game-changing healthcare tech solution, I want to hear about it. Reach out.
Enjoy the ride.
