A Brief Manual For Female Entrepreneurs
The exciting part about being medical professionals is the versatility of career paths we have in front of us. Entrepreneurship is an example of one such choice that can be independent with or coexistent with our medical practice.
The medical field is no doubt prime for disruption, and in our everyday patient and administrative tasks we encounter countless examples where innovation is direly needed. Endless opportunities are open through the outdated EMR systems, inefficiencies of care delivery, wave of changes in the payment models from fee-for-service to value-based care, and more.
Analogous to the field of cardiology, female tech founders are still a minority only about 17 percent of tech companies had a female founder in 2017, and this number has remained steady through the recent years.
At the same time, female-founders have to pitch their ideas to the way-too-familiar homogenous all-white-male investor audience. In fact, among the top venture capital (VC) firms, 94 percent of the investment team partners are male and 78 percent are white, according to data by the Information and Social Capital.
Meanwhile, female-led tech start-ups in 2014 received just 8.3 percent of venture capital funding, according to Pitchbook. It was projected that 2018 was going to be a tipping point for female tech founders, with a multitude of VC funds and funding networks actively seeking female-led companies in which to invest, but it remains to be seen if the entrepreneurial landscape is truly going to undergo this big shift.
On the flipside, a growing body of evidence demonstrates that businesses with a higher percentage of women in leadership roles outperform male-dominated companies. MassChallenge, a well-known start-up accelerator program, performed a five-year gender-focused analysis on their investment history.
They established that female-founded companies received an average investment of $935,000 this is less than half of the average investment in their male counterparts of $2.1 million. At the same time, female-led businesses outperformed their male competitors, generating 78 cents for every dollar invested in them, while male-owned start-ups generated 31 cents on the dollar.
The challenges of innovating in the health care space are numerous, and the allegory of "the sleeping giant" is highly pertinent to the health care field. The stringent HIPAA rules and lengthy FDA approval processes are a hallmark of this complex and regulated market.
The sell cycles to large hospital systems are lengthy and can be lethal for the leanly funded young companies. Additionally, figuring out who will pay for the product is oftentimes confusing in this large and complex market where the patients are not used to paying for care.
Few people understand this complex system with its intricate workflow better than us physicians. As insiders, we live through the pain-points we are trying to solve daily and we can be an essential part of the core founder's team in roles such as chief medical officer, medical advisor or even as the CEO.
Starting a new business does not require having additional business training. Although dual MD/MBA degrees are an option, the learning of practical skills occurs best on the job. As a founder of a digital health startup during my medical training, I count this experience as one of the most rewarding ones of my career.
Below are some of the pearls and recourses I found useful along the way.
Identifying the Opportunity: Cost, Quality or Access?
Identifying the pain-point someone is passionate about solving is critical to laying the foundation of the business. It is best when it can be directly translated into dollar amounts, how you are going to save costs or improve efficiency of processes (i.e. cutting time, resources, etc., that directly translate into money savings), or better quality of care delivery.
Early on in our startup lifecycle, we determined that our mobile app for patient rounding will greatly improve costs (no need for expensive and bulky computers-on-wheels), decrease screen downtime through its smart design, engage patients in their care and decrease delays in order entry through its real-time EMR interaction.
However, it was difficult in practice to run a brief pilot to demonstrate the above benefits, as many of the proposed advantages of the app are less tangible in nature. Although the users of the app were fully behind us and loved our product, the ultimate payer for the app (the hospital administrators) are detached from the day-to-day patient workflow and want fast demonstration of real-time cost savings.
In order to bypass the hurdle, we had to quickly figure out how to use certain features of the app, such as photo capturing applied to wound healing, to demonstrate usage and time-savings and prove the value of the product.
Similarly, establishing product-market fit is key. This reason is why it is important to develop an initial minimal viable product rapidly and cheaply, such as a barebones prototype that one can test with real users and gives the opportunity to receive real-time feedback for adjustments to the core product or rapidly pivot before substantial resources have been spent.
Many hospitals have already partnered or launched their own accelerator programs that allow for seed funding and rapid pilot product testing.
Create a Team
Each core team member should reflect the diversity of skills needed to make the company succeed. Founders can have dual or overlapping roles if their strengths allow for that. The important point, however, is that the CEO of company is fully dedicated to networking and fundraising activities, which occupy a significant amount of time and provide the lifeline for the longevity of the company.
It is difficult for the core team dedicated to building the product to spread efforts among team leading, product roadmap building, and business or marketing activities. Also, technical talent is expensive and difficult to find, and many companies, including ours, resort to outsourcing to foreign countries.
Preferably, that would occur with countries on the same or similar time zone as the U.S. and where team members can communicate in a common language without needing translation.
Funding and Resources For the Young Entrepreneur
Female founders of startups are oftentimes much more scrutinized during the idea pitching stage. For example, more women report being asked during their presentations to prove their competency in understanding the technical aspects of the product.
Additionally, male founders tend to "overpitch and oversell," making bold projections about the trajectory of their business and being ready to aggressively defend their stance.
With these disparities in hand, an increasing number of accelerator programs (Springboard enterprises, Women's Startup Lab, Refinery), angel investors (Golden Seeds, Astia, Women's Venture Capital Fund) and VC firms (Rethink) are applying the gender lens to their investment portfolio, and some of them even prefer giving support to female-led founders. Launchopedia has developed a listing of startup accelerators which focus on female entrepreneurs.
Despite these challenges, growing your own business from the ground up is one of the most gratifying experiences I have gone through, and I am hoping just as the community of female cardiologists continues to grow, so does the forum of health care companies led by female founders.
This article was authored by Andriana Nikolova, MD, fourth-year cardiology Fellow in Training (FIT) and doctor of philosophy candidate at Cedars-Sinai Medical Center in Los Angeles, CA.