The Longevity Network’s Guide To Pitching Digital Health & Caregiving Investors
Entrepreneurs are compelling—captivating even—because of their passion, their willingness to take risks, and their backstory of how they came to be so passionate and willing to take risks. So everything you’ve read about 1) making your pitch aspirational; 2) being creative in capturing “the problem” you’re trying to solve and 3) adding a personal story about why you care about this problem—those are all good tips. You want to convey the entrepreneurial persona when you have those few minutes of an investor’s time.
However, the aura is not usually enough, in particular, for investors experienced in the health tech and caregiving space for the 50+ market. This sector is uncommonly complex. To name just a few reasons: we have both public and private payers, enormous variety in providers, convoluted regulations dictating the behavior of payers and providers and a whole slew of shifting dynamics among aging but capable older adults and their paid and unpaid caregivers (the latter of which often bring geographical distance and complicated family dynamics into the picture).
So what else do you need to make sure you convey in a successful pitch? Here’s a curated list pulled from real feedback investors gave entrepreneurs after hearing their pitches.
Even if you’ve successfully conveyed the entrepreneurial aura, your potential investor can still be left wondering about the basics: who is the user and who is the buyer? These fundamentals of your business plan should not be left to clarify during the Q&A, so when practicing your pitch, make sure you clearly convey who benefits and who pays.
Time is of the essence when developing your pitch, so the details of the business plan cannot always be included, but make sure you are fully conversant in those details should any questions come up afterwards. For example, here are a few questions coaches asked during AARP’s recent Innovation@50+ LivePitch event in Mountain View, CA.
– What does it cost for consumers now and what will it look like when you add b2b? What problem are b2b customers most interested in solving for?
– How do you provide value back to the payers?
– How many units do you need to sell to be profitable
– What is the lifetime value of a customer?
– What if your user varies their behavior, e.g., doesn’t take their meds at home one day?
– Tell me more about the data integration with your app.
CUSTOMER ACQUISITION & SCALING UP
If you haven’t yet heard of CAC, now is the time to learn about it because every investor worth their salt will be asking. Cost of (Customer) Acquisition is important for every startup but particularly for startups whose product is software and / or if your target customer is a payer or provider because those sales cycles are notoriously long.
If you aren’t tracking CAC yet, start now and come to any future pitch armed with data.
Here are some versions of the way you may be asked this question:
– How does acquisition happen?
– How do people find you?
– What data do you have on the cost of acquisition—i.e., growth cost versus cost of maintenance?
– How do you integrate into these health systems specifically, i.e., who do you target and how do you locate the decision makers?
Closely related to acquisition cost questions are questions about the costs involved in scaling up? You will want to be conversant how hiring, training, and marketing play into your business.
You may hear, for example:
– Would you need to build a fairly sizable marketing engine to scale?
– Have you calculated how large a sales team you would need to hit target customer numbers?
– What percentage of your scaling up operation is human-driven and what percentage is based on marketing campaigns?
– Do you have any organic referrals happening yet or are you generating all your own leads?
This is a brief lesson: investors know that execution of the business plan is one of the top 3 or 4 factors in the success of startup. Being the impassioned, visionary founder is compelling, but don’t forget to highlight the domain expertise, technical abilities or marketing savvy of your fellow team members. Any previous success with a startup venture is particularly good to highlight.
Having a plan in place for building strategic partnerships may be what separates the unicorns (or even reasonable success stories) from the zombies doomed by an unforgivingly high CAC. Every digital health or caregiving tech startup faces an uphill battle, and investors know it. The space is inefficient and the market is enormous—which is to say, ripe for disruption—but breaking in is still tough and many a startup with a great idea and a talented team has run out of cash before achieving that market traction crucial to securing Series A or even sufficient seed funding.
But don’t show up with a vague reference to how you will soon begin developing those strategic partnerships. Have a concrete list in mind of who they might be and, importantly, what it would mean to be “partners”. Would they be:
– Distribution channels?
– A marketing platform?
– Willing to pay for kind of data you will be collecting or producing as a by-product?
Pilots for digital health and health IT products have become very popular in recent years. Brookdale Senior Living Solutions, one of the largest operators of senior care facilities in the country, has even developed an Entrepreneur-in-Residence program. (See our in-depth exclusive of the program here).
It’s a great idea to highlight any past or current pilots during a pitch, but because they have become so prevalent, make sure you are prepared to provide plenty of detail so it conveys your skillful execution.
Questions you may hear from investors:
– What have been your biggest learnings from consumer-facing pilot?
– What was the number 1 request you received from your customer during your pilot?
– Is there anything in place to roll this pilot into a paying contract automatically, if say, a certain benchmark is achieved?
Investors will love to hear that you have negotiated that conversion to paying customer ahead of time, because they have already seen too many startups die a slow cycle of “death by pilot”.
DIFFERENTIATION FROM COMPETITORS
This key indicator should arguably be at the top, included under “the basics”. Any smart investor will want to know as much as possible about the competitive landscape, and it may be up to you to educate them on it, depending on how niche your product or service is.
Again, this is not a topic to leave for the Q&A—it should be defined and then reinforced during your pitch.
This is particularly true if you are attempting to break into an already crowded field. As one judge from LivePitch told a contestant: “be stone cold on your differentiator and your creativity, because there are a LOT of these on the market”.
Here are a few ways to frame it:
– How do you differentiate from competitors?
– What competitor scares you the most?
– Do you have anything proprietary—patents or trademarks—that would secure your market differentiation?
Pitching has become its own art form, so the competition is stiff. The better prepared you can be shows not just that you value the time and expertise of the investor but also, that you understand your business model from top to bottom. And that—reinforces the entrepreneurial mystique.