This post is cross-posted on the Tincture blog.
Aan avid fan of the reality TV show Shark Tank, I was thrilled to learn that Robert Herjavek and Kevin O’Leary, two of its stars, were closing out the Health Information Management Systems Society (HIMSS) conference this year in Orlando. As I expected, Robert, who built a data security company, outlined some emerging security opportunities in the healthcare arena. Robert and Kevin also shared some words of wisdom, both on stage and at a smaller reception, that I wanted to pass on to digital health entrepreneurs and investors:
1. Know What Makes a Successful Pitch
Kevin succinctly spelled out the key elements of a successful investor pitch, regardless of the industry or business size:
— Articulate the opportunity within 90 seconds. If you can’t explain why you’re there and what’s in it for the investor in a short, elevator-style speech, forget it.
— Explain what’s special about you, the CEO. Do you have strong experience in the industry, or evidence of your grit and success in another area? This is not the time to be modest about it.
— Know your numbers. Know the size of the market you’re working in, your profit margin, and your break-even point. Cold.
According to Robert, the brief segments of each pitch that the TV audience sees on Shark Tank are cut down from sessions that can last several hours — so you have to be succinct but not that succinct, at least on TV where you can do multiple takes. Regardless, the advice holds: make sure your pitch highlights your critical points and keep it tight.
2. Invest In Women
Kevin learned the principles of investing from a woman: his mother. And, according to him, his own Shark Tank investments in women-run companies outperform his investments in companies run by men. Why? Women are better at allocating time (perhaps thanks to practice balancing a barrage of professional and family demands?), and are more likely than men to set and achieve attainable business goals. Failing to meet unrealistic goals, by contrast, lowers morale among employees and investors alike. Kevin’s observations about the gender of entrepreneurs on Shark Tank complement data tracked by investor and Rock Health founder Halle Tecco, which shows that female entrepreneurs ask for less money than their male counterparts on Shark Tank, but are more likely to receive a deal.
Though Shark Tank typically features businesses that are asking for $2 million or less (which eliminates many digital health and other high-growth tech startups except in the earliest phases), there are some lessons here for both entreprenuers and venture capitalists when it comes to gender. Women make up about half of the work force, and are the majority owners of 36% of small businesses, yet they head up only 9% of VC-funded high-growth technology startups. Research (based on Shark Tank and elsewhere) shows that female investors are more likely than male investors to fund female entrepreneurs, and more likely to help their businesses succeed. Gender (and other kinds of diversity) matters at all levels — staff, leadership, and investors included.
3. Tell Your Story: Health is Personal
While the impact of storytelling in health isn’t new to me, (I’m proud to be a member of the Walking Gallery of Healthcare), I somehow didn’t expect the business-oriented Shark Tank stars to be as succeptible to moving personal stories as the rest of us. In reality, though, when patient advocate Erica Chain told Kevin her amazing story of surviving a brain tumor, he immediately engaged, sharing a health story of his own. It’s this kind of human connection that fuels many people who work in healthcare, and business people and investors are no exception. If you want someone to care about (or even fund) your business, tell them in personal terms why it matters.
While not everyone can be on Shark Tank — only one of every 222 people who audition makes it — the show is demystifying entreprenurship for a new wave of self-starters of all types. Hopefully one or two of these takeaways will be useful for you.