Inside the Venture Capital process

Although this post is not exactly about healthcare IT, it is about enabling healthcare IT by getting some money for your startup. I talk regularly to entrepreneurs who pitch ideas (which is one of my favorite parts of blogging) and many of them aren’t sure how to get their ideas funded. Having been through several money raising rounds in my previous startups I recommend not raising money from VCs unless you have absolutely no choice; use angel money, bootstrapping, etc. However, sometimes professionals will be the best choice if you need “smart money” from a good VC.

Here’s a good perspective of the VC process: The Post Money Value: Inside the process.

A great list of characteristics for you health IT startup dreamers was put together by Sam Decker:

  1. Defendable and differentiated
  2. Competitive cost structure
  3. Attractive partnership opportunities
  4. Repeat customers
  5. Word of mouth opportunity
  6. Memorable product and name
  7. Potential for PR
  8. Attractive to be bought or merged
  9. Scaleable staff and systems
  10. Scaleable product — build once, sell many times
  11. Uncomplicated
  12. Focus
  13. Niche market or fragmented industry
  14. High velocity and large market / industry
  15. High perceived value
  16. Product can be accessorized – revenue synergies
  17. Healthy cash flow –> margin x velocity
  18. Demonstrable felt need, demand – does it hit a primal chord?
  19. Business can be measured for improvement
  20. Can claim leadership
  21. Sales model is scaleable and predictable
  22. Product evokes emotion
  23. Can make big wins – big customers
  24. Limited exposure to legal issues
  25. Own relationship with and information about customers

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2 thoughts on “Inside the Venture Capital process

  1. Pingback: Thought Leadership

  2. Venture is not interested in healthcare IT unless one can prove value. Hospitals will not buy unless one proves that value. It is very important that one proves an ROI. The difficulty in this space is that no vendor (an exception includes Visicu Inc) can do this.

    About not disclosing the idea, I would really not worry about this. Execution is what makes for a successful startup — ideas are a dime a dozen. If you have an idea, one can almost guarantee that someone else has similar ideas. With a market this big and this inefficient you can bet that there will be a lot of people trying to bring in products.

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