What entrepreneurs and startups need to Do Prior to Raising $! The Basics!

Many of us understand that need-based innovation is a process in which problems are identified and sorted based on impact and opportunity. Once the top problem has been selected, solutions and commercialization are approached. However the American healthcare system is not always set up to encourage various types of innovation. Hurdles such as: institutional policies, hierarchical, team formation, administrator-driven systems and pilot program dynamics are creating a stunted ecosystem that is not reaching its full potential. The entrepreneur is faced with a time-consuming and costly disadvantage that frequently forces them to enter deals that hurt them. The deals can also counter-intuitively hurt the investors and stakeholders. One of the most important considerations when participating in a dynamic system is setting yourself up to win. Make sure your company can weather the different kinds of storms. Sharing a few tips for entrepreneurs:

1. Choose the right corporate entity. Not all formations are created equal. Make sure you’ve chosen the formation that best suits your business model, technology and fundraising needs.
2. Find a co-founder, you cannot do everything alone. A surgeon needs a business CEO. An engineer needs a clinician and tech folks need to connect with nurses and everyone needs to build teams with aligned expectations on what it takes and means to succeed. Make sure you define and document founder roles and responsibilities from the outset and allocate equity accordingly. It can be a difficult conversation to have with a co-founder, but the alternative — not having a clear written deal in place — can crush a startup later.
3. Know where the idea was born and who owns the IP. Many healthcare startups are born during a founder’s time at a healthcare or educational institution. The institution promises to foster the innovation and make the nuances of the legal landscape easier. However, institutional innovation policies are not optimized to foster innovation, but rather to maximize ownership and financial returns. Most policies will require all filed patents to run through a “Tech Transfer Office,” which is assumed to provide value by performing Freedom to Operate searches and helping file for provisional patents.
4. Study key negotiated terms of financing and fundraising. Understanding how dilution and equity work is critical. Your investors get it; you should, too. Seek advice on the key mechanics behind valuation, dilution, participation, and liquidation. This will also help you connect with investors and financiers. You want investors to focus on learning about you and your company, not struggling to understand what it is that you want, or what you have to offer them in return. Learn the ability to discuss your company and the opportunity it presents to investors in terms that investors will understand. Please keep meticulous records of everything. Documentation, documentation, documentation. Ping me on twitter at @engineer_health for a list of common investor terms and easy-to-understand definition for each.
5. Plug yourself into different networks and find great partners and advisors. Ask your trust circle for names. My 2020 rule will be to only surround myself with the best! World-class partners and advisors.