Entries Published On October, 2017
For this week’s Investor Spotlight, I spoke to Dr. J. Michael Bennett, an orthopedic surgeon with years of experience serving the Houston community.
Aside from the potential returns, what made you decide to get started with investing?
Over the years I’ve learned that it is best to diversify as opposed to putting all your eggs in one basket. I’ve always looked at and been involved with a number of different investing opportunities. I’ve been looking at startup healthcare companies for over five years and that’s how I found out about AngelMD.
I got involved with AngelMD two years ago before anyone else in my local region (Houston). I started researching a company named VICIS when I stumbled on AngelMD. I went to the website and learned about the company. I ended up reaching out to AngelMD and talking to CEO Tobin Arthur. I was impressed, so I started introducing physicians to the platform.
Looking back, what have you learned and what would you have done differently?
I don’t have any regrets. I always look forward and learn from my mistakes. If anything, it would have been nice to find out about AngelMD a little earlier. I think that an opportunity like AngelMD to invest in healthcare startups would have been nice to have ten years ago.
What gets you excited about a potential deal?
It has to be something that I think will be a game changer. It has to either benefit the patient or streamline services. It has to be something that’s novel, and something that can be scaled. The company has to have a solid base and team. You can have an okay idea, but if you have a rock-solid team with an exit strategy, then I’m interested.
What warning signs do you look for?
I look for a few things. I look for how long the company has been trying to get funding and how long they have been in existence. Some warnings signs are if the company doesn’t have a reliable timeline and if they don’t have a good exit strategy. I look to see the backgrounds of the team members and the CEO, including how many and the results of the companies they have been involved with.
How much of a role does healthcare play in your portfolio? Do you see that changing?
I try to diversify, but essentially most of what I’m dealing with right now is healthcare related. It all comes down to our motto “Invest in what you know,” and as a healthcare provider, this is what I know.
What attributes do you look for in an entrepreneur?
The first thing I look for is the ability to listen. They need to be adaptable and listen to their staff and advisors. I like it when they are passionate and have a vision, but they need to be able to pivot. The industry can change and you have to have a plan A, B, C and D.
Is there other advice you could offer people who are looking to invest?
Invest in what you know. It’s our motto for a reason. I recommend that everyone do their due diligence when it comes to investments. The more knowledge that you have about trends in the healthcare sector, long-term outlook in the company – the more knowledge you have, the better.
It can be exciting, but you have to be willing to ride out the ups and the downs. It’s never a sure thing, but you can hedge your investment with information and knowledge, and I believe that is what AngelMD is the best at.
What are 3 things you’re really excited about right now?
First, I’m excited about regenerative medicine. There is a lot promise in regards to cartilage regeneration and using biological scaffolds. It’s very early still but I think it is the future of orthopedics.
I’m also very excited in regards to virtual and augmented reality in healthcare. I think the next phase of training surgeons new techniques is through augmented reality and virtual reality.
The third thing is the current interest in artificial intelligence. With big players like Apple and Amazon producing new technologies, it is setting up the infrastructure of a healthcare artificial intelligence database. I can see that being the next big thing in medical management and disease prevention.
What was the last book you recommended to someone?
It’s called Ready Player One. It’s a science fiction novel about a dystopian future where there is no transportation due to a massive oil crisis. The only way people escape their daily realities is through an alternate universe via virtual reality called “The Oasis”. It exemplifies a very scary reality of what could happen if we replace human interaction with technology, something that is not too far fetched. I also recommend “Talk Like TED” which highlights some of the best TED (Technology/Entertainment/Design) talks and looks into why those talks are so profound and how each speaker utilized some key characteristics to take a talk from “great to unforgettable”.
Windpact has big ambitions: to become the most advanced impact protection company in the world.
Before starting Windpact, CEO Shawn Springs had seen countless injuries during his NFL career, where the players were outfitted in what should have been the best gear available. But when Springs totaled his car in an accident, his children walked away with only scratches because of the impact technology in their car seats. What if he could translate that level of protection into helmet technology for use across a variety of sports?
I recently had the chance to speak with Shawn Springs, Windpact’s Founder and Chief Executive Officer. As the company ramps up for its syndicate funding round through angelMD, he had some valuable insight into the genesis of the company, and what it plans to do next.
Windpact is taking a unique approach to building a brand that is solving all types of impacts, from football helmets to race cars. Rather than building its own equipment and end products, the company partners with top brands to integrate its Crash Cloud system into their products. This holds the potential to scale quickly and spread their life-saving technology to more hands, across a variety of fields, with less cost and overhead.
First thing’s first – How does Windpact make money?
We don’t sell ski helmets or shoulder pads or race car seats; we partner with great brands to make their existing ones better. We call this our hybrid go-to-market approach. In some ways, we look just like a component supplier: we get paid on delivery of our padding systems to the host brand. But at the same time, we are a core brand partner to those companies, and work to market the Windpact brand inside other products. Think of us like the Gore-Tex(R) of impact protection.
Partnering with large host brands lets us leverage those companies for sales and distribution of the products, as well as marketing to and reaching end consumers.
What were the early days like?
We started to explore the market, and we quickly understood that this was an area that just lacked innovation. We can look at the automobile sector, and cars change every four years. Even tires change every year. For something to go thirty plus years without some big innovation? You know that there’s an opportunity.
In the early days we spent a lot of time working with very smart people – mostly top engineers in our partner engineering firms to unpack the problem and apply this technology as a solution, but also our IP experts and legal to ensure we had a solid foundation for a business.
I will never forget some of the first feedback we got when we put the technology in a football helmet shell and took it down to the Virginia Tech Helmet Lab to see how it would do on their new 5 Star rating scale – which has now become the gold standard for helmet rating. Dr. Stefan Duma, who ran the lab, cautioned me to manage expectations: he said that 96 percent of all new helmet concepts tested in the lab never even make it off the rig, much less earn a star score. At that time, there was only one 5 star helmet. I can still remember the one question he had for me after our prototype helmet received the best score ever tested at the time. He said, “Shawn, how did you do it?”
Talk to me about the Windpact approach.
This is a physics problem. We got a team of engineers together, and we started looking at how the technology worked and how to optimize it for different applications. It wasn’t long before we knew that we had something special. A technology that could improve protection in every sport that required a helmet without losing performance.
Today, when we are solving for a new application, we start with the engineers. They first work to understand the market, what’s being used and what is effective. We analyze the standards and learn how the industry measures a product: hockey glove testing is completely different than a helmet drop test, which is totally different from a military ballistic shell. We demonstrate improved performance using prototype testing pods, and once the client understands the gains, we get to work designing a distinct padding system, consistent with our brand. We want everything we make to be beautiful and effective.
Why not make your own helmets?
We learned a lot about the technology in the early days, but we were also pressure testing the business model and how to bring the tech to market. I knew I didn’t want to raise 50 or 75 million dollars to build a new helmet brand from the ground up and market it to end consumers. I just wanted to solve a problem. Focusing this technology on a single Windpact helmet, by definition, would limit how fast and far we can spread the reach of a critical new tool in the conversation about impact protection.
If you look at brands like Intel, Gore-Tex or BASF, that’s the model that we’re using. We found that there are other implications as well. We can apply the Crash Cloud to military, transportation and even healthcare. The companies who make football helmets? All they make are football helmets because that’s where they’ve sunk all of their marketing and R&D dollars.
We’ve already demonstrated improved performance in the automotive setting, where we were approached by a large US automotive maker to put our Crash Cloud system into specific interior areas of their vehicles. That’s a conversation we couldn’t be having right now if we were just a football helmet company.
Talk about your IP and how it works for the business.
We have an issued patent for our technology in helmets, and have a second application pending that expands that coverage. The key is that our IP is on the Crash Cloud system, not the specific materials. The better foam gets, the deeper our ocean becomes. Contrast that to companies whose core IP is around a certain formulation of a certain material, to build a certain product. That is very limited.
We use off the shelf materials, then we can optimize the system by using different foams or adjusting airflow to build particular products. That’s where things get interesting.
Give me an example of what that looks like.
With a baseball helmet, for example, there is a layer of impact attenuating foam and a layer of comfort foam. We tune our system by adjusting foams, skin thickness and airflow, to provide a pad that is softer than the hard impact foam, but outperforms it at high and low impact.
What about the challenges?
The biggest challenge is getting this tech out as fast as we want to in order to take advantage of the opportunities that exist today. We were surprised, for instance, to hear baseball equipment companies talking about the pressure they feel over the concussion concern. Everyone knows it’s an issue in football and hockey, but we are amazed to see how pervasive the need is for innovation in this area. At times it can be frustrating to balance staying lean and smart, with aggressive fundraising and team building when the opportunities are stacking up.
And how about milestones?
We won the NFL First and Future Startup Challenge at the Texas Medical Center during the Super Bowl, we won the NFL HeadHealth TECH Challenge II, we won the NFLPA-sponsored Leaders Sports Summit in London, we already have a product on the market for women’s lacrosse, and we are working on a number of new products with major brands we hope to be able to announce in the coming weeks and months.
There are challenges, but it’s fun. Now we are turning a corner and are ready to scale to meet the opportunity. That will bring a new mix of fun and challenge.
What about the NFL HeadHealthTECH Challenge?[Read the story from the NFL here.]
That’s big. It definitely helps when you have a former Pro Bowl athlete because you can get that level of visibility. But the fact that we are being validated in the scientific community is extremely humbling, and not just because of having your CEO be an athlete.
It’s great because the NFL is not just throwing money around; they’re looking for real products and not just research at this point.
What’s the future look like for Windpact?
Our focus today is on building a great company with superior products to help protect people, and we are well on our way. We have a terrific technology and are turning the corner from R&D to putting products on the market. We are excited to see what tomorrow holds for us.