Innovation4Alpha Se1Ep3 – Investing in What You Know

If you’ve been around AngelMD for any length of time, you’ve heard us talking about investing in what you know. It’s the key that makes AngelMD investment so strong.

In this episode, AngelMD CEO Tobin Arthur discusses the topic, and helps to define the ways to use your own knowledge to make investment decisions.

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Innovation4Alpha Se1Ep2 – Financial Literacy

In this week’s episode, Tobin and Jeff discuss the methods that they use to continually increase their financial literacy. Make sure to check out the show notes below to find links to resources mentioned in the podcast.

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The Rise of the Family Office as an Investor

Three main drivers for macro-economic growth for any country’s economy include accumulation/deployment of capital, increase in labor outputs, and technology advancement. AngelMD is focused on driving healthcare growth by both unlocking access to capital and supporting the very best healthcare technology advancements.

Family offices today are playing an increasing role in deployment of capital on a global scale. In 2008, an estimated 1,000 single-family offices were in the world. Less than a decade later,  Ernst & Young reports the number has grown to more than 10,000 family offices globally. Family Office Exchange says that, while most estimates peg the current number of family offices in the United States to somewhere between 3-5,000, the real figure could be closer to 6,000.  

Research conducted by Dominic Samuelson, CEO of Campden Wealth, suggests family offices currently hold assets in excess of $4 trillion. Family offices are now capable of making transactions that were traditionally reserved for big companies or large venture and private-equity firms, therefore making them a notable force in the marketplace.  

The Global Family Office Report shows more than a quarter of family offices (28%) report being engaged in impact investing (i.e. investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return.) Two-fifths plan to increase their allocations this coming year, a push largely attributed to ethically-minded millennials moving up through the family ranks.

A major trend affecting future growth of family offices is to balance changing investment strategies for increased emphasis on direct minority-stake investments, yet more active participation in the strategic management of these investments versus rising operational costs and the need for specialist, more scarce talent.   

Impact investing by Family Offices is a natural fit on the AngelMD platform. Rather than building up staff to evaluate healthcare investment alternatives, Family Offices can rely upon the AngelMD network to source, evaluate and deploy capital to the best healthcare impact investments.

The JOBS Act created the regulatory framework for AngelMD’s syndicated investment model for accredited individuals. To be considered accredited, an investor must have a net worth of $1,000,000, excluding the value of their primary residence, or income of $200,000 each year for the past two years. In just over 24 months, AngelMD has been able to leverage our digital platform and network of accredited investors to execute 30 syndicate investments in leading healthcare startups.  

AngelMD physicians are able to play a key role in our syndicate investment vehicle by sourcing, vetting, scoring, and advising the best healthcare startups. A portion of the AngelMD physician membership also participates as investors and leaders in syndicate opportunities. This proven model, however, is materially enhanced when complemented by funds that are available to precede and/or follow-on to syndicated investments. This rationale underlies the creation of AngelMD’s Catalyst family of Funds.  

The Catalyst I LP fund leverages the network as an input to investment decisions made by each Fund Manager. Rather than investing in individual syndicates, family offices, institutional investors, and sovereign funds view AngelMD funds as the more efficient model for capital deployment. Over time, AngelMD will create a number of thematic funds that will deploy significantly more capital than our syndication model.

The AngelMD network of family office membership will continue to grow as they seek platforms that provide returns while simultaneously providing societal impact. Over time, we believe that the majority of our deployable capital will come through those relationships.

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New Startups on AngelMD – March 2019

The following companies joined the AngelMD platform in March of 2019. Follow companies in the Innovation Categories of your choosing to stay up to date.

Consumer App

Reviews from Friends

Consumer Product

As Directed Plus
Sleep BioLogics, Inc.
HealthMe Technology

Artificial Intelligence

riskLD

Diagnostics

DICOM Director

Patient Care

SaRA Health

Pharmaceutical

Calici Therapeutics Inc.
Icell Kealex Therapeutics

Medical Device

Nephron Technologies LLC
Addinex Technologies Inc

Mobile Health

ListenMD

Telemedicine

SurgTime

Oncology

Thompson Oncology Devices

EHR

INvaryant Inc.

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Multi-Sided Platforms: The Future of AngelMD

A multi-sided market is one in which two or more distinct companies benefit each other by the presence of a common customer. Diners Club is a prime example of this type of business. Diners Club provided a charge card which could be used to charge meals at a network of restaurants. The restaurants benefited by having access to Diners Club members, and Diners Club benefited by having customers that paid to use the card. As technology has overtaken much of our daily lives, multi-sided markets have expanded dramatically.

Today we interact with multi-sided digital platforms that enable transactions at a scale previously not thought possible. When we order an obscure product from Amazon, it ships from a seller that we might not have known about otherwise. Posting your resume to LinkedIn allows employers to find you, while helping to grow the active user base of the LinkedIn network. ln most of these cases, we would refer to these companies as B2B2C, though there are exceptions such as AngelMD in which there are many parties involved.

For example, AngelMD connects startups, physicians, investors, and advisors. In our early days, it was important to grow both the “buy” and “sell” side of our network to make it viable.  In just over 24 months from digital launch, we have over 10K physician/investors connected to over 1,200 startups resulting in over 42 investments.

Over the next year, our focus  is on scaling the network. One goal within this focus is to gather 100,000 physicians. Physicians add scale to the network by sourcing early stage startups, scoring the best companies, supporting the investment syndication process, and advising the startups post-investment.  

One way that we will help grow the number of physicians on the network is by organizing them into specialty communities. In collaboration with national societies such as the American College of Cardiology, we will be rolling out specialty homepages, online surveys, daily news feed content, and startup deal flow.

To meet the requirements of a multi-sided market, we have to do more than just cater to physicians. In view of this, startups will have access to a wide variety of services that help accelerate their success. In the next few months, the first AngelMD Boot Camp will be held at our new Denver facility. This boot camp will provide access to our new production studio for video pitches, in addition to expert instructors to sharpen the skills of our member CEOs. We are also finalizing an ecosystem of partners for regulatory, compliance, accounting, legal, go-to-market, and strategy development.  The final piece of the puzzle is our annual event that we will hold each fall. This event will provide AngelMD portfolio companies the opportunity to learn, grow, and share best practices.

An area that few people expect is AngelMD’s collaboration with the healthcare industry. Industry players will be able to expand their participation in targeted specialty communities while leveraging our network of experts to score potential acquisition targets. This scoring is further bolstered by access to physician affinity metrics that can be aligned to an industry player’s portfolio strategy. Alpha Conference 2020 will be a prime opportunity for the industry to connect to members of the AngelMD network to build their brand and market reach.

This multi-sided platform enables us to expand our market globally as well. While there are more details to come soon, at this point we will say that we are having conversations with a wide range of geographies about opening up new global markets to the AngelMD marketplace.

This series has covered the transitioning from analog to digital, the wisdom of crowds and the power of multi-sided networks. The next article will focus on leveraging big data and AI (Artificial Intelligence) on our platform.

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