Category Archive For "Investing"
Early stage investing is not only inefficient, but almost entirely driven by varying levels of guesswork and amateur efforts. In the meantime, virtually every other industry is getting smarter through the adoption of big data or artificial intelligence (A.I.). The primary goal of AngelMD is to revolutionize early stage investing into a legitimate asset class, combining the power of an expert network and artificial intelligence.
To understand the role of A.I. in investing, it’s important to recognize a core weakness of all investors: subconscious bias. Many of you are familiar with Moneyball, the Michael Lewis book chronicling the rise of data in the world of sports (baseball). It has had a fundamental impact on a sport that has remained largely unchanged for a hundred years. For years the statisticians swore that metrics like batting average and home runs should be the focus of scouts and managers. Billy Bean applied real statistical rigor to baseball decision-making and the rest is history. Concepts from Moneyball are now being applied to retail, insurance, travel, real estate, public market investing and more.
Lots of startups talk about being based around “big data”, or being A.I. centric. The reality is that saying you are a big data company doesn’t mean anything until you not only have the data, but you are also using it to make better decisions than you did without it. That’s why the early stages of AngelMD focused on growing the various member types within the network: startups, physicians, investors, and industry. We needed to harness the collective expertise of this community to more effectively identify trends and make better investment decisions.
Now, every time a member of our community logs onto the site, provides a valuation on their startup, reviews a company, follows a startup, takes a poll, attends an event, or invests in a company, we are able to gather that data. As this proprietary body of data grows, we are able to form that data into what we refer to as the Meta Knowledge Engine “Metis”.
The product team at AngelMD is always working to build features that can help you, while also engaging you. This “sticky” factor, where members of the AngelMD network return to the site and complete different actions, enables us to gather more proprietary data than anyone else.
We have also begun to augment this information with third party data sets including external investment transaction information, mergers and acquisitions data, patent data, and much more. All of this feeds an artificial intelligence engine that will get increasingly accurate and predictive with time.
It’s important to understand that adding A.I. to AngelMD does not mean that we are eliminating human judgement. Quite the contrary. The AngelMD network and platform grows from a center of physicians and other allied health experts. It is their input, cultivated and analysed by software, that allows AngelMD to outperform any methodology or system that has come before it.
Today AngelMD announced that it completed a syndicate investment comprised of its members into Noninvasix. This represents the second investment AngelMD has made into Noninvasix in the past year.
To reduce the incidence of neonatal mortality and morbidity, Noninvasix is developing a patient monitor to directly, accurately, and noninvasively measure brain oxygenation in preterm babies in the NICU. Early detection of inadequate brain oxygenation will allow neonatologists to intervene before cerebral function is permanently compromised.
Leading the AngelMD syndicate of investors was Jagjit Khairah, DO, FACOG, Department of Obstetrics & Gynecology, Kelsey Seybold Clinic who had this to say about Noninvasix: “The technological advances used with by Noninvasix to detect levels of oxygenation without needing a blood sample is remarkable. To have instant results using acoustic and laser sensor related probes will enable health care teams across many specialties of medicine to expedite critical care. Graham and his team have an amazing vision and are poised to help us change the way we address the needs of our patients on many fronts using this innovative technology.”
“Raising money through AngelMD is basically raising money from our future users. These are the people who understand best how Noninvasix’s technology can be a solution to some of their biggest issues.” said Graham Randall, CEO Noninvasix. “While we value all capital investment, having a group of engaged and supportive physicians backing us brings value well beyond the money.”
One of the subjects that we cover quite often is the idea that you should invest in what you know. For physicians, this often means that their first investments are within their specific specialty. But as time moves on, investors can find themselves eager to branch out. How do you get there, without branching out from what you know? The solution stems from expanding knowledge of the areas around you.
Advising & Consulting
The beauty of investing, and especially so within a network, is that you will be able to branch out your areas of expertise. The Warren Buffett method, often referred to as value investing, relies on understanding intrinsic values so that you can spot a good deal with the time comes. This level of understanding will come with your work expertise in some areas, but you will develop it in others over time.
One way to further develop your base of knowledge is to get directly involved with companies that are operating a step away from your current comfort zone. For instance, a radiologist could lend their expertise to a company that focuses on EHRs. Their first-hand experience in using EHRs could provide valuable insight to the company trying to build something new.
Often times, the best way to branch out is through advising or consulting for young startups. Advisory and consultancy roles are similar, but functionally different. The advisor could be seen as a mentor, likely familiar with a broad scope of the business. A consultant, on the other hand, is usually someone who fills a functional role such as a radiologist who helps to design the imaging portion of a new EHR.
The Network Effect
The AngelMD difference happens because of the network. But it’s not only a matter of pairing startups with investors. It’s important to follow startups that you find interesting. This allows you to connect with those companies, follow their progress, and be notified when they have needs to be met.
AngelMD provides the network of investors, and as you grow in your own role you will help by contributing more to the network. Angel investing is always risky, but there are ways to mitigate that risk. Build a diverse portfolio, invest with a group, do rigorous due diligence, never stop learning. Above all else, AngelMD’s strongest points of advice is to invest in what you know.
Each of the following startups joined AngelMD in the past month. Check out a new company in a specific innovation category.
We have a few mantras around AngelMD. One of those is “invest in what you know.” But recently we’ve also been focusing on the idea of “innovate where you are.” The theory is the same — you know more about the area in which you’re already working, so it makes sense to put your money or your work there.
Over the years, we’ve seen many instances where non-healthcare companies have used this same idea to break into the market. The latest of these comes from Lyft, an on-demand transportation company. Lyft is working toward building out a healthcare business unit that helps patients travel to non-emergency medical appointments. They company is focusing on its own wheelhouse, and then making key hires to help it transition into a new vertical.
Windpact is a great example of this idea. The company’s CEO is a former professional football player. He knew about the dangers of the sport, and he hired the right people to help build the solutions. Today Windpact is finding success outside of football, while still staying true to its roots, and even being recognized by the NFL.
The idea isn’t new, but it seems to come up more often these days. A few months ago, while we were at the Health:Further conference in Nashville, we heard these same suggestions. Dr. Suzanne Manzi, the Lead Investor for the AngelMD Syndicate for Neumentum, echoed the sentiment.
“I’ve seen promising companies, but sometimes they’re run by people who don’t have experience in the market that they’re trying to enter. They can have a great product, but the odds are stacked against them if they lack the background.”
That said, branching outside of your area of expertise isn’t forbidden territory. It’s a move that you have to handle in the right way. As Dr. Jack Lewin shared with us, it’s important to follow your passion, but it’s critical that what you’re following aligns with your experience. If that passion is too far removed, then find someone who can bridge the gap for your company. Otherwise you’ll be chasing problems that don’t exist.
Dr. Lewin’s example is HealthPals. Dr. Rajesh Dash started the company as little more than a lab with a single purpose. However, the market dictated that HealthPals could have a much larger impact than a single lab could provide. By partnering with the American College of Cardiology, HealthPals has been able to transform its business, while still holding true to its roots.
As the AngelMD network continues to grow, we see new companies join every day. There is nothing more motivating than watching a cardiologist, radiologist, or internist build a company that changes their field. Innovate in what you know, or connect with an expert in the AngelMD network. Are you next?