Investor spotlight – Dr. Fred Duffy

Dr. Fred Duffy is a board-certified plastic surgeon in private practice in Dallas, Texas. His practice focus is on breast reconstruction following mastectomy, particularly microsurgical breast reconstruction. Both Fred and his partner, Dr. Wendy Whittington, serve as Regional Medical Directors for AngelMD. He and Wendy are both passionate investors, with Fred having recently served as co-lead Investor for the Fibralign Syndicate.

What Got You Into Investing?

I do follow the principle that you should invest in what you know. As a plastic surgeon, I make a decent living that allows me the flexibility to do some different types of investing. I have done really well over the years in real estate investing. Before my involvement with AngelMD, the only other medical investing I had made was nearly 10 years ago. For me, the answer to “why” is simply that I invest in what I know because there’s real power there.

But beyond that, in my case, I like to invest in technologies that can actually help my patients as well. For instance, I invested in Fibralign because they have developed a matrix that may improve lymphedema. I have a lot of patients who struggle with lymphedema. To be able to invest in something that might help my patients one day? That’s a wonderful side benefit.

What Have You Learned?

Looking back, any time that I have had an unsuccessful investment, it’s always been because I had a friend who said: “this will be a great thing.” The only time I’ve had a significant loss was when I invested in a friend’s company. This taught me the biggest lesson I’ve learned with high-risk investments — get as much information as you can. This is where AngelMD comes in.

I haven’t lost a penny in real estate, but in healthcare I don’t know the space as well. I live in the space, but I don’t know it. It’s important to me to be able to get a lot of information in advance. I’m amazed by the fact that we can get so much information about the companies on the AngelMD platform, and that this information can lead to better investment decisions.

For example, with Fibralign, I had an initial investment in the company and I had considered increasing the investment based on what I knew about the company. With the help of AngelMD, I found out that they had secured a $3 million grant through the National Institutes of Health. I thought, “you know what? I need to put more in because the NIH is not going to give them a grant if they don’t have promising data and a promising product.”

With AngelMD, we get so much more information about these companies before we make the initial investment, and then as you go along there’s the opportunity to potentially put more money in, with additional information that you don’t get from any other platform that I’ve ever used.

What Gets You Excited About an Investment?

I think that there’s something to knowing the management team. Before I invested anything in Fibralign, I had the opportunity to call the CEO and talk to him, as well as the CMO. So I like to see an experienced team, along with a novel approach.

I am interested in any product that solves one of the many issues that we have in healthcare right now. Wendy and I make a good team here because she’s on the technology side of medicine. She’s taught me a lot in our time together about the inefficiencies of the market, and the different approaches to improving these inefficiencies and patient care at the same time.

There’s so much money to be made by saving money or improving these deficiencies. Healthcare is a $3.3 trillion market and some studies suggest we waste forty cents of every dollar that we spend. So we get really excited to invest in products that improve patient care while saving money. For example, I’ve been a plastic surgeon for twenty years. I’ve seen so much money wasted in wound care. So I’ll tell you right now that if I see a novel product that comes down the pipeline to improve the outcome of wound care or open wounds, I’d be all in.

What About Warning Signs?

Duplicity. The benefit for me is that I know the marketplace, so the warning signs for me are when I have to ask whether a product is going to reimburse. Is this something that the hospital will include in their global fee, or charge for separately? If it’s something that gets included in the global fee, that’s not something that I’m going to invest in. Hospitals are under the gun already and you’re going to really have to have a compelling argument to have that product used and make money.

What Attributes Do You Look For in a Founder?

Honesty. You want honesty and that can be hard to assess. You want to look at their track record. You want to be able to talk to them directly. To be able to talk to someone, look them in the eye, and have a sense of where the company is going is powerful. I read people well, and I always have. You can get a good feeling, but it’s great to have a history as well.

This is where the network comes in. Do you have someone in your network who might know this person? It’s a simple fact that every time you invest, your network will grow. We’re having so much fun doing this, but that network is key. AngelMD provides an immediate network of smart, experienced, engaged people you can rely on.

What Are 3 Things that Excite You?

Wendy and I believe we should help those less fortunate than ourselves. We have recently adopted two great young men from Colombia and we are super excited about bringing these boys into our lives. I have two older boys of my own and Wendy has four of her own, so we now have eight kids between us. So what I am excited about is that David and Alexis are now Duffy boys!

What really jazzes me is trying new things, and one of the things I’m most excited about right now is AngelMD and being a Regional Medical Director. I am meeting incredible people and expanding my own network and teaching others about the power of investing with the AngelMD platform.

One of my other big passions in my life is my work in Haiti where I spend a fair amount of time operating and teaching plastic surgery. I am hoping to have a wonderful return from some of my investments, that I can then use to expand our efforts in Haiti.

We’re making progress. I went down to Haiti when I was in college, and I’ve been going down since the earthquake with a group out of Boston. We’re trying to build plastic surgical capacity. The country has ten million people, and it has one plastic surgeon. So we’re trying to gradually get a training program going in Haiti. We face huge challenges there but the work is very exciting and rewarding.

What Was the Last Book You Recommended to Someone?

There’s a wonderful book called All the Light We Cannot See, by Anthony Doerr. It’s an amazing book about the human spirit. It’s written by a guy that I heard speak in Dallas. It’s another one of those World War II novels, but it’s one of the most profoundly moving books that I’ve read about the perseverance of the human spirit.

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Investor Spotlight: Dr. J. Michael Bennett

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”.

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