Herwig Konings (MVCA): Before we dive right in, please give us a quick bio on yourself for those of our readers who may not yet have heard about you.
Christian Seale: I am an entrepreneur and early stage investor. Most importantly, I am a huge fan of Miami. Each day I wake up feeling super blessed to live here and be helping to build our entrepreneurial ecosystem.
So, that led you to found the innovation program and fund?
Yes, I want to transform healthcare and believe Miami represents the best petri dish to do that. I spent 24 hours in a hospital in Colombia with two parasites and paid $53. Four years later, I dislocated my pinky and went to an ER in New York where I received a bill for $17,300 a month later. Silly story, but it illustrates how we waste $1 trillion dollars a year on healthcare. My grandmother passed away from a misdiagnosis and my dad is blind in one eye because of a botched cataract surgery. Each of us has our story – I am committed to helping entrepreneurs transform healthcare for the better.
What is your overall investment philosophy to ensure the fund can do that?
We have a local and national network of healthcare customers who share their pain points and challenges with us. We invest in entrepreneurs solving those identified customer pain points and making our system more equitable, efficient and accessible. We have to believe the founders have a unique advantage that will enable them to win. If not, we do not invest.
This means how many deals exactly before you write a check? What does it take for you to get excited about an opportunity?
Last year we saw over 1,000 companies and invested in eleven companies. We typically like to see the ‘movie of the entrepreneur’ (multiple acts) and get a positive response from our customer network that they will/would buy the solution before investing. Time is the most valuable asset as an entrepreneur. So, if it is a ‘no’ for us we tell the entrepreneur why and then encourage she/he to continually update us as they progress.
How are you sourcing all these deals? What percentage of applicants get a deal?
We went to thirty cities across the US, LatAm and Israel last year. We like to get out there and share Miami’s growing healthtech ecosystem with entrepreneurs. Referrals from co-investors, founders and our network have the highest conversion into investments. Last year we invested in less than 5% of applications.
That’s impressive. How do you guys then size positions? Do you save for follow on?
We like to acquire a certain ownership percentage and size accordingly. We do save for follow-on, however, are very judicious about following on as to keep our weighted average cost basis low. Eric Paley from Founder’s Collective has some great thoughts on this on Nick Moran’s podcast – I recommend a listen.
What terms do you look for in a deal? How do you structure them (ie. board seat)? Any terms that are deal killers for you?
We have not yet taken a board seat though are very hands on with our founders. We always ask for pro-rata and for an option to invest in a significant portion of future financings
This isn’t your first time around the block either. Did your investment process change over the last year? What are the most significant things you learned?
Never rush to invest. An investment opportunity is like a bus. There will be another one coming. When a round feels rushed, we stay away.
What were your best deals? Your worst? Any good takeaways for our members?
We are early in the game so hard to tell winners vs. losers. We are fortunate all companies are still operating strongly. The takeaway is to double and triple check founders’ claims with third parties.
So you’re bullish on Healthcare. Why do you see big returns here?
We spend $3 trillion a year on Healthcare, 1$ trillion of that spend is said to be a waste. Over 50,000,000 Americans do not take their prescription drugs as prescribed because of cost concerns. Medical debt is the largest cause of personal bankruptcy. Medical errors are a leading cause of death in the US. Healthcare has to improve and big businesses will be built doing so.
Have you partnered with any investors in the area? Who?
We co-invested with multiple local angels on a few deals and followed-on in one of our companies with the Miami Children’s Hospital and a local VC.
How much capital is each team receiving that gets accepted to your latest round of startups?
$20K up front, access to $100K convertible note and additional follow-on financing. For example, we just led a $500K round in one of our portfolio companies (round has yet to be announced).
You’re currently accepting applications now, is there anything you want to say to entrepreneurs who might be a good fit?
As I mentioned earlier, you must be solving an identified customer pain point. Equally as important, why are you the most capable to win at this opportunity? What is your unique advantage? Why are you doing this – better said, what is your purpose? We look for entrepreneurs who have a clear vision for the outcome they want to achieve and a state purpose for why they are doing it.
That makes sense. Do you have any parting words for those who might not have that fit yet?
We see too many entrepreneurs who are building a great technology or product without ever having spoken to a doctor, stepped foot into a hospital, claims office, etc. Healthcare is super complex. We can not stress enough how important it is to understand your customer needs.
Thanks for your take, Christian! Good luck with your applications.
Entrepreneurs can apply for the accelerator at https://www.f6s.com/startupbootcampdigitalhealthmiami18/apply (applications are open till Sept 1st)
