# VC10X - The Shift From Diagnosis to Prognosis: A New Era in Healthcare - Sam Libby, TCB Capital Advisors

An episode of [VC10X - Investing, Venture Capital, Asset Management, Family Office, Wealth Management](https://invisiblenetwork.ai/podcast/1632806986), 2 Sep 2025, 40 min.

Audio: https://anchor.fm/s/a453ddd4/podcast/play/107680598/https%3A%2F%2Fd3ctxlq1ktw2nl.cloudfront.net%2Fstaging%2F2025-8-2%2F406705532-44100-2-6d3d6dac7c7e1.mp3

Sam Libby is a veteran healthcare investment banker and the founder of TCB Capital Advisors. After a long career, he's now dedicated to a single mission: making a real, tangible impact on patient care. Links: ⭐ Sponsored by Podcast10x - Podcasting agency for VCs - https://podcast10x.com TCB Capital Advisors website - https://www.tcbcapitaladvisors.com/ Sam Libby on Linkedin - https://www.linkedin.com/in/sam-libby-b4530b48/ 🎙️ Hosted by Prashant Choubey Follow Prashant on X - https://x.com/ChoubeySahab Follow Prashant on LinkedIn - https://www.linkedin.com/in/choubeysahab In this episode, we talk about - - AI Evolution in Healthcare - Predictive & Prognostic Medicine - Holistic Patient Care Approach - Healthcare Startup Investment & Funding - Patient Data Democratization & lots more Timestamps: (00:00) Introduction (02:21) Sam's career journey and motivation for founding TCB Capital Advisors (04:06) Significant transformations in the healthcare space (04:19) The evolution of AI in healthcare (06:01) Proactive and preventative healthcare trends (08:09) Holistic wellness and patient care approach (10:30) Digital health and technology trends (13:31) The potential relationship between AI and doctors (17:21) Data privacy and security in healthcare AI (19:35) Acceleration of innovation in healthcare and biotechnology (21:38) Evaluating the investability of healthcare businesses (24:12) Go-to-market approach for healthcare startups (28:29) Strategies for early-stage healthcare companies (31:38) Building trust and credibility in healthcare sales (32:16) Navigating the reimbursement maze for healthcare innovations (35:46) Advice for founders passionate about patient care (38:17) Rapid-fire round about investments For sponsorship or guest appearance requests, write to prashantchoubey3@gmail.com Subscribe to VC10X on Youtube, Spotify, Apple Podcasts.

## Transcript

[0:00] We're seeing, you know, companies with strong clinical
[0:03] data be able to get from concept to market much quicker and
[0:06] that's going to be one of the things that I think changes
[0:09] patient care in the biggest way. A person is more than you can
[0:12] see in a quick 5 minute session and they're more than just a
[0:15] collection of symptoms. But you can't just take a pill
[0:18] to solve everything. A lot of it does have to do with
[0:20] lifestyle and decisions. The empowering of patients to
[0:25] manage their data, to have access to their data, to be able
[0:29] to generate and take a bigger part of their care is a really
[0:33] big trend. Hey everyone, this is.
[0:37] Prashant and I'll be host for the VC Tenets podcast, and today
[0:40] we'll be tackling some of the biggest questions in the future
[0:43] of healthcare. What if we could just predict a
[0:46] disease like cancer five years before it even develops?
[0:50] What is the real role of AI in the doctor's office?
[0:53] Is it a partner or a replacement?
[0:55] And how can the smallest lifestyle changes become more
[0:58] powerful than any pill we can take?
[1:01] To guide us through these monumental shifts is Sam Libby,
[1:05] a veteran healthcare investment banker and the founder of TCB
[1:08] Capital Advisors. After a long career, he is now
[1:11] dedicated to a single mission, making a real, tangible impact
[1:15] on patient care. So without wasting any time,
[1:18] let's dive straight in. This episode is sponsored by my
[1:21] own podcasting agency called Podcast NX, where I help venture
[1:25] capitalists, asset managers, allocators and family offices
[1:28] and starting their own podcast and building a strong brand.
[1:31] Podcast NX is designed in a way to work well with the busy
[1:35] schedule of investors, where we handle every aspect of podcast
[1:39] production so you can focus on investing.
[1:42] If you're looking to build a strong investor brand, starting
[1:45] a podcast should. Be right up your priority.
[1:47] List. It's the only form of marketing
[1:50] where you can showcase your strong network, in other words,
[1:52] access to limited partners and founders and grow that network
[1:57] further and contrary to what most.
[1:59] People hear it's still very early.
[2:01] To start a podcast, there are at least 10X more newsletters and
[2:04] thousand X more blogs than there are podcast in this world.
[2:09] You can learn more about our podcasting services at Podcast
[2:12] ten-x.com. I'll make sure to add the link
[2:15] in the description below. Enjoy this episode.
[2:18] Yes, I'm so good to have you on the VC10X podcast.
[2:20] How are you doing? Good, good.
[2:22] Thank you for having me. Yeah, pleasure having you on to
[2:25] start things off and we first have story behind founding PCB
[2:29] Capital Advisors with a patient first mission that you have
[2:34] there. Yeah, happy to.
[2:35] So I've spent the entirety of my career as a healthcare
[2:40] investment banker. So worked on a number of
[2:42] different platforms. You know the last one that I
[2:45] worked on, I was brought in to build out their their healthcare
[2:48] practice. They were primarily focused in
[2:50] financial institutions at the time and then became a principal
[2:53] owner and, and had an exit from that, from that company.
[2:57] And, you know, following that exit, I was really sitting back
[3:00] and saying, you know what, what has kind of my career led to?
[3:04] Has there been an actual impact? I mean, I've been in healthcare
[3:07] for the entirety of it. And, you know, as a, as a
[3:10] healthcare banker, we always talk about, you know, the
[3:11] patient impacts and the patient impact.
[3:13] And as I look back, I just, I didn't, I didn't feel that, you
[3:16] know, I had actually impacted, you know, human, human care, the
[3:20] patient care in a positive way. And so when thinking about what
[3:24] I wanted to do for the rest of my career, that that's really
[3:26] where I started. It was saying, OK, how do I, how
[3:28] do I do something where first and foremost is the impact on
[3:33] human health and, and patient outcomes.
[3:36] And so, you know, I've been, you know, blessed and very lucky to,
[3:38] you know, we've grown to about 18 people now.
[3:40] And so my, my partners, as well as, you know, my board and, and
[3:45] all the people that, that support the company are really
[3:48] all focused on that mission 1st. And so we, we built a unique
[3:51] suite of services. We even made some direct
[3:54] investments with this being the core mission where we believe if
[3:58] we're focused on where patients are going to, you know, have a
[4:01] positive impact, everything else is going to work out, we're
[4:04] going to find a way. Absolutely, Yeah, that's quite
[4:07] interesting. And from your vantage point,
[4:10] having spent so many years in this industry, what do you think
[4:13] are the most significant transformations that are
[4:16] happening in the healthcare space right now?
[4:19] It's a good question. So I mean, there's, you know,
[4:21] things are changing so rapidly right now that it's almost kind
[4:24] of a a hard question to answer. I mean, at the, at the forefront
[4:28] for everyone is kind of the, the evolution of AI.
[4:31] Now when you look into healthcare and particularly like
[4:34] diagnostics, you know, AI and machine learning were a core
[4:38] part of, you know, genetic testing, liquid biopsy for a
[4:41] really long time. It was more on an applied side,
[4:45] you know, but the bar of accessibility and the cost to be
[4:48] able to leverage some of these these tools has dropped.
[4:52] And so we're seeing a lot more innovation on the, the other
[4:55] side of ease of innovation is also a lot of noise.
[4:58] There's, you know, a lot of companies in market that are,
[5:03] you know, proposing that they have the cure or the way to
[5:07] screen for a certain patient or to, to manage a patient's life
[5:10] cycle, but they have no clinical data.
[5:12] And you know, so I think with with the AI evolution and and
[5:18] revolution we're seeing, you know, companies with strong
[5:21] clinical data be able to get from concept to market much
[5:25] quicker. And that's going to be one of
[5:27] the things that I think changes patient care in the biggest way.
[5:30] Absolutely. Quite interesting and I've
[5:32] started tracking. How early in a conversation does
[5:35] AI come? Up this was. 2 minutes and 20
[5:39] seconds for this conversation. Quite early but I've had ones
[5:44] where it was even earlier than this.
[5:46] But those are AI focused ones. But to my next question, we are
[5:51] seeing a growing emphasis on proactive and preventative
[5:56] healthcare, right? How are you seeing this play out
[5:59] in the investment landscape? So you know, the, the longevity
[6:04] medicine side of things is really interesting and, and, and
[6:08] the longevity medicine overlapped with prognostic
[6:12] approaches is, is pretty interesting.
[6:13] So I mean, when you look at like GLP ones and what they've done
[6:16] to kind of obesity medicine, that's been one change.
[6:19] But then you look at the clinical trials that Novo is
[6:22] running right now on the, the potential increase or the
[6:26] potential decrease for the risk of Alzheimer's in people
[6:30] utilizing their, their products. And so, you know, there's kind
[6:33] of this overlap between preventative or longevity
[6:37] medicine and then, you know, the impacts downstream on
[6:40] neurodegenerative conditions that are extremely debilitating.
[6:45] I mean, when you look at the, the Alzheimer's space, I mean,
[6:48] there's two approved drugs right now that are for a delay of
[6:52] symptoms. They're not even, there is no
[6:54] cure. And so there's the, the current
[6:58] paradigm for patients has been hopefully you find what is mild
[7:03] cognitive impairment, the, the early indicator that a
[7:06] neurodegenerative condition is on the horizon and you find it
[7:10] soon enough where then treatment can be used.
[7:14] Now, if we can start to offset the risk for these patients with
[7:17] longevity medicine, it's going to be amazing to see what can
[7:20] happen. Because, you know, some of the
[7:22] conditions that that happened downstream are so debilitating
[7:25] that even if the, you look and you say, OK, it, it, it's not a
[7:30] fatal condition. It the quality of life, the
[7:33] quality of life decreases so rapidly and you know, so
[7:37] permanently that you know the further we can delay these
[7:40] things, the better. Absolutely.
[7:42] And there's also this idea of holistic Wellness that I started
[7:45] to gain traction where people have when the awareness has
[7:49] started to kick in that there are different aspects of your
[7:52] personal health, like it can be mental, physical, emotional,
[7:56] spiritual, different angles to it, right?
[7:58] How do you see that playing out in the space and what are you
[8:05] seeing the solutions come up in that space?
[8:09] Yeah, and you know, for, for, I'll just say for my own
[8:12] personal, you know, healthcare, I've always seen D OS for this
[8:15] exact reason, which is, you know, a person is more than you
[8:18] can see in a quick 5 minute session and they're more than
[8:21] just a, a collection of symptoms.
[8:23] I mean, you know, even if something like depression is
[8:26] left unchecked, it, it can, you know, a person can actually have
[8:30] a lot of the same symptoms of an autoimmune condition.
[8:33] And it's actually a mental health issue, you know, and I
[8:36] think, I think the, the society embracing mental health
[8:40] challenges changes the conversation a lot in this area.
[8:44] And so looking at a person in, in a holistic view of, you know,
[8:48] is, is there an illness? Is there a condition that has to
[8:52] be managed? Is there a mental health
[8:53] condition? How do these all intersect?
[8:56] And then also lifestyle, I mean, you know, diet plays a big
[8:59] factor in, you know, risks of certain cancers, you know, kind
[9:03] of the, the, the society as a whole, embracing the fact that
[9:08] if we change our behavior, and sometimes it's the smallest
[9:10] change can lead to a much, much more positive outcome for
[9:14] someone 10 years later, 20 years later.
[9:17] We obviously saw that with embracing quitting smoking.
[9:21] You know, looking at it, it's not just about the cancer risk
[9:24] today, but also what's the impact downstream.
[9:27] But then it's become a much broader conversation around
[9:30] everything from, you know, caffeine to drinking to, you
[9:33] know, food coloring and dyes and other carcinogens.
[9:36] And, you know, it's amazing that that's the way people are
[9:39] thinking now because it's you can't just take a pill to solve
[9:42] everything. A lot of it does have to do with
[9:43] lifestyle and and decisions. Absolutely.
[9:46] Yeah, that's quite interesting. And these days I'm also seeing
[9:49] there are certain apps in which you can scan products and it
[9:52] will tell you what are the harmful substances in it and
[9:56] should you avoid that or not, right.
[9:58] So love the progress that's happening there.
[10:00] And I think in the medium to long term, it will also force
[10:04] companies to avoid including these harmful elements because
[10:07] you'll see that that is impacting sales and they will
[10:11] have to, you know, hold true to the numbers and start putting in
[10:15] the right ingredients that are actually good for people.
[10:17] Right. Moving on to digital health,
[10:19] which has been a buzzword for your some really big companies
[10:24] in that in that space. How are you looking at that
[10:27] right now? What are the trends there?
[10:30] Yeah. And so I, I still remember when
[10:31] everything was HCIT and then it moved to digital health and
[10:35] it's, it's changed a couple times since then and kind of now
[10:38] doubled back. So the, the, you know, digital
[10:42] health and, and, and health tech side of things, where we're
[10:44] really interested is in areas that impact either directly or
[10:49] downstream patient outcomes. And so anything that can improve
[10:54] clinical workflow so a patient can get treated, get treated
[10:57] quickly, and also that we can properly identify the patients
[11:01] that need a specific indication. So, you know, one of the areas
[11:05] that's interesting to me is when you, when you think about like
[11:07] neurodegenerative conditions and the clinical trials around
[11:10] there, there's, there's, there's two components that both have
[11:14] the, the exact same issue. So clinical trial design and
[11:18] neurodegenerative and patient treatment have the same issue,
[11:22] which is can we find the patient quick enough that we can, you
[11:25] know, put them into the, the process to move forward?
[11:29] And they both have different downstream effects on, on the
[11:33] patient management or, you know, actual clinical side, it's if
[11:37] you can't find them quickly enough, they can't get treated.
[11:39] The therapeutics are no longer eligible.
[11:41] And you know, it's, it's devastating.
[11:43] And on the clinical trial side, there's the same issue, which is
[11:46] if we can't find the patients quickly enough, we can't, the
[11:49] clinical trial can't have its endpoints designed
[11:51] appropriately. And then you have potential
[11:54] failures that could otherwise be avoided and therapeutics that
[11:57] don't make it to the market. So there's one side, which is we
[12:00] have to identify patients and get them to the right place as
[12:03] quickly as possible, be it for a clinical trial or, you know, or,
[12:07] you know, the standard workflow with from going to a doctor to a
[12:11] specialist and then to, to treatment on on the other side,
[12:14] it's the democratization, as a lot of people like to call it,
[12:18] of healthcare, which is the ability to control more of your
[12:21] data. So, you know, I choose to use an
[12:23] aura ring or have a glucose monitor.
[12:25] You know, how much data do I myself want to have?
[12:27] And then you know, the, the play between even even the major
[12:32] labs, so the reference labs now offering tests that you know, a
[12:35] person can be able to buy themselves.
[12:37] And so the, the empowering of patients to manage their data,
[12:42] to have access to their data, to be able to generate and take a
[12:45] bigger part of their care is a really big trend.
[12:49] And, and without the, the, you know, revolution of digital
[12:53] health in the last, I'd say 10 years, it wouldn't be possible.
[12:56] Because I remember in my early 20s, you, you weren't able to
[12:59] get the same level of data and you weren't able to go to your
[13:02] doctor and say, Hey, these were the tests that I've recently
[13:05] take and this is the results. And then work with your doctor
[13:08] and your care. Now, I don't believe that going
[13:11] so far as being like a, a web MD doctor for myself is the right
[13:15] call. I, you know, but getting
[13:17] additional data, being able to monitor things that I discussed
[13:20] with my physician. So I'm an active participant in
[13:24] my care, but still I'm always going to lead on the doctors who
[13:27] have trained at this and know how to actually guide me to the
[13:30] right thing. Absolutely.
[13:33] And I think with the coming of AI and some reports saying that,
[13:37] OK, this AI can read this report better than a doctor can, and
[13:42] such reports are out there, do you think that the battle
[13:45] between AI and doctors can actually get fierce enough in
[13:50] the near future? What do you think?
[13:53] So I think I think it makes good headlines.
[13:58] You know, I remember when, when IBMI think it was 2014 or 2015,
[14:01] they bought all of those, you know, radiology images to try to
[14:06] teach Watson how to become the, you know, automated tech
[14:10] radiologist. And, you know, since since then,
[14:13] there's been obviously a, a lot of innovation in the radiology
[14:16] space. But, you know, at the end of the
[14:18] day, you still need a radiologist to do your reads
[14:20] because they're, they're highly trained and they're able to see
[14:23] nuance. Now there has been AI overlays
[14:27] that help a radiologist do a second read or help on some very
[14:31] simple scans to be able to basically turn through things
[14:34] quickly and then get the radiologist to do the second
[14:37] read. But you know, it's, it's, it's
[14:41] saying that like AI will replace, you know, this test or
[14:44] this physician or this specialty.
[14:47] It's more in my opinion about buzz and creating that type of
[14:53] fear based consumption because it's not only in the medical
[14:55] field we're seeing it where they push that out about creatives
[14:58] and about movies and music and everything.
[15:01] So, you know, either they're all right and AI is going to replace
[15:04] us all and we're all just going to be sitting on the couch doing
[15:06] nothing that's possible or this is a tool for us to use to be
[15:12] able to expand. We have two arms.
[15:14] Suddenly we have 8. You know, we can do more.
[15:17] And, you know, I think, I think the fear actually really hurts
[15:20] the adoption. And you know, the physicians by
[15:23] nature are risk averse. They and we want them to be
[15:27] right. If they were, you know, complete
[15:29] risk seeking behavior, they wouldn't be the people we
[15:31] entrust with our care and our health and our families.
[15:34] And so I think, you know, can we automate and use AI to automate
[15:38] note taking, you know, for for patient fires?
[15:42] Well, that's a good thing. That's positive.
[15:44] That frees up the doctor to do more care to be with the
[15:47] patient. Can we help radiologists to get
[15:50] a second read so they can feel more comfortable with what
[15:53] they're doing? Instead of kind of like the, the
[15:55] positioning where like, oh, they might be replaced.
[15:57] It's like I, I just, and maybe I'm a dinosaur, but the truth is
[16:01] that I don't, I don't see it as that.
[16:03] I see it as empowering the physician.
[16:07] And I think because the physician at the end of the day
[16:09] is the one that makes the decision on what they apply in
[16:11] the clinical setting. And so like the, I've never seen
[16:15] a pitch where it's like we're going to replace this specialist
[16:19] ever actually then get FDA clearance or approval depending,
[16:23] and then get CMS reimbursement and then get a payer decision.
[16:26] Because there's a lot of steps to be successful in the
[16:30] healthcare space, especially when it comes to patient care.
[16:33] And the strongest advocate is, well, the first strongest
[16:37] advocate is the patient themselves.
[16:38] And the second is, is the physician.
[16:40] And we want their buy in and, and, and companies should want
[16:43] their buy in. Absolutely, completely agree
[16:46] with you. And, and there's one more key
[16:48] aspect of AI in healthcare and that is of data privacy and data
[16:53] security, right? Because if AI is listening to
[16:56] all those doctor prescriptions that are happening in real time
[16:58] and taking notes and storing that data and maybe learning on
[17:01] that data, then what happens to data security?
[17:05] And you know that can be this in, in that way because you
[17:10] don't know what AI is going to do with it, right?
[17:13] So, and there's compliance around it as well.
[17:15] How do you handle health data of individuals, right?
[17:19] So what's your take on that? Yeah.
[17:21] So I was actually on a call with one of my strategic advisors
[17:27] who's been in the pharma space for an exception in a long time,
[17:30] brilliant individual. And he was talking about
[17:34] clinical trials on cough. So like focused on like COPD and
[17:37] other breathing issues and he was like discussing how
[17:42] technology that can be used for cough measurement.
[17:44] So, you know, duration of the cough, you know, what was the
[17:47] pitch and they, they look at a number of different factors.
[17:51] It is actually a key focus for a lot of clinical trials.
[17:55] There was a tech that was designed at one point that would
[17:58] record every time he coughed it would record it.
[18:01] The problem was didn't factor in that if I'm out in public and I
[18:05] start coughing and now you're recording, you're recording
[18:07] outside conversations and now you actually type a hit on wire
[18:12] or wiretap laws and recording laws and all these other things
[18:15] that they hadn't factored in. So they created this great
[18:18] technology with a great measure, but they hadn't designed it to
[18:21] operate in the real world. And it actually led to that,
[18:23] that being dropped, as you know, some others new technology
[18:26] that's looking at it, you know, but it's, it's so, you know,
[18:29] it's kind of really, I think I've also like quality and
[18:33] assurance stuff or even HIPAA, like tech designed in a vacuum
[18:38] that can't operate in the real world is problematic.
[18:40] And sometimes that's why it's great to have outside advisors
[18:43] and people could take a look and be like, have you ever thought
[18:45] about this and give that outside perspective?
[18:48] And so like, you know, we're, we're working with certain early
[18:51] stage companies and we'll just ask them the simple question of,
[18:54] you know, OK, well, what about the hip considerations?
[18:56] And then we start a whole robust this discussion about, you know,
[18:59] how they're going to manage patient data.
[19:02] And if they haven't started thinking about that, they
[19:03] suddenly start thinking about it becomes a work stream on it's
[19:05] own. Absolutely.
[19:08] And with AI coming into healthcare and biotechnology,
[19:11] there has been tremendous acceleration in that space as
[19:14] well. All big companies, Google,
[19:17] Microsoft, all coming up with new findings and new models that
[19:21] have actually increased the pace of innovation in the healthcare
[19:25] domain. What are some the key areas of
[19:30] accelerated improvement that you're saying or are excited
[19:32] about and closely tracking? Yeah.
[19:37] So I guess there's a number of different things.
[19:40] So on one side, on the diagnostic side, what's really
[19:45] interesting to me is the movement from, from just
[19:48] diagnostics to prognostics in nature.
[19:50] And this is, is something that's possible.
[19:52] So you know, there's a company that we're working with Clarity
[19:56] that recently got FDA clearance for their Clarity breast
[19:58] offering and they came out of Mass General.
[20:02] And, you know, the the founder had a question, which is how do
[20:05] we identify the high risk patient population for breast
[20:08] cancer? Because, you know, 34%.
[20:11] Of of diagnosis in the in in the indication are in breast cancer
[20:15] are late stage, so stage 3 or later, which is a problem in
[20:18] mammography is widely adopted and and can work very well, but
[20:22] not for all women, be it you know, but what what she realized
[20:27] is and what clarity has worked on is looking at a standard
[20:32] mammogram. They can see the way that breast
[20:36] tissue has developed in the way that it looks and be able to
[20:40] assess the risk of in five years a woman developing breast cancer
[20:44] and they're able to identify who's medium risk, low risk and
[20:46] high risk. And so that movement from like
[20:50] we were discussing earlier with the radiologist tech to date has
[20:54] been focused on better diagnosis.
[20:57] Now the technology has evolved so we can look at predicting
[21:01] where people are going to go and what issues they're going to
[21:04] develop. And and you know, clarity is the
[21:06] first FDA clearance of its kind that kind of set the stage for
[21:10] what will be expected of, of companies in the future to get
[21:12] this type of approval. But it's amazing to see now kind
[21:16] of the what, where this innovation will go and become.
[21:20] Now, obviously there's a lot of other innovation happening on
[21:22] therapeutic development and lowering the cost of preclinical
[21:26] So we can look at, you know, different compounds and see
[21:28] what's going to work in a, in a virtual environment.
[21:31] So there's a lot of other innovation.
[21:32] But you know, this is 1 area that to me is really exciting is
[21:35] being able to find the patient who will get sick before they
[21:38] get sick. Absolutely.
[21:39] Yeah, that's very important. And coming to how you evaluate
[21:44] businesses that you're working with, how do you evaluate the
[21:48] investability of a new business that you are tracking?
[21:53] Yes. So, so first and foremost is, is
[21:55] clinical data. You know, we, we love the the
[21:59] brilliant concept and idea, you know, but there's going to be a
[22:04] question of you, can they develop clinical data or have
[22:06] they developed clinical data? That's really the
[22:10] differentiator. The market right now and for the
[22:12] last couple of years has probably been the toughest
[22:14] market that I've ever seen in my career.
[22:16] And so, you know, I always kind of tip my hat to the companies
[22:19] that have had challenging raises, but are still around
[22:21] and, and have been able to close around or even just pull capital
[22:25] internally to keep going on their mission.
[22:27] Because that being around at the end of a challenging market for
[22:30] an early stage company is an accomplishment in themselves.
[22:32] And so they should pat themselves on the back.
[22:35] But then it's really for, for every dollar that they bring in,
[22:39] they need to move towards establishing credibility through
[22:43] clinical data and, and, and through the actual utility of
[22:46] their idea. A lot of companies will do their
[22:49] first raise with little seed and then they're like, OK, I need
[22:51] office space and I need to grow and they start hiring all these
[22:55] people that early stage, you know, those early stage dollars,
[22:59] use them in the clinic, you know, push the, you know,
[23:03] everything should be about the singular mission of
[23:06] accomplishing whatever your goal is.
[23:07] If it's therapeutics, if it's diagnostics, if it's
[23:09] prognostics, it's moving towards that because you know, that's
[23:15] the the number one thing. Once a company has misstepped
[23:18] and you know, has to do a big pivot or a recap or something
[23:21] like that, it's very tough because you're saying, well, we,
[23:25] we were trusted with investor capital for three years or four
[23:28] years or five years. And you know, we utilized it in,
[23:30] in the best way we knew at the time, but it turned out to be
[23:32] wrong. But now we know how to do it
[23:34] better. So, you know, I think the first
[23:36] thing you look at is, is the vision from the top is the
[23:39] leadership and like how they're applying that?
[23:42] Are they taking a disciplined approach and making sure that
[23:45] they, they treat investor capital with a certain level of
[23:48] respect? A founder or a A-Team that's
[23:52] raising capital is a steward of investor capital.
[23:55] It's not their money. And I think they need to have
[23:57] that approach. And then the second is, you
[23:59] know, how closely are there's clinical milestones?
[24:02] Because in our field, that's how you differentiate yourself.
[24:05] Is it worked in the clinic. Now we're moving forward, we can
[24:08] we can apply it in the in the healthcare environment and
[24:11] actually make a difference. Absolutely, yeah.
[24:13] That's an important learning there for founders that you have
[24:16] to be a steward of capital that you raise and any missteps can
[24:20] actually cost you big, can cost you the entire company as well
[24:23] at times, right? So you have to be very careful
[24:26] with that. With that, let's talk about the
[24:28] go to market approach of healthcare startups.
[24:31] Let's say a new healthcare startup has started.
[24:34] What should be their zero to, you know, first traction
[24:37] approach? Should they be raising funding
[24:40] in that duration or should they try to bootstrap it until then?
[24:43] And what should be their go to market strategy there?
[24:47] Boostrapping is really, really hard and I, I don't think people
[24:52] realize how hard it is because anytime I and I don't, I don't
[24:57] care who the company is. If someone assumes it's going to
[24:59] be $1,000,000 and only cost 1.5 to 2, if they think it's 20,
[25:02] it's, you know, 25 to 30, you know, things become more
[25:06] expensive. It's just the way it works and,
[25:10] and when, when someone tries to bootstrap their first coming in,
[25:12] people, obviously there's a lot of examples of people who've
[25:14] done it, but there's a lot of examples of people who've tried
[25:16] it and failed. You know, more just because you,
[25:20] you've run out of runaway. At a certain point, it becomes
[25:22] really challenging. And then they pull from their
[25:23] credit cards and then they destroy their credit all, all
[25:26] for, you know, the the goals that they're trying to achieve.
[25:30] And you know, there was the other issue, which is if you
[25:33] bootstrap through your pre seed, who's investing in your seed?
[25:38] If you bootstrap through your seed, who's investing in your a
[25:41] because what happens is each round kind of helps breed the
[25:45] next round. And so the with the exception of
[25:47] your earliest adopters, your Angel investors, a lot of
[25:50] there's going to be people in the local network.
[25:53] So depending on your geography, it's easier or harder.
[25:56] I mean, you know, aerials like Austin have a great Angel
[26:01] investor scene and have a lot of support.
[26:05] Boston is the same. Saint Louis has 1.
[26:07] You know, if you're, if you're in a, in a region where you
[26:10] really don't have that ecosystem, it could be quite
[26:12] challenging. But let's just say a founder is
[26:15] in an ecosystem where there's Angel investor networks,
[26:18] there's, you know, precede investors.
[26:22] Having them in your company is going to help because when you
[26:25] do your seed round, some of them might participate as well.
[26:28] But they also all have friends and they all know other
[26:30] companies. And so it kind of helps fill out
[26:32] your seed round and then your seed round helps fill out your
[26:35] A. I've seen a lot of companies who
[26:37] get to their A and like, they just don't have any support from
[26:41] the current investors because they've grown too big for their
[26:44] investor group. And now you're trying to find a
[26:46] new lead investor with no allocation to the current
[26:50] investors and say that you're, you're ready to go to market.
[26:53] And it's really, really hard and a lot more companies than you
[26:57] think and up in that place with like, I'm ready to do my Series
[27:00] A, my product has been approved. I can't, I can't hire a
[27:04] commercial team. I can't do the market access and
[27:07] the payer work that I have to do because I can't get the funding.
[27:10] And those rounds are so extremely tough because by the
[27:12] time you get to Series A, they're like, OK, you need to
[27:14] be, Some are saying you need to curse commercially ready, but
[27:17] others are saying I need to see commercial traction.
[27:19] And how can I, how can you have commercial traction without the
[27:21] A? So you need the A for the
[27:22] commercial traction, commercial traction for the A and you know
[27:26] it gets it gets quite challenging.
[27:28] Absolutely, Yeah, Yeah, that makes complete and it's like a
[27:30] treadmill and it's easier to get on when the speed is less and
[27:34] then increases speed from there from round to round.
[27:37] You can progress from there and it only helps as your body keeps
[27:40] getting warmer. But there's also a separate case
[27:44] for bootstrapping. I think it's a different style
[27:46] of building a company all together.
[27:47] If you don't plan to raise venture money, if you don't want
[27:50] venture scale, then bootstrap is an option for you.
[27:53] And also you can open those doors at growth scale when you
[27:56] have proven growth model, you'd still need traction that is a
[28:00] given. But I think in industries like
[28:03] healthcare or DPEC that would just be hard to do on just your
[28:07] own money. So I think raising funds would
[28:10] be the best approach. But on the go to market strategy
[28:15] for healthcare start-ups, what's their first goal or approach is
[28:18] like getting to early testers first?
[28:20] Is that the first milestone or is it more like getting to the
[28:24] product and the early trials is is that the first goal?
[28:28] Yeah. And so I, I think it depends on
[28:31] what the end goal is that you're looking for.
[28:34] So like there's some companies that are built to be acquired.
[28:37] They don't want to commercialize their product, they want to sell
[28:40] it. So really your goal then is to,
[28:43] you know, take your concept and your idea and develop it far
[28:47] enough and get enough clinical data where somebody on the other
[28:50] side can diligence it. And that's, it's a funny
[28:53] business model because sometimes it's like it's, it's common
[28:56] therapeutics and diagnostics and things like that, where to
[28:59] commercialize that might actually cost, you know, $40
[29:02] million.50 or more. And that's not even included
[29:06] what's going to cost for the full clinical trial.
[29:08] And so you, you know, that you need to be part of a bigger, a
[29:11] bigger system, bigger company. And so then it's really about,
[29:15] you know, how do we make every dollar count in, in the clinic
[29:17] so we can get clinical data, so they can diligence us, so they
[29:20] can make a decision. And what's important there, I'll
[29:23] also note is that company should be having discussions with that
[29:27] potential acquirer as early as possible.
[29:30] It's like, because if you're, if you're structuring everything
[29:33] and building it so it can be bought, then you should make
[29:36] sure what you're building to be bought meets the specifications
[29:39] that the company's going to need a diligence.
[29:42] And so, you know, that's my thought on that when it comes to
[29:45] to other things, to companies that actually want to grow on
[29:48] scale, you know, research is key.
[29:51] And so again, going back to getting in the clinic, getting
[29:54] clinical data, being able to publish on it, being able to
[29:56] create research collaborations with leading institutions, you
[29:59] know, the, the bona fides that are going to give you the
[30:05] credentials you need. Because downstream, if you're,
[30:09] if you're selling into the hospital systems, if you're
[30:11] selling into primary care, if you're selling into whatever
[30:14] your buyer is going to be, they're going to be looking at
[30:17] who you know, who you've been working with, what you've
[30:19] accomplished in the time. And it's really great to have an
[30:23] awesome product demo and be able to say, you know, look at this,
[30:26] it could completely revolutionize how you're, you're
[30:29] treating patients. And the doc, the physician,
[30:32] let's say, in a hospital system might love it, but then you go
[30:35] to the administration and they're one step removed from
[30:38] the clinical workflow. And then we're like, OK, well,
[30:41] where has this been validated? Where has it been de risked?
[30:43] And you're like, OK, well, I work, you know, we published
[30:45] papers with this, this, this institution that starts to
[30:48] change things. So you have to think about how
[30:50] do we build the not only the use case and build it to work within
[30:55] the environment we're selling into, but how do we build it?
[30:58] So one of the investors who I, I had a dinner with, you know, he
[31:02] explained it as he invests in things where there is an echo
[31:06] chamber. He hears about a deal from one
[31:09] person, then mother person that someone else is talking about
[31:11] it. His network is hearing about it.
[31:13] It's not just, you know, you send an e-mail, you say here's a
[31:16] cool idea. Do you want to do something
[31:18] here? So, so you have to build that
[31:21] foundation and build that network because you know,
[31:23] investors in today's market, they make consensus decisions,
[31:28] but so do hospital systems and so do the buyers and so do the
[31:32] customers and so even patients. And so, you know, building that
[31:35] credibility and that that support is going to be really
[31:37] important. Absolutely makes sense.
[31:40] And I believe that is the exact framework if you want to start
[31:43] selling to big healthcare providers as well.
[31:46] It's it's true this exact process of building trust and
[31:49] credibility and after the process is somewhat more mature
[31:54] than you can start selling to more mature buyers as well,
[31:57] right. So let's talk about the
[32:00] reimbursement maze, right? Securing reimbursement from
[32:04] peers is a critical hurdle for many healthcare innovators,
[32:09] right? What strategies can start-ups
[32:11] employ early on to increase their chances of favorable
[32:14] reimbursement? Reimbursement decisions.
[32:16] Yeah, this, this is a really good question, especially for
[32:22] for companies that are on the cutting edge of, of new
[32:25] technology because you know, if, if you kind of, if you have a
[32:29] better version of a prior test, you might be able to leverage a
[32:32] prior CPT code. And so then really it's
[32:34] clearance or approval and then kind of moving forward with what
[32:37] exists, you know, and then there was obviously great companies
[32:42] that focus primarily in market access and you don't do a lot of
[32:45] work with the payers. And for companies that have the
[32:48] funding, they're great partners. And you know, like we, we have a
[32:51] number of them that we call when like a company we're working
[32:54] with has some work there. You know, on the other side,
[32:58] it's really looking at it and this is part of kind of
[33:01] evaluating the thesis. I, I think about when the early
[33:06] stage companies are trying to, they say, oh, we're going to
[33:10] sell into the concierge physician market.
[33:13] What I hear is I don't have a payer strategy or I don't have a
[33:16] full commercialization strategy. Now some will start there as a
[33:20] means to generate some revenue to then be able to put money to
[33:23] work and do, do the, the pay work that's required.
[33:26] But you know, the, the pharma, the pharma sector, you know, has
[33:31] a more evolved version of this is they're submitting for
[33:34] approval. They're already doing their
[33:35] payer work because it's a very tried and true model.
[33:38] They know how the process goes, you know, and also they have the
[33:42] funding to do that. On the other side when it comes
[33:44] to early stage startups and kind of the, the no mains lane, which
[33:48] I'll say is like diagnostics or even, you know, digital AI
[33:51] applied as prognostic and things like that.
[33:54] All of these rules are being written and then, you know,
[33:57] obviously it's, it's going to be pricing is one of the key
[33:59] things. So like, you know, a lot of the
[34:01] diagnostic companies will try to fight for like the highest
[34:03] pricing possible, which in my mind kind of goes against their
[34:09] whole mission driven messaging. You know, if I'm going to as a
[34:12] perfect example, as if I'm going to create a, a diagnostic test
[34:16] in the mental health sector to identify patients and you know,
[34:20] who will benefit the most from medications and, and
[34:24] schizophrenia. And then I price it at $700.00,
[34:28] eight hundred $900 A test in a market where, you know,
[34:33] schizophrenia as an indication does lean towards having a
[34:36] patient population classified as Smis.
[34:39] So severely mentally ill individuals that will possibly
[34:41] need a hospitalization and you know, are on a lot of times on
[34:47] the lower end of the socioeconomic spectrum.
[34:49] So now my test is expensive. My patient population doesn't
[34:53] have means I haven't done the market work to make sure that I
[34:57] can have the biggest impact. And when I go to the payer and
[35:00] they say, you know, here is the benefit, it's really challenging
[35:04] to to keep my cost. And so, you know, some of that
[35:08] work should be done by the the startup.
[35:10] It's saying, OK, what is a price that the patient in this sector
[35:14] can actually, you know, pay and then build things around that.
[35:19] So when you're going to the payer, you actually have a, you
[35:22] know, an economic model that makes sense and not one that
[35:25] when they do come down and they do push your price down,
[35:27] suddenly your company can't function.
[35:29] Yeah, absolutely. And thanks for sharing that.
[35:32] And now to my last question, which is if you had to give one
[35:36] piece of advice for the founder who is passionate about patient
[35:39] care healthcare, but is not so much geared towards fundraising
[35:43] or when's the capital, what would that piece of advice be?
[35:48] So I think at it's core, treat the VC as like people speak to
[35:56] them before you want to raise your money.
[36:00] So most venture funds see, you know, an individual investor in
[36:05] a venture fund will actually really dig into like 1000
[36:08] companies or more. Some of them are digging into
[36:10] thousands and thousands of different companies to find the
[36:13] ones that they're actually going to do work with.
[36:15] And then they actually invest in less than like, you know, .01%
[36:20] because you know, they have to make decisions based on one
[36:24] patient impact returns, their stewards of LP capital.
[36:29] So they're looking at a number of different things and they're,
[36:31] they're trying to minimize risk and maximize the upside.
[36:35] And so if they meet you on Monday, they're not going to
[36:37] write you a check on Wednesday. You know, so like I always, I
[36:42] always like to, when we're working with the company they're
[36:44] doing around, it's like, let's have conversations with people
[36:46] four or five months before you're going to raise, go have
[36:49] lunches, talk to them about what you're trying to do, get their
[36:52] input and their thoughts. They have networks.
[36:55] If, if AVC really likes you and they can't invest for whatever
[36:59] reason, maybe you're too early, they might introduce you to 3-4
[37:02] other people who could invest. But it you have to be able to
[37:06] make that connection beyond just kind of treating them like a
[37:09] money pinata. And I think that's the main
[37:12] thing. You know, these are VC investors
[37:16] look at a ton of companies, which means they also say no a
[37:20] lot, which can means they can tell you why they said no.
[37:24] You can learn from them. They like to mentor a passionate
[37:27] founders. And so you know, again, it's
[37:30] just like anything else, create the relationship, invest in the
[37:33] relationship. That relationship could pay
[37:35] dividends and it might be funding, but it might be
[37:38] knowledge, it might just be a great personal relationship.
[37:41] And if they if they approach everything like that, I have
[37:45] found that when you approach investors like that, for the
[37:48] most part, they actually care about the patient.
[37:50] They care about making an impact.
[37:51] They're just on a different side than the founder, and that makes
[37:54] them a real powerful ally. Absolutely.
[37:56] Yeah, that's great advice for founders listing not just in
[37:59] healthcare, but I think regardless of which industry
[38:02] you're operating in, that's great advice.
[38:04] A relationship driven approach always wins.
[38:08] All right, now to the rapid firearm with and I'll ask you 6
[38:11] quick questions about the investments you're making and
[38:15] you have to give 6 quick answers, right.
[38:17] So the first one is what are the sectors and regions you invest
[38:21] in? I I love the lipid biopsy still
[38:24] but I'm focused on single cancer tests.
[38:26] Pan cancer just hasn't seemed to pan out.
[38:29] Love neurodegenerative on the diagnostic prognostic side and
[38:32] anything that starts to break the late stage cancer
[38:36] diagnostics curve and moves that earlier when it's treatable.
[38:40] Absolutely. What's the typical stage where
[38:43] you're interested in an investment?
[38:46] C to Series A. OK.
[38:48] Do lead rounds. No, we tend to follow.
[38:51] We've also done some off round investments where we put money
[38:54] directly to working companies that we really believe in.
[38:57] OK. What's the typical tax size you
[39:00] put in? So it's, it depends, it's a bit
[39:02] all over the place. I mean, you know, we have
[39:05] $3,000,000 invested in one company, but primarily we're
[39:08] looking at, you know, a couple $100,000 and you know, kind of
[39:13] mixing that with the banking services that we offer as well
[39:18] as the consulting services. So we try to kind of marry it
[39:20] all together in a merchant bank approach.
[39:23] Got it. Where can founders get in touch
[39:25] in case there's a direct approach?
[39:27] Yes. So our website
[39:29] istcbcapitaladvisors.com, you know, we, we again, we try to
[39:34] take that personal approach. And so we, we welcome inbounds,
[39:38] we love to have discussions with founders and you know, we might
[39:41] not be the right fit or anything like that, but we're all in the
[39:44] friend business. And so we love to introduce
[39:46] interesting companies where they might be a better fit to
[39:48] somebody else too. Absolutely.
[39:51] Last one, where can our listeners follow you?
[39:54] Same. So we have a LinkedIn where you
[39:57] know, we'll, we'll put out updates as, as things happen and
[40:00] then on our website. Awesome, I'll make sure to add
[40:03] those links in the show notes below.
[40:05] Thanks so much for making time for this time.
[40:07] It's been an incredible conversation and I wish you
[40:09] happy investing. Thank you so much, pleasure
[40:11] chatting.

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