This episode features Ivanny Franklin, Managing Partner at MedSight Capital, who brings a wealth of experience from her background in molecular biology and her decade-long tenure at NAMSA. The conversation centers on the shifting paradigms of medical device investment, specifically how the industry is moving away from service-based models toward a focus on clinical outcomes.
Etienne and Ivanny explore the critical intersection of global regulatory bodies—such as the NMPA in China and the FDA in the US—and the necessity of a cohesive clinical evidence strategy. Ivanny emphasizes that for startups, understanding market-specific data requirements is not just a regulatory hurdle but a fundamental component of commercialization and investor conviction.
The discussion also dives into the "patient empowerment" movement, fueled by the convergence of wearables, AI, and at-home monitoring. Ivanny shares her bullish outlook on technologies that give patients control over their data, while acknowledging the tension this creates for physicians and the ongoing need for rigorous regulatory oversight to ensure safety and effectiveness.
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Think of a Special Purpose Vehicle (SPV) like a "carpool" for investors. Instead of a massive bus (a Hedge Fund) that picks up everyone's money and decides where to go over several years, an SPV is a single car created for one specific trip—in this case, one specific company.
Investors put their money into the SPV, and the SPV makes one investment in one startup. This allows smaller investors or family offices to pool their resources together to act as one large "passenger" on a company's cap table.
"FDA and NMPA, for example, are quite strict in clinical evidence coming from in-country... as a startup, you really need to understand can we run a single trial with multiple global sites to achieve clearance cohesively." - Ivanny Franklin
"I’m an advocate for [at-home monitoring]. I do think that’s the future. However, there is concern around what types of information should patients be receiving and how are they going to act on that information?" - Ivanny Franklin
We want to hear from you! Did this breakdown of investment vehicles help you? Do you have suggestions for future MedTech topics? We provide personalized responses to every listener who reaches out. Send your thoughts, reviews, and questions to podcast@greenlight.guru.
This episode is brought to you by Greenlight Guru. Moving from a "service-based" model to an "outcome-based" model requires impeccable data and quality management. Greenlight Guru offers both QMS (Quality Management System) and EDC (Electronic Data Capture) solutions designed specifically for the medical device industry. Whether you are gathering clinical evidence for an NMPA submission or scaling a revenue-generating product, Greenlight Guru helps you stay compliant and efficient.
Etienne Nichols: Everybody, welcome back to the Global Medical Device Podcast. My name is Etienne Nichols. I'm the host for today's episode. And today I want to talk a little bit about investments and specifically in founders building the next generation of regulated, regulated medical technology.
So, our goal is really to focus on what's really happening in the industry. I want to talk about maybe some convergence across wearables, diagnostics, how AI is changing, what's fundable and what actually is scaling in MedTech and where evidence, clinical, utility and the commercialization play into all of those things. One of the things I'm specifically interested in is how outcomes over services are becoming the new bar in healthcare.
And we actually, we being Ivanny Franklin, who I'm going to talk a little bit more about. But how are you doing today, Ivanny?
Ivanny Franklin: Yeah, nice to see you. Appreciate the opportunity.
Etienne Nichols: Great to have you with us today. I know we have an episode; we have a panel coming up at LSI where we're going to be, we're going to be talking about something similar, outcomes over services and how that's becoming more and more important in the, in the healthcare and now the MedTech industry.
So, Ivanny, today I'd love it if you were able to share what this looks like for teams advancing in MedTech, diagnostics, digital health.
We'll talk about some hardware, software, data workflow and what founders need to do to prove and earn that conviction in a highly technical, highly regulated market.
Give a quick intro. Ivanny Franklin, I know you've seen MedTech from every seat. Ivanny started in the lab as a molecular biologist. She's, she spent a decade at NAMSA helping diagnostic and emerging MedTech teams get products to market.
Now she backs founders as the managing partner at MedSight Capital and she's also a board member at the Gorski Family Foundation. So today we're going to be talking about where MedTech invest, investing is headed as wearables, AI and consumer expectations collide with what actually is going to win in regulated healthcare.
I'm sure I missed something in there, Ivanny, but what would you add to.
Ivanny Franklin: That wonderful intro and appreciate all of that? I think where I can share maybe some expertise and some different views is at my time at NAMSA and then at my time post, NAMSA is seeing thousands of medical devices going through global submissions.
Whether that be through FDA or notified bodies or PMDA or NMPA, etc., clinical evidence associated with that. So, I've been able to see both micro and macro trends in that time and then using my expertise and seeing those trends in a way that is investable and an impetus to help products commercialize more effectively.
So happy to share thoughts, happy to have a discussion, happy to share what I'm looking for and also what I want to see more of perhaps.
Etienne Nichols: Yeah, that would be great actually, because I'm sure those who are listening, there's got to be some out there who would probably like to talk to you from an investment standpoint as well.
So yeah, if you want to share with you, interested in looking for, we can jump into that at some point. You mentioned NPA and I'm not going to try to ask you to go too far down the road to China, but is there anything interesting there?
Ivanny Franklin: You know, NMPA is. So, first of all, I think the terminology is important.
A lot of people still call it CFDA. I think it's important to address it as NMPA.
That particular regulatory body is quite stringent in terms of the clinical evidence that they allowed to come into and out of the country. So, I think as medical device companies are looking and startups are looking at which markets to prioritize.
One thing that's important for NMPA is really understanding what data can be leveraged from multiple markets. FDA and NMPA, for example, are quite strict in clinical evidence coming from in country in order to achieve the submission versus if we look at Europe MDR, IVDR regulations, notified bodies, a lot of those regulatory bodies allow for clinical evidence to come from other countries, for example China or the United States.
So NMPA is a big buzzword as well, always as FDA. I think in terms of commercialization strategy for startup companies, it's super important to engage with regulatory, regulatory consultants that understand how can data be leveraged so that you don't have to be running multiple clinical trials so that the data that you're collecting can be used for multiple markets, multiple submissions, multiple approvals, if you will. I think in particular NMPA and FDA globally are likely the most stringent.
Etienne Nichols: Yeah. And we don't have to get into the specifics on how to achieve clearance or commercialization in each region necessarily. And maybe I should just clarify the acronym NMPA being the National Medical Products Administration for China.
It's the primary Chinese regulatory agency.
Ivanny Franklin: Yeah. And formerly known as CFDA. Yeah, correct.
Etienne Nichols: Yeah. And it's just it keeps coming up on my radar and at some point, I'm just going to have to go check it out and see what's going on over there.
But it, and so I don't know from an investment standpoint or if, if there are certain.
Well, let me back up a little bit. The UK, EU and the US, the FDA.
Ivanny Franklin: Those are the Brexit as well.
Etienne Nichols: Yeah, yeah, yeah, well, those are the big, the big ones. But then more and more I keep hearing China. So, I don't know if that's something people should have on their roadmap, but it's. Yeah, it's interesting.
Ivanny Franklin: Yeah. I think as you're looking, you know, you, you have to do market analysis of where your, your device will be most commercially successful. So that, that's, I think perhaps step one, step two being what does it take to get that device on market? And if you're looking at, on a global scale, you really need to understand what are the regulations and the regulations therefore drive the clinical evidence requirements.
And in particular NMPA. China is, yes, a large market, but also quite challenging to leverage data that perhaps you've collected in other markets. So, to speak frankly, if you want NMPA clearance, if you want NMPA approval, probably need clinical evidence from China, FDA and United States a bit in the same boat.
On a global scale, I think you have better ability to leverage that data where you don't necessarily need to run a clinical study to commercialize the device to get clearance in that market of entry.
So, first, absolutely need full understanding of market potential.
Secondly, then what does it take to get clearance there? Thirdly, and what I think you need to use perhaps regulatory consultants or CROs for is understanding can we run a single trial with multiple global sites, multiple global regulatory oversight in order to achieve clearance cohesively without necessarily having to run, for example, three, four, five different clinical studies to gather evidence for clearance?
Yeah, there's a way todo it.
Economies of scale or efficiently. I think that's why you need partners.
Etienne Nichols: Absolutely, absolutely. And apologies to those listening if I've gotten us way off track. You know, I just, I can't help every time I hear about these different things. So whatever region you're going in, that was good advice.
Whether it's Brazil, New Zealand and, and Australia, etc., Health Canada, all these things. There's a lot of things to weigh, a lot of the considerations to make.
So, Ivanny, you've been in commercial clinical strategy now capital. I'm curious if you've seen any shifts in the market maybe in the last five years, things that you know, okay, you were in the market five years ago, there was one thing that you need to be thinking about now today it's a little bit different and any thoughts there?
Ivanny Franklin: Yeah, I'm seeing a big shift in trend in kind of the at home monitoring and the shift to patients having a bit more control and oversight of data access to information as well.
Physicians love and hate this for different reasons.
You know, if we look at the. It's empowering patients indeed.
I think physicians and regulatory bodies get concerned with once patients have this information, are they properly equipped to manage that information? Are they properly, you know, equipped to make medical decisions based on that type of information? However, I'm an advocate for it, I'm actively investing in it. I do believe in it.
I do think there needs to be heavy oversight with it. So, whether you're talking about, you know, wearable devices, OTC testing within diagnostics, at home monitoring for things like diabetes or different metabolic analysts, you know, the patients receiving that information I think is really valuable. I think we should empower patients with that. I think that is the future. I think that's beautiful. Covid showed us a bit of that.
For example, buying an over-the-counter COVID test and understanding do I have this infectious disease? That's beautiful.
I do think there needs to be maybe care and oversight or there is concern around what types of information should patients be receiving.
How are they going to act on that information?
What does the interface look like with physicians, whether that's hardware, software, AI, etc.
How can they be properly prepared and how can the physicians be equipped to properly manage their patients once they're receiving that information? But huge, I want to stress, very big advocate for.
I do think that's the future. I do think it does need to be properly managed.
Etienne Nichols: Yeah, it's, it's interesting because I mean, I don't know how just based on what you've said, I'm sure you probably have a little bit of attention in what's going on in the market right now.
I mean, just a few weeks ago the FDA came out with some guidance documents about practicing enforcement discretion on wellness devices or what they might, might have considered previously classified, maybe their wellness.
And some of that could have come out of the whoop strap situation.
I personally, I love using the product and, and, and so I have this again, it's attention. I want the regulation because I want quality data.
Ivanny Franklin: Right.
Etienne Nichols: But I also want it to be available, and I want it to be out there. There's an interesting gap that I'm curious if you could speak to or if you have an opinion on.
And that gap is say I,I wear an aura ring. I, I wear, I'm naming brands. I probably shouldn't. But okay, so I've got all these different wearables.
Ivanny Franklin: The examples help, I think people to understand.
Etienne Nichols: But yes, yeah, I've got all this, these wearables. I'm pulling all this information in and I personally, I believe in a convergence. Right now, there's the wearables that is pulling all the data.
But previously we could have done that, but we didn't do anything. We couldn't do anything with the data. But now AI is able to assimilate that data into information.
And then like you said, the patients want to own their outcomes. But let me say just this hypothetical situation. I've got this data and I as a patient feel empowered.
I take it to my doctor. My doctor's like, please, you know, I'm busy.
Where's. How do we, how do we bridge or thread that needle to where the information I'm gathering about my own body and I want my doctor to do something or help me get to the next level, whether it's a health span, activity, longevity, whatever, how do I get that partnership going? From a device standpoint, do you have any pieces of advice for the, the people producing those devices? Because there, that has to be a communication or else it's just going to go nowhere.
Right. Or what are your thoughts?
Ivanny Franklin: Yeah, you're absolutely correct. And you're talking about multiple worlds combining. Right. And everybody has different perspectives. So, I think number one, number one most important is regulatory oversight. I'm going to use FDA as an example.
It's FDA's job and they're doing a great job at defining what information should the device be allowed to provide, what information should the device, the data or the type of information be allowed to be provided to the patient? And how is that interface back to the physician?
That's also all of those types of moving parts. And all of that information about data or clinical evidence is going to drive how that device is developed and what type of information, those types the end users are allowed to get.
So, I think as if I put myself in, we have an investor arm and then we also have an ARM with the developer.
From the developer standpoint, I'd be looking very heavily at what am I allowed to do and how do I get the appropriate clinical evidence to demonstrate that the device is safe, effective and that the information to the patient is appropriate.
You also, we can probably move next into reimbursement and, and payment for that as well.
From an investor standpoint, you want to make sure as your pressure testing these startup companies in these medical devices that are pursuing these regulatory pathways, you want to make sure that they're aligned with the regulatory body and the reimbursable body.
Otherwise, that you know, you can have an unmet clinical need. You can have some somebody who is willing to invest in a wearable product, for example, that might be safe for the patient. But I think what's super important and what I do as an investor to pressure test all of that is to make sure that is it aligned with the regulatory body, does the regulatory body and do the physicians and you can do that through primary market research.
Is there an unmet clinical need that's adoptable?
Does the device and the intended use statement align with the regulations?
In many cases, especially as we're incorporating AI, those regulations are changing daily.
So, I think it's important to have a partner that understands how to interpret and ensure that commercialization strategy is effective, safe and successful. I think the statistic now you probably know better than I do at the end but 90% of MedTech companies fail and then when you start looking at ones that are incorporating, you know, OTC patient monitoring or kind of at home care, AI failure rate is even higher.
Highly driven by regulations. So, I guess to answer your question, I think it's beautiful, but I think we still have to follow as we have for the past 55 years, what it takes to commercialize a medical device per the regulations so that it's safe and effective for not only users but physicians.
Etienne Nichols: Absolutely 100% agree. And I think that regulation, if people don't appreciate what FDA is doing, then they don't recognize what FDA is doing because they really are just to emphasize what you said, they're keeping things safe and effective.
And so many different case studies as to how FDA got in place and why we need that regulation in place.
So, from an investment standpoint, when you're looking at these medical device companies today, what are some of the top three, I mean or whatever number if you want to throw out there that are non-negotiables. This is no matter what it it must have X, Y, Z my our.
Ivanny Franklin: Particular thesis like within MedSight Capital our particular thesis is heavily weighed on I, I have shifted a bit. I'm not agnostic to this also not exact agnostic to any therapeutic area but I have shifted more towards revenue generating sage companies.
Okay. So, I am now, you know, my minimums are I need to see clinical evidence. I, I, I'd like to have, I'd like to see a clearly defined regulatory plan.
What's your regulatory classification?
How can this be leveraged globally?
What are your interactions with regulatory body?
You know one being FDA.
Etienne Nichols: Can I ask you about that? So, if these are revenue generating companies and you talk about the regulatory plan, is that for expansion or future products or what's the thought there?
Ivanny Franklin: It's more so, so that I can equip, equate inflection points of success.
If for example, we're talking at a probably a seed stage company, they don't know if they're 510k or a PMA. For me, huge red flag because the clinical evidence associated with that approval or clearance is on the scale of millions.
So, I feel almost as if my investment is not going to be utilized for properly that they're not properly prepared to manage the money my group is willing to invest.
That's that I have moved a bit past that. Again not, not against it but there are so many things that can go wrong between then and commercialization and post that I, I, you know as investors we're constantly de risking. Right.
So, so regarding regulatory and reimbursement those are huge inflection points for me that I see a lot of red flags during the investment process or during the diligence process that my group does.
If we move past reg and now we're moving into clinical evidence, everybody knows, you know, for example if you're a Genova or PMA that that's a, that's a bigger trial you're going to have new clinical evidence. However high statistics associated with higher exit value.
So, I always am very clear with my port co companies that I'm speaking with.
Not a bad thing if you're De Novo or PMA. I just wanna know if you are.
Etienne Nichols: Yeah.
Ivanny Franklin: And also, do you understand what it costs to generate the clinical evidence to satisfy the regulations?
So, I think that those, a lot of startup companies that we speak with, I feel like are not understanding that early enough, not communicating that to investors.
I also on the flipside think not a lot of investors are also asking some of those questions.
So if we look at how you tie reg reimbursement and clinical that has a huge impact on how much we invest and at what time point I have found, we have found that once you get toa point where the product is cleared and you're now putting it in the hands of physicians, they're utilizing it totally different set of questions.
What's your retention rate of physicians?
How are you in servicing the product? How are you providing training as you're releasing new products, are you getting new physicians? Are the existing physicians’ clients, you know, customers repurchasing, if you will.
All of the totally different set of diligence type questions that we are evaluating when we get to that stage. My particular thesis is focused more so on that.
Couple reasons. One, quicker exits. So, when, when you start investing in companies that are revenue generating and commercialized and now looking to open a B round, for example, for scaling a commercial team and starting strategic discussions for exit.
Totally different set of diligence questions that we are evaluating.
Benefits to some of my LPs that might be older, you know, instead of a seven-year exit potential, we might be looking at two years. So, when I'm working with my team on building a strategy around how do we deploy and at what check size, all of these things come to play. And again, agnostic to the therapeutic area, more so the strategy of the company and the founding team.
Etienne Nichols: Yeah, that makes sense. When I think about kind of what you're saying, you made me think of something. Someone told me once and I'd love to get your opinion on this because you know, especially as an investor, one person said, well there's good money, there's neutral money and there's bad money. Good money is where you get the money, but you also geta lot of help with that comes along with that money.
The network, the introductions, their expertise. Neutral is just money and not gonna say bad, say no to that and then bad money. And they also said I might not say no to bad money, but that's where they actually want to control what we're doing.
I'm curious how you, how you help the companies or I know you sit on a lot of boards or at least that's who I was.
Yeah. What are your thoughts there?
Ivanny Franklin: Yeah, you know, I. So, we take the approach. Every single LP within our network provides value.
I have no requirements for board seats. Even if I'm leaving around. I always, and our entire group always offers expertise in health and health, whether that's regulatory reimbursement, clinical commercialization strategy, introductions to strategics.
Many of the LPs within our group are ex FDA, ex regulatory body KOLs, existing or not.
You know, KOLs that have perhaps shifted more towards investing.
I utilize them not only in the diligence process, but also in support of the company. We have no requirements for necessarily a board seat. However, we do participate.
We do provide that as an option.
I think a lot of the value we provide is not only during diligence, but post diligence. Post investment is, you know, we obviously want a great return. So how can we help you? So, we do not invest in companies where we feel like the founding team can't manage it if we don't exist.
We're, we are just there to provide additional support.
I do utilize those LPs however, very heavily in the diligence process to pressure test. I've had a couple instances where for example, you know, PortCo will tell me that they're 510(k), I'll run it past one of my ex-FDA LPs and they'll say no, absolutely, this is the PMA. So, shout out to Adam Saltman.
I use him heavily. Same with reimbursement codes. We've had port codes that say these are, I'll ask, you know, is the product reimbursable? Have you done a strategy? What are the codes?
They same kind of thing. I, I have had port codes that have made up codes. I've asked, you know, some of my LPs and they've said these codes don't even exist.
I've had some where, you know, the, those codes are not applicable to the product.
So then when you look at kind of later stage companies that are already commercialized, you know, that's a, that's a, that provides a huge impact on my, on our return and the return that I've promised to my LPs.
So, I think important part of the process, certainly.
Etienne Nichols: Yeah, that sounds, I mean that's hugely valuable both to you and to them because you're wasting each other's time if you're chasing codes don't even exist.
Ivanny Franklin: And just be honest, it's okay with me if they say we haven't figured it out yet. I said, okay, let me help you figure it out.
Let's do it together. And you know, it's not necessarily a no means no, it's just maybe no right now. Or let me help you get to that point, and these are the reasons why.
Etienne Nichols: Yeah, but I gotta believe a deception is an immediate disqualification.
Ivanny Franklin: Absolutely. If you're lying, then. Then we're out. We'll figure it out. Yeah, yeah, yeah, yeah. There's no. Nobody wins there.
Etienne Nichols: No. And you mentioned several different things that you could maybe stumble on or. And I'm gonna put deception off the table. Cause I mean that's an obvious. But. But these other issues that people are struggling with or facing, you dealt with A lot of different companies. I'm curious, are there certain pitfalls that. Oh, you know, even, especially revenue generating companies Because I want to make that quick distinction as well.
So early stage, they've got their submission, they're struggling towards, they got their clinical, all the different things they're working towards. But then you mentioned the other different obstacles or challenges that a revenue generating the company may face whether it's readoption for new products.
I'm picturing like you want that Apple Sway where the new iPhones coming out, you got people lined up around the block to trade in their old one for the new one.
And I don't know if that ever happens at MedTech, but what are some challenges or things that you either really like to see or. Man, I see this a lot, and I wish they could get through this.
What are your thoughts?
Ivanny Franklin: Yeah, so when we're looking at, let's talk about revenue generating companies, for example toys, you know, a lot of times they'll open up a B round and so most of our diligence questions at that point are associated with use of funds.
Okay, so why if you are already on the market, do you need more money? Okay, is my first question.
So, most of the time the response is we need to scale, we need to scale manufacturing, we need to scale commercial individuals, we need to hire a sales team, we need to expand into different channels. We're develop, developing a new product. So those questions and that focus that diligence is, is very different. I actually, I love that because it provides quicker returns and, and lower risk. I also want to help and want to guide companies that are more earlier stage to get to that point.
Those diligence questions are more associated with what's your regulatory strategy? Have you communicated with CMS? What's your, what's your reimbursement strategy? What are your clinical evidence requirements? What's the cost of your clinical trial?
And on the flip side too, the whole time who's going to buy you? Right? Are you IPO versus strategic, etc.?
You know, I think you have different inflection points and different risks profiles for each.
If you're looking more at the earlier stage type companies more heavily, we are focused on regulations and clinical evidence and costs associated with that that those use of funds typically are utilized for gathering clinical evidence or gaining clearance or establishing manufacturing, establishing CPT codes, etc.
I have different inflection points and thresholds of expectations on that stage.
Later stage, can we pass all of that? And now we're looking more towards scalability.
So, from an investor standpoint, and those are very different check sizes. I'll use some, some concrete numbers.
If we're looking at Pre Seed, Seed A, anything basically leading up to a trial, those vehicle sizes from our group is typically around 100k to a million. We'll, we'll kind of cap it at that. We'll, we'll put it at that. And, and I want to know as an investor use of funds and I want it substantiated so whether that's an RFP response from a CF, CRO, FDA pre sub feedback, for example, you know those types of things. Have you communicated with CMS? If yes, can I have confirmation of the codes? Did you use a reimbursement consultant, or did you do it yourself?
That's going to substantiate that check size. If we're looking more like the commercial stage companies A, B, C, later rounds, revenue generating check sizes and vehicles. I don't have a hedge fund model. We do SPVs. That's between 1 to 8 million depending on where we're entering in the therapeutic area.
That set of diligence is very different. I want to see you know, year over year commercial growth. Who are you hiring?
Who's your commercial director?
Now? I want to have a better understanding of the board, have a better understanding regarding use of funds scalability.
You know, at that point they're obviously past regulatory body, past clinical evidence generation. So sometimes I, we even ask for LOIs and who are you communicating with? I might even sit on some of those calls to see you know, for who your strategic is.
I'd like to listen in on that discussion. What documentation do you have that these indi. That these groups are highly interested in purchasing?
Again, with our network.
Do you need introductions? Can we help you with introductions? Can KOLS provide input? Can you, you know, can, can we introduce you to higher ups within the strategic so that you have a better exit potential? So vastly different diligence.
Again, agnostic to therapeutic area.
Etienne Nichols: Yeah, and I'd like to get into therapeutic area at some point here. But at the same time, I feel like we should have made this like 101 on investment because you are throwing out a lot of acronyms that I just want to make sure everybody listening understands.
So, you mentioned not having a hedge fund model, but the SPV special purpose vehicle. I think can you talk just a little bit about why that is?
Ivanny Franklin: Yeah. So, for our group, specifically the SPV model, SPV again being special purpose vehicle is we raise money to deploy in a particular company, a particular portfolio company versus if you have a hedge fund model, say you raise 25 million, 50million, 100 million.
Whatever the case be that model is quite typical in VC, especially in MedTech. So, so investor, the leader, the GP of that fund, a hedge fund model will raise money, pool that money all together and then over we'll call it using arbitrary examples over a two-year period they'll deploy that money into different portfolio companies for their strategy. As they're raising that money, they're communicating their strategy to LPs in order to get that investment and to pool that money.
That's one model. Our model is raising money per SPB. So, what I like to do is sell a particular deal, so I find a particular portfolio company and I say I want to raise money to enter into this B round and here's the use of funds.
I have different diligence documents, different diligence criteria associated whether I'm entering in seed A, B, C or D of the round and the size of the vehicle. I like the SPV model because what, what I can do with that is enter a cap table as a single line item. MedSight Capital.
Yeah, but on my backend I might have 8, 10, 12 LPs so I might have people throwing down 100k quarter million etc. into my vehicle and I, and maybe my goal is to raise 5 million so I on my back end and in my LLC, in my STV model, in our STV model raise 5 million and I'll deploy that 5 million as a, as MedSight Capital onto the cap table for a revenue generating company that I think is a really cool model.
I, I don't charge fees, I've got a pretty high carry, I don't charge fees to do so I don't have a hedge fund and basically all I'm selling is the potential of this MedTech, this revenue generating MedTech company. It's a lot, I think a lot harder, harder to put together an SPV for, for me at least for, for our group for ones that are more earlier stage just because we have a little bit more risk and a lot more inflection points that need to be met in order for that vehicle size to be large enough where I feel comfortable promising returns.
If we're looking at more of the early stage pre seeds seed A of which I do deploy more. So, our end I'm doing that directly that's more of a direct investment at maybe a smaller check size.
But the SPV model I think is wonderful because it allows us to be very nimble and it's very common with family offices. So, my group actually is a family office.
I collaborate with other family offices.
So, if I have for example a 5 million minimum that I want to reach for a revenue generating company, I might say to another family office, hey, I, I've reached 2 million. I need 2 million from your group. They might even have 10 LPs that they use to generate 2 million that they put into my vehicle. I've got another group that's doing the same.
Two million. I'll put in two million and then you know what, we'll still end up, you know, and one on a cap table.
Then each of us have carry terms and have to manage K1s and all of that. But that has been a very nimble and successful way for us to support the MedTech community by finding maybe different ways to pool money to get money together versus a hedge fund.
Is, is, is kind of a, it's a very different model.
Etienne Nichols: Yeah, no, that makes sense and I appreciate you going through all the specifics and explaining that. That's very helpful.
If we get into the therapeutic, the actual, whether it's therapeutic or technology and I don't know if you focus on one or the other. Is there, is there a particular focus for you? Any recommendations there?
Ivanny Franklin: I have areas that I'm passionate about. I have areas that I love. So, diagnostics, my background, I love trends and I'd love to use maybe this platform to talk about some of those trends. So, I want to talk about trends I'm passionate about. I think therapeutically though, in terms of returns, we kind of follow the market. So cardio neuro, ortho is where we're seeing the best returns. I do a lot of fun to fund deployments as well that honestly that's where we're seeing the most returns.
Probably we should talk about AI in this podcast as well. I have some thoughts there concerns and also, I think there's great potential there within diagnostics.
That's my passion and background. But to answer the question directly, cardio neuro, ortho are providing the best returns.
Etienne Nichols: Okay.
Ivanny Franklin: In, in a, in a. Yeah, that makes sense.
Etienne Nichols: So, diagnostics though, what do you think is one of the biggest things coming? Is it decentralization data?
Ivanny Franklin: Yeah, absolutely. OTC and DTC over the counter and direct to consumer and, and Covid did that for us. So, I, where we're seeing a shift. Every company that had a COVID test that was cleared and or approved in the United States or globally has Shifted to two pathways, one multiplex respiratory.
So, they have expanded their panels from being Covid to being Covid, Flu A, Flu B, RSV, you know, whatever other respiratory diseases they want to include in their analyst selection.
Now the huge shift is into STIs, so CTNG, gonorrhea and chlamydia trick some of them. We're now seeing 3, 6 plex when you start looking at additional pathogens. FDA is still working on regulations associated with that.
The problem with these multiplex OTC products is that they are infectious disease trials are very expensive in the diagnostic space, and we all know that the diagnostic exit potential is lower is the lowest bar of all of MedTech.
So, you have this kind of really bad concurrency of, you know, how beautiful would it be if you can just go to CVS and just get a full STI panel. So, the technology is there. These companies, the same technology that was used to develop COVID test is there.
It's now being applicable to other infectious diseases.
I'm a huge advocate for. Although the exit potential is not as lucrative. I, I'm personally passionate about trying to get more information to the people which. And that's how we started this discussion.
Right.
I think OTC diagnostic testing though I, I do feel like it should be easier to achieve that and I, I think it would be wonderful for people to have that type of information.
I'll use the pregnancy test, which is I think a class one if I'm not mistaken.
It's a class one to get an understanding if you're pregnant or not.
Why is it, you know, such a high bar to understand if you have a stuff STI or if you have a respiratory disease? Right.
Etienne Nichols: Yeah.
Ivanny Franklin: So, I, I get that there are different methodologies for collect specimen collection, etc., but that, that's an area I'm, I'm passionate about in terms of returns from an investor is, is the same,
the same three that everybody follows it. They are the most lucrative. But where I want to help most is the.
Yeah. OTC infectious disease diagnostics. That's what I, I want.
Etienne Nichols: Yeah. You know, I, I look at these different categories, and you mentioned the cardio, the neuro, the ortho, etc.
Ivanny Franklin: Yeah. And wearables. We can talk about wearables too.
Etienne Nichols: Wearables. Yeah. Each one of these is a vertical that just as overall they are beating everything else. But I can't help but wonder in every market whether it's OTC diagnostic, IBDs.
There's that one player who's Leading the pack. And everybody else just wants to be like that one. I mean, maybe I'm wrong about this, but it seems like in every industry, every field, there's, there's one.
And then you basically judge the field with them as an outlier.
I don't know if you've seen that or if you thought about that with diagnostics.
I mean, obviously you can't hang your hat on the, the, the one hoping that Apple, you know, is going to use them as another, as an example.
Ivanny Franklin: But the biggest failures that we see are those that don't understand the clinical evidence.
So, you know, and rightly so, I'm not against that. I, you know, I fully believe that it's important and if you don't have that, that's why our country is so safe with devices.
So, I do, yeah, I highly, I still highly advocate for those requirements. I understand that's a hard barrier for entry into commercialization.
I think for OTC devices, especially when we're talking about infectious disease or at home monitoring devices, you know, back to how we started, how do physicians monitor how patients are using that information? That, that's hard. And from FDA's perspective, their job is difficult. They have to manage all of that. And then if you put yourself in a founder's shoes, they have to manage all of that as well as fundraising, as well as generating the clinical evidence, as well as getting the reimbursement, as well as selling everything, as well as building commercial teams.
So there probably should be like a therapeutic group just for founders to talk about all the things they have to manage. I appreciate everything they're doing. I'm sure FDA is in the same boat.
We're all trying to help investors too.
Investors are trying to make sure especially we talked about our SPB model.
That's gonna be a really hard Thanksgiving dinner if I've lost everybody money, right. Cause a lot of my own fees are within the family. So, I, you know, I, I, I wanna make sure that I have, that we have done our job in leading the diligence process, inworking with FDA or whatever regulatory body and that whether we're looking at early-stage companies versus revenue generating companies, that that diligence has been appropriate.
I also collaborate, like we said, with different family offices as well.
If we don't deliver it there, then it becomes that we might not be able to work together in the future.
The whole purpose of why we're all here, and I want to remind everyone of this, and this is why I got into this space, is we're trying to help. Right.
So, whether that's providing money or expertise, guidance, etc., collaboration, introductions, that I think a lot of times that gets forgotten. So, I don't know if I answered your question directly there.
Etienne Nichols: No, I love it. I appreciate that too. And I know it's. I know it's true. When, you know, sometimes people talk about VC or funding different. You always focus on the ROI.
But there are multiple types of ROI. However, you can't keep breathing if you're not, you know, making some sort of money. You can't keep doing that. So that, that is a necessity.
It's the baseline necessity. And then you have a lot of altruism on top of those things.
You mentioned AI and concerns. If we don't get to any of the benefit, you know, or whatever you. I am curious about your concerns, and I'd love to hear any thoughts you might have.
Ivanny Franklin: Yeah, AI. So, I'm a huge proponent of AI. I love AI. I do; I love it. I do.
Etienne Nichols: You know, we all have to make that disclaimer. Yeah, we're all using it.
Ivanny Franklin: We have to.
It is as hot as atopic as anything. Politics and everybody.
I feel like AI is polarizing. So, I do feel like it's a sensitive subject and a polarizing subject.
When you look at AI within medical devices, my advice is.
Or. Or our approach is, and I, I can't preach this enough is it goes back to regulations. Okay, so with AI devices in particular, you have the software piece, and you have the hardware piece.
How are you incorporating the two together?
You have different regulations for both parts.
FDA, I'm going to use the United States as, as our vehicle here or as our medium.
FDA regulates both differently.
Hardware and software differently. Those regulations are changing rapidly all the time.
So, when you're talking about use of predicates, when you're talking about how do we adjust our intended use statement, etc., that's all going to impact the clinical evidence that you need to demonstrate for that AI associated product to commercialize, for it to be in the hands of users.
I will advocate and I'll plug NAMSA here.
We have two people on our team, Monica Montanez and Adam Saltman, that are on the board within FDA or helping to write the guidance document. It's important to find a regulatory consultant that understands the regulations associated with both because you have clinical validation that you have to demonstrate for AI type devices on the software and the hardware side.
So that's super important.
It's not always with in the same department of FDA.
So, understanding those regulations is super crucial as well as the endpoints associated with.
How are you going to get those?
How are you going to demonstrate that that product is safe, effective, better than standard of care and meeting an unmet clinical need on the investor standpoint, I'm still uncomfortable with it.
I don't invest in AI yet because of those reasons. Because the regulations are changing so much. I do think it's the future. I'm not saying it's no forever. Is. Is a no for me right now just because of the complexities associated with tying together hardware, software, AI regulations, unmet clinical need, who's gonna buy it? Why did that. Not that strategic. Not develop that internally for me in particular, for our group in particular, too much risk for us to invest.
Not against it though. I just want to say I'm very pro.
Like keep whoever's doing it. Keep doing what you're doing.
For me in particular, I think I.
It's a pass for now.
Etienne Nichols: Yeah, that makes sense.
I'm curious. Okay, so there's the product that could be AI. What about the process and the expectation that the companies are utilizing AI? Any thoughts there?
Ivanny Franklin: Yeah, there are different ways AI is used. For example, in service providers. I'll use an example expediting clinical trials.
So, I do think AI can be a really useful tool in terms of if you upload a protocol and you identify patient endpoints and you triage patient space, inequality, inclusion, exclusion criteria.
It can. I'm a huge proponent for that, that utilizing that to expedite that process as well as expedite what clinical sites meet the criteria for patient population.
You know, meeting the protocol. I, I think that's a little bit more common in the biopharma versus the MedTech world.
AI as a service, I think I would be.
I'm equally as cautious because it's more so a tool.
I don't. I would. Maybe you can do this for me. That the exit potential on that type of company, I don't know would get the returns that I'm promising to my LPs.
Not at all saying that the technology is better, that process is bad. Totally in line that I'm an advocate for that being part of the future. I don't think that that's going to be a 300 million exit potential, for example.
Etienne Nichols: Yeah.
Ivanny Franklin: So, I don't invest for that reason. There.
Etienne Nichols: That makes sense. Specifically, I guess what I'm thinking of is, is.
Is that becoming a requirement for companies to utilize it in certain ways. And I'll give you an example from a different Industry. So, like the SA B2B SaaS companies, there's huge expectation from private equity or from VC funding that you, even if you're not an AI company, you're utilizing AI internally.
So, I don't know when you do your due diligence when you look at a company, I'm just curious when I talk to investors, is that something you care about right now or is it just really a matter of the outcomes?
We're really focused on the patient itself. But when you do diligence on the company itself, what are those?
I mean I've always heard the CEO matters. Don't want a first-time founder. A lot of times it's the company, the team itself that I'm focused on. Not so much the not.
I mean the product matters, but that's almost as equal. I don't know just those criteria.
Ivanny Franklin: Yeah, I think in terms of criteria for that type of company, it's unmet clinical need and you cannot replace humans. You know, so when a lot of the ones that come across my desk are associated with can, can AI replace what a clinical team can do? I have not seen one that has sound. So yeah. Therefore, I have not invested. Can it enhance it? Absolutely, yes. What's the exit potential of that?
Unclear.
So, when I'm looking, when we are looking at that type of, when we're analyzing that type of group or that type of potential, that type of company.
Absolutely. It might, it might be better.
I want to understand they're claiming it can replace a clinical team. I disagree entirely. I don't think we have enough time to talk about that.
Can it enhance it? Absolutely, absolutely. Absolutely.
No questions there. Who's going to buy it?
That's the biggest question. And, and at what point. And therefore, that's what I have to sell to the LPs. Right.
So, for, for those reasons, I'm, I'm out. I, I do believe in that being the future. I'm an advocate for that. But because of those two reasons I mentioned, I, I think that's probably the biggest driver of why we don't invest in that space yet.
And also, the regulations are changing daily. So even if they.
Yeah, yeah, yeah.
Etienne Nichols: Once some things stabilize and converge, eventually.
Ivanny Franklin: I will, eventually we will. Absolutely. I, I think, no, not right now.
Etienne Nichols: And I appreciate your thesis on the revenue generating companies. I mean you, yeah, once, once a few things happen with AI, you know, the, the technology gets to the place where it is on par with what we're expecting for human intelligence.
You know, the expectations are similar, then it makes sense to invest, but maybe not when you're so early stage from something that matters and is going to affect people's lives in a very serious way.
Ivanny Franklin: The whole point of investing is we're de risking. We're de risking. We're de risking. With AI, it's almost. It is a unicorn, you know, it is there.
The statistics associated with the failure rate kind of contradict that. Right. So you've got, there are unicorns there. You've got very high failure rates statistically and you have ever changing regulations.
So, for our group in particular, that although, that although it can have beautiful potential, there's too much risk bridging all three of those things together for me to invest heavily in that right now, for me to put. I would never put together a big vehicle and invest in that at this point.
I'm not saying that in the future I won't, but once you've derelict. Those are the reasons why. Yeah, yeah. And it's to no fault of anybody, but those are the reasons why, I think.
Etienne Nichols: Yeah, and I think that's. I love that you're showing the principles behind it because, you know, I think AI is one good thought experiment that we're facing today. It's not as if humanity has never had to face a disruption of sorts, you know. And so, this is just to understand those principles helps us to, you know, how.
Know how we're going to move forward to where we could get to where we are investable, whatever the product may be.
So, I know we're kind of coming to the top of the hour. I really appreciate you hanging in there with me and answering whatever I threw at you. If you saw those of you listening, if you saw the questions that I showed Ivanny what I plan to ask, we've gone way over the board.
So, I really appreciate you just. You're good.
Ivanny Franklin: Spoiler. Likewise.
Etienne Nichols: Like if anybody's out there planning to go to LSI, Ivanny has put together a really fun panel that I get to moderate. I'm super excited that I get to be a part of.
We're going to be talking a little bit more in depth on some of these different topics and hope you'll join us for that as well.
Any last thoughts, piece of advice that you give the audience?
Ivanny Franklin: You know, I think the only other thing maybe I would add is family offices versus VCs. Yeah, we're, we're out there. I know it's hard to find us. I, I think I always like to speak very highly of.
We are approachable, we're nimble.
We want to help.
We collaborate with each other. And so, vehicles like this, like what you've done at Etienne, is absolutely incredible.
I want to use this as a vehicle to encourage others to reach out to me, to reach out to you, for us to find a way where we can help the industry.
So, I'm here.
I'm approachable.
I'm not always the most responsive, but I try. My LinkedIn inbox is inundated, but I will get to it eventually, always.
And I want to help. So, I really think as we're talking about investing and we talked about clinical evidence and trends and therapeutic areas and clinical evidence and regulatory bodies and reverse it, all of that.
I think what I really find valuable is we need to always remember and not forget why we're all here is to save lives, not ROI. I get that people need to make money.
I'm a huge advocate for.
We need to remember why we're all trying to help the community, help everything.
All of us as investors, as innovators, everything, all members of the ecosystem, we're hereto help. And so, if I can be.
If we can use this platform or LSI's platform or anything to help provide access to that, I think that's most important.
And I would encourage people not to forget that piece of the puzzle, if you will. We talked a lot about different puzzle pieces that I think that's what I feel the most strongly about.
Yeah.
Etienne Nichols: Once all the puzzle pieces are together, that's the picture we're painting, really. It's. It makes it sound good.
There's a Zig Ziglar quote that I really like that you can have everything in life you want if you'll just help other people get what they want. And so, I think that's kind of if we can help enough people.
I mean, the money's there. It's that. That's a byproduct of a lot of what we're doing.
And you're helping a lot of people at the companies you're helping. So, I really appreciate that.
Ivanny Franklin: Likewise. Yeah. You need to make that the title of your podcast of the.
Etienne Nichols: Absolutely, yes. I can't wait to see you in person in LSI. We'll let you get back to it, but. And those of you listening, we'll put information so that you can get a hold of Ivanny in the show notes.
Check that out and you can reach out to her directly or myself as well and get ahold of us with any additional questions.
Ivanny Franklin: Thank you so much. Thank you so much, Etienne. Have a great day.
Etienne Nichols: Take care.
Ivanny Franklin: All right, bye.
Etienne Nichols: Thanks for tuning in to the Global Medical Device Podcast. If you found value in today's conversation, please take a moment to rate, review and subscribe on your favorite podcast platforms.
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