Medtech Venture Investing in the Current Climate | LSI Europe '22

Transcription

David Uffer  0:00  

I'm very pleased to have foreseeing panelists that are very seasoned executives in venture investing. Without making a direct introduction, we're just going to start with Sam at the end and come right down the line, though introduce themselves, their history in the in the fund and the thesis for their fund. And then we'll get right into the content.

Samuel Levy  0:23  

So thank you very much. I'm Samuel Levy. I am one of the founders of Lux era capital, which is a Paris and San Francisco based health tech investor. We are actively deploying our debut fund. It's a 262 million euro fund that we raised during COVID. My background, I'm American by birth, although I lived in France for about 11 years in Paris. I am a physician by training. But during my second year of medical school, I actually invented a medical device with a classmate of mine. We spent, you know, the company is in its 14 Two year, the company's called ullery on technologies. I lead it with my co founder for 10 years, I lead all functions in our vertically integrated med tech company and took it from an idea and a napkin through this year, we're going to do about $70 million dollars of top line revenue. And so I built the quality system I've designed and led to clinical trials, I've led the regulatory process, and so have a lot of scar tissue on my back. And Lux era is really a firm where we try to combine investors on our team and operators to hopefully be more than just money.

Alexander Schmitz  1:30  

Good afternoon, Alec Schmidt's partner at Endeavor vision. We're a med tech focused investor across investing across devices, digital health tools, diagnostic and tech enabled services. We have about a billion under management currently investing out of a 2020 Vintage fun, never met Tech with two that's a $375 million fund split pretty evenly across Europe. In the US, we're typically investing about 15 to 20 million per initial investment as part of larger commercial scale up round. So we're later stage investor team is split across Europe in the US with about 11 investment professionals and like Sam, an American who's been over in Europe now for 20 plus years, about half of which as an investor and then prior to that spent about nine years in an operating role with an interventional cardiology company and helps scale that business from zero to 300 million in revenue globally about 180 in Europe so similarly, I think focused on the investing side of things but also have a kind of deep operating experience, myself and with with our other investment professionals partner pretty closely with the companies that we back to help them grow and scale.

Assaf Barnea  2:45  

Cool. My name is Assaf Barnea. I'm running Sanara. Sanara is actually today two funds based in Israel. The first one is joint venture Phillips and Teva. Teva Pharmaceutical. We do early stage very early stage like a million $2 million investments. We have 20 companies like an incubator VC, investing in digital health medical devices and bio convergence, which I'm going to elaborate a little bit what do they mean by bio convergence. Second Fund, which I just launched now, with my teams and partner schools on our capital, we do post incubation around we have Philips, then again as an anchor investor, and few other strategics and family offices. I'm also for the last few years, I'm the chairman of the Life Science Board of the Israeli export Institute. So we have an insight about 1800 life science companies was 2007, hundreds have been 50 of those digital health related 300 of those are device related and about three handles therapeutics and biotech. So I'm promoting about eight to $9 billion of life science experts out of Israel on a yearly base. I used to be a consultant to the venture capital team of the World Bank of the IFC in Washington. So I've been looking for equity investments in Israel and build some global innovation hubs in growth markets in India, in Brazil and others was a privilege to do so. And I'm happy to be here. Oh, and if those of you have gone ask me just we've been teasing one another. Yes. My background is a professional basketball player. So we've been asking it are you Did you at least because being six to date, so some people asked me Did you at least play basketball? So lucky? I did. I was a professional for 14 years I played for Seton Hall, winning the biggest championship back in the 90s. So this is covered as well. Sorry.

Diana Saracenia  4:29  

Okay, thank you itself. Diana Saracenia, here I'm co founder and general partner at Panakes Partners. We have about 300 million under management at the moment of which almost half is to be invested in new companies. We primarily invest in medtech, but also in biotech therapeutics. Now, we primarily invest in Europe, but also in Israel and in the US. We primarily invest in a round but also in B See and up to pre IPO round, ticket size will do anything between five and 10 million, on average on offer, stick it about myself, I have over 20 years of venture capital experience, I will co founded FANUC. As long ago, about 20 years ago, I also co founded another investment firm, which is, and sorry, with the two companies I've raised about seven funds, different generation different economic cycles, different outcomes with lots of success, lots of failures. Overall, the positive return for investors,

David Uffer  5:40  

And you skipped raid or Seton Hall and went to play for the Knicks is that. So thanks for the great introductions, I want to come right out and ask upfront. So many folks come to me say how do I get to these investors? And I talked to all the VCs that say I get between 10 and 30 decks on my desk a day, share with the audience, if they didn't have the good fortune to get on your agenda here. Maybe they're trying to reach you, your colleagues or if they're not at these conferences, how do people get your attention? From when they send you a deck? Is it an intro through a partner and advisor, a colleague? Or what do you look for in that email or that deck that captures your fancy enough to say, let's have a management discussion? Sent me want to start us off? Yeah, I

Samuel Levy  6:33  

I think, you know, I'm, I'm relatively new to this job. I've been doing it for, you know, two years. And one of the things that I've discovered is how important focus is for our investment team, you know, we have a limited bandwidth. And so we have to be spending our time on the deals that most reflect our strategy, and we think are most attractive. And so you know, we're being a little bit ruthless, honestly, in terms of how we're spending our time. You know, we're mostly investing in Europe, and we're exclusively investing in commercial stage companies. So if if, you know, if a company is based in Asia and pre commercial, it's unlikely that we're going to, you know, have an initial phone call. That being said, I think for companies that really are in the sweet spot of what we're trying to do, nothing replaces an introduction from a mutual contact, who, you know, we really respect and who has brought us great ideas in the past. I think that's the best way to meet investors.

David Uffer  7:30  

Anything to add?

Alexander Schmitz  7:32  

Yeah. Oh, no, I think yeah, warm introductions are always I think the best way to get get sort of through the filters. And I think, taking the time to target your outreach, and make sure that if you're raising a seed round, you're not targeting late stage investors and vice versa, because there's a, there's a mismatch. And in the world of healthcare investing, everybody's pretty specialized, most firms are pretty transparent about their investment criteria and strategy. And in terms of geographically stage wise, verticals within the space. And even on those teams. There's people that have concentration areas. So sometimes, a company will email all 11 investment professionals twice in the same week. And we'll get to our Thursday meeting, and we'll have 22 copies of the same email. And that doesn't reflect well, on the company, it suggests that you weren't sort of thinking carefully about who's the right person, is this the right firm? Do we fit with their strategy and stage and, and within that team who's who's the, you know, the person that's done the most work in orthopedics or an interventional neuro, so being a little bit targeted and focused, and that's where the intros can help. Because if you go through somebody that that knows the team, they'll be able to steer you toward the right person, and hopefully give you a warm intro. And obviously, conferences, like these great opportunities to get connected with folks that maybe aren't in your network and, you know, have those discussions. So

Samuel Levy  8:54  

I think if you want to, if you when you're out raising money, you want to be right down the fairway for the investment strategy that people you're talking to, because otherwise the bars just highered at get through the Investment Committee and close the deal. And you want to be spending your time as much time as possible that people most likely to transact?

Diana Saracenia  9:14  

Yeah, I, like this is the ideal word, you get the right person with the right background, that investor, but that requires an enormous amount of time, right? Think of them. I mean, they look through all the websites and understand which partner does what, I'm fine with the spam, you know, I mean, I'm fine. But there's one thing that can be done to attract our attention, which is explained clearly in a few lines, how we're going to make money, which is never there. It's almost about what you've been achieving laters what a great result you have in clinical trials, which is obviously interesting, but not how we're going to make money. So why don't there's not just an email that says, you know, this is our inspiring story. This is the story that reflects the fact that our exit will be a billion dollar IPO, possibly because someone else same target same, has done it, and then be inspired by that we are financial investors. So that's what we need, right? So maybe that will increase a bit the conversion rate, there will always be a conversion rate. That's terrible. But that will increase the conversion rate email to first meeting.

David Uffer  10:28  

So that's a good segue into the next question on this. Once you do actually open the deck or you have enough, there was intriguing from somebody who introduced this to you, or you found the email enough to say, Let me dig into the deck. I've had people send me a two page teaser all the way up to a 55 page deck, which I don't think either of those appropriate, but this is your call. What do you typically like to see in that introductory deck enough to say, I'd like to have the management discussion, I'm going to write them back and say, let's set up a call.

Assaf Barnea  11:03  

One thing, going back to the previous question, as well as this one, investment, eventually, at the end of the day, in my eyes, it's a relationship. It starts with a relationship. If you can come up with someone through someone, definitely, it's been helpful. But in so many cases, I find that some of those startup companies and intrapreneurs, they don't realize our needs, or expectations. And specifically, when it comes down to competition wise, say for instance, AI in radiology, we've been having dozens and dozens of companies coming up with AI in radiology, for pathology for various applications. And so many of which stumbled into the same world of scaling and whatever, if those companies and this is merely just an example. But if those companies would have taken into consideration the know how that resides in the industry, for the last two or three years, whatever, that it's tough to scale, and they may come up with a unique business model, instead of just sending out a generic kind of presentation that we're doing that and we have aI everybody knows that AI, I mean, it's an enabling tool today, but the use case itself, and the business model and the ability to scale these, what bothers us, these are the things that bothers us. So in order to differentiate yourself, if we then that email and presentation will be a special focus of, we are looking to do that and specialize in that. And we have already aside from references, and validations, and customer and pipeline, whatever. But this is a unique model that we have created and it was validated oops, then you stand out. And then it addresses our fears and anxieties of Oh, not again, not just seeing another company with the same thing, same core technology, going to stumble into a wall in two years time, we're not putting $5 million into this one

David Uffer  12:40  

To get that relationship, oftentimes, this is a shotgun approach. You can be very targeted, but you've got to start with a lot of these are early stage entrepreneurs and founders, they don't know the investment community. So Alexander, from your perspective, what captures your your fancy enough to that you want to see in that introductory email, the deck that something that captures your interest to host that call?

Alexander Schmitz  13:13  

So we I mean, we tend to look at not the three T's, but the five T's. So the first three that everybody knows team and I putting them in rank order, team. Tam. So you know, is this a team, we come back? Are they going after a large unmet clinical need in a market that's going to be forgiving? Because usually things don't go according to plan. And so if if you're going after a really small opportunity, and you you miss calibrate, doesn't leave you a lot of margin, if you're going after a big opportunity, you can you can reset, you can pivot, and there's still a big opportunity, technology, is it? Is it unique, is it differentiated is protected. But then also, for us at least kind of timing in terms. So is it the right time that and that sometimes is related to how does this product get reimbursed. So you may have a really good product, a really good market size, a great team, but you've got to go do a three year pivotal study, and then a three year post approval process to get category one code and then you can start the fun of talking with commercial payers in the US. That's a that's a long timeframe to sort of underwrite and so that factors into our process, at least in terms of visit, is it the right time to be investing now versus versus in a later round? And then obviously, the terms and I think to your point, Diana, that's always kind of missing is like how are we as stewards of our investors capital going to generate a return because that's what we're paid to do on behalf of the people that invest in our funds. And thinking about that, as the entrepreneur? I think is important. It's often it's often missing in some of the early stage decks that we see. And I think just saying, Hey, here's, here are the precedent trends. I actions, here's how these businesses get valued. Here's the buyer universe. If you're going to propose a an IPO pathway, then why do you think you're going to be a standalone public company, because the bar for actually being a successful public company is pretty high, the last 24 months, not withstanding, but I think we're back to kind of normal IPO bubble times. And so if you're gonna go down a public pathway, it's got to be a huge market, you've probably got to have multiple products in your portfolio, not just not just one. And, and it's got to be big enough opportunity that there's appetite from public investors. So thinking through all of that, but, you know, most of the decks we see I think, address the first three pretty well, but the timing and the terms that that tends to come later in the process. But I think putting it up front saying here, here's why you should invest right now. And here's what you should expect if you do is, you know, it's helpful.

David Uffer  15:50  

Yeah, I'm always shocked when I'm about to send along a deck to somebody and really nice introduction, the company. But where's the ask you never said what you're raising what you're asking for. So it maybe the elements in mind 

Alexander Schmitz  16:06  

One more thing. Oftentimes, there's this dance early on, like, let me give you the noncontact. And, you know, maybe later, we can get an NDA in place. And if there's truly proprietary stuff, secret sauce, undisclosed patent information, fine. Don't don't share that without an NDA. But if it's, it's a published patent, there's no need to be squirrely about it. Your cap table is not, you know, top secret information, right? At some point, the investors you're talking to, we're going to know how much you raised from whom, at what valuation and with what terms don't, don't make that process more complicated than it needs to be by going back and forth with lawyers on NDAs. Unless they're really something in in, in pharma, I think it's much more of an issue. But in device, by the time you're talking with folks like us, you've probably protected the core elements of your technology. And we're not going to take it and start a rival company, we just we just want to know like, oh my god, okay, so your your cap table was upside down. And that's going to factor into our decision as potential investors better to get that out sooner, because if it comes up late in the process, it's like, oh, we really liked the, the opportunity. But now we got to deal with, you know, issues on the cap table, just just be transparent. And I think it goes a lot smoother and builds the relationship. 

Diana Saracenia  17:20  

Yeah, just to add to this point, most of the time, clinical data, I mean, companies are very jealous of clinical data when they're not published or preclinical data sometimes as well, when they're not published yet. You don't need to put the entire clinical data and the entire publication draft that's not been published or on the presentation, but just sentence that summarize what the outcome of this data is not just disclosing anything. But it's just we have data that shows that, and what the if efficacy point to safety point you've demonstrated is, that is not conflicting with anything that's confidential. And that's tremendous, has tremendous value towards investors. So just feel comfortable of doing that.

Assaf Barnea  18:06  

Good post this one thing that I'd like to emphasize maybe in terms of the presentations, once mapping and profiling the investors, if this is a safe round, or this is an A round of you want to bring in strategics, or whatever, I don't know family offices. But I've been telling our companies, you know, the presentation is eventually your oxygen, burn rate related, whatever the presentations themselves, this is your oxygen, just just recently, one of our portfolio companies, which is quite fascinating one, these are drops in your eyes to replace lenses and glasses, post the laser flash and quite fascinating. But eventually, the service itself should be delivered, at least initially, in pharmacies, chains, like the Walmart, optics, boots, optics, whatever. And I've been introducing them just recently to one of those chains. And they sent a presentation without this one slide of, you know, specifically indicating which we which they did have and undetermined by the way, so I'm ashamed. But I remember that there was one slide which actually was presenting the go to market and bringing in those strategic partners, you know, the Walmart optics and the bhoots optics. And there was there were pictures of how the service is going to be delivered. With that specific introduction that I did this presentation that they sent just just just a generic one, they had missed this one slide. And then those guys asked me so what's what's what do we have to do within this? And I was like surprised late at night, and I call them up and say, please do send me the one with this one slide which was missing and then all of a sudden, the total total dynamic was changed because of one slide. So always for those of you intrapreneurs I'm sure most of you are quite experienced, but it's really not the generic presentations, but try to tailor it again and again and again to the specific potential investor that should be should be addressing that presentation.

David Uffer  19:55  

Yeah, your core materials. I've always said that your core presentation Is it but what what's relevant to who you're sending this to we have a different presentation for everyone. If we could, let's switch a little bit, the the session is entitled venture investing in the current climate. Let's talk not specific to your funds, but just in the general climate because everybody has a different thesis. Now, Scott and the LSI team, thanks for putting together just a wonderful, varied group of companies here. What we're hearing a lot in from my side, is the early stage investing what's happening with the preclinical and the pre regulatory side, pre commercial and pre regulatory companies. It is the environment there to support this is the funding there, I've seen a lot of funds that keep going larger, thus, a little bit later stage to tell us about the environment that you from your perspective on the earlier stage?

Diana Saracenia  21:00  

Well, I think the liquidity on the early stage hasn't changed much, because you know, I mean, we raise each one of us raise funds every two or three, five years. And so there's a steals a lot of money that were raised during calving time. And available, so the liquidity is there. The point is going back to my previous point is the financial returns to us to make the math on financial returns. We use now comparables that are totally reduced Sydney have been significantly reduced since 12 month ago, and so everything looks a little bit more less exciting. So that's as simple as that. I mean, our financial math is not as exciting as it was, and we are a little bit more conservative and selective. I think this is it till the IPO market will not change and will not show that there are still going to be exciting exit opportunities for early stage companies is going to remain this way.

David Uffer  22:10  

Samuel, different perspective, are you seeing the same element?

Samuel Levy  22:14  

Well, we live on the total opposite sort of side of the value chain in my firm. So we 50% What we do is growth stage investing. And then we also do you know, buyout investing, so we're only investing in commercial stage companies. I know a couple of points you made Dianna. Sound familiar to me, I think one is a bid ask spread that exists in the marketplace. on the growth side, I think there are a lot of companies that that did deals in the last couple of years that now feel very expensive. And deal flow has reduced substantially. I think in that area. I think part of that is because people are waiting to come back to market part of it is because it's internal rounds that are being done by existing investors kind of solving the valuation issue often with with structure. The three, you know, we did last year, four deals, three of them were growth deals. One was a buyout deal. This year, we've done three deals, all our bio deals. And that's because that's I think the quality of the deal flow that we're seeing is just greater in that part of the world right now.

Assaf Barnea  23:17  

We, we've been looking, I think, to some extent, I totally agree with the Diana in terms of liquidity, I don't know, I think there's a bit less capital, because of just the atmosphere itself. So the will maybe the funds are there, obviously we are there, but their willingness to deploy capital is definitely a bit different. So what we used to do just for the sake of, you know, looks fine, this is this is this is this. Now, we shall be scrutinizing, much more going back to basics, in terms of the five T's, or really how you extract whatever the T is do truly mean in terms of timing, is it the right timing, like for going back to your question in terms of David, for the early stage of those companies, first in human, for that matter? You know, some companies should be waiting for the true ability to bring some kind of data before approaching. And in the meantime, they should reduce the burn rate and maybe approach some private investors for the meantime, do some safe rounds, kind of a CLAS and whatever. But approach those of us maybe the more funds related, the more institutions related the most strategic related in a proper timing, exactly the proper timing, because that will be with enough data. This will be one of the criterias. I mean, and this is something that I'm trying to teach some of our companies which are early stage companies, they did raise like additional $3 million, kind of post the seed stage and whatever, but they need to come up ready for those rounds of financing. I think those companies the good companies will eventually be able to fund fund themselves as long as they are disciplined as long as they know what they're doing as long as they come up with those right answers. So it's in that sense for us it is for VCs and for companies it is going back to basics. It's actually a good thing that is happening now. And I think some of those more fascinating companies would be resulted of that there are in some cases, you know, uncertainties of what's the use case, what's the initial with the core technology, what should be the first use case of a company, this is a major issue, this is something that they need to encounter and talk to VCs and talk to strategics and have some design partners to make sure those early stage company then the focus of in some cases, they're not even sure what will be the first use case. But it's a core technology that maybe would be able to do some. And in that sense, this is I think, this is something that we accept, and we are okay with it to to, to think and to be back and forth and contemplate. But on the others, there's has to be a true focus answers to, you know, then again, business models and how you contemplate and themes and whatever, in the right timing, I think those good companies will be able to sustain even those tough times that we're facing. Now, just

Samuel Levy  25:52  

Another kind of the behind the scenes dynamic that's impacting deployment is sort of a, you know, fund industry element, which is in 20. And 21, capital was cheap. And there there was, you know, I think GPS investment funds, felt that the environment was propitious for fundraising. And so there was a big increase in philosophy of capital deployment, because people were able to go back to the market and raise larger funds. Quickly, I think that in this environment, it happens to be probably one of the worst fundraising environments for investors in decades. And so the, you know, we start thinking about raising the next fund when we've deployed 70% of the current fund. And so I think the folks that are deploying funds and thinking about portfolio management and their own business, are also thinking, you know, how quickly do we want to get back to that 70% and be back in this terrible market for fundraising. And so that dynamic, which is around our business also relates to the decision making that's happening in ICS.

David Uffer  26:53  

Back to South common. Tell me general trends, Alexander, and what you see going on in the market that excites, I get frustrated when I see somebody that has a platform that can do anything, but they never get one thing done, accomplished. I'm trying to do six different things. I know you can. But why don't you get one accomplished in maybe parallel path and have them staggered, but I liked the opportunity for platforms. But sometimes they do focus the the executive trying to do too much general attitudes about I like to see a single technology or something that is more platform oriented.

Alexander Schmitz  27:38  

Oh, yeah. So with respect to my comment earlier about, if you're going to propose an IPO as a possible exit, I don't think you can be a single product company. That was my point. But But absolutely, at the stage of being a venture backed company, you should be focused on a single product, right? So it's having the potential to offer a platform, but not necessarily diffusing your efforts so much that you don't get anything done, we see that and I agree that's probably best to be avoided. Having focus, having a clear initial market, having an understanding of what you know, what the customer needs, what your commercial strategy is, and how you're going to bring it to market, how you're going to price it, what your margin structure is, where you're going to manufacture it increasingly, you know, it's unfair for companies, sort of the venture stage to have to think about redundancy in the supply chain, but the last two years have taught us that they have to, because otherwise, you can have a great product in a great market with a great team, but you can't build it. And so you're dead in the water. Right. So it's gotten harder. I think, and, and I think that, you know, entrepreneurs just have to be adaptive and resilient in that context. But focus remains critical that you can't spread yourself too thin, because you just you won't be able to generate enough progress, you know, reach enough milestones ahead of your next financing event, if you're trying to do too many things at once. But But knowing that your technology, your IP, allow you to do that down the road, once you've knocked off the first application, the second application, that can be pretty interesting. And I think, you know, Shockwave and Ron talked about it last night, but that was a great example of they started with peripheral, but they had a plan that included, you know, lower limb and coronary and even structural heart, but that they were focused on one than the other than anything to earn the right to do the others. But from an investment point of view, having that broad breadth of IP and having multiple, you know, indications or anatomies where your technology can be applied. I think that's, you know, that's, that's important, and it makes more credible, the claim that hey, this is gonna be a multibillion dollar public company Sunday, versus I've got a, you know, an incremental improvement in treating lower limb ischemia. That's part of a treatment algorithm, but it's One part of it, and it's never going to be a, you know, $200 million product line on its own right. So it's getting that balance, right. But having that potential, I think it's important if you're going to say, Hey, I think this is a billion dollar opportunity, and we're going to be public one day, if you're saying no, it's going to be a tuck in, and someone's going to buy me for $200 million, with some earnouts, then you don't you don't need that you can be very focused, but then you have to be really capital efficient and not raise, you know, more money than someone's going to pay for you at exit

David Uffer  30:30  

people people invest me, in my particular investment thesis, am I married to any particular segments? I am completely agnostic. Any segment could be exciting to me, it's really about as you talked about, not just the three the five T's are there any areas that though either market or technologies that a really exciting you? And then upcoming few years, Diana?

Diana Saracenia  30:56  

Yes, there are and all of us have. So I'm a bit surprised, you don't. You probably do have to know, and, I mean, there are segments, which are fairly proven in making financial returns and great comparables and great stories. I mean, I can mention, I don't know recently robotic was very, very hard for the multiples and the transaction to value or, like I mentioned, I don't know, genetics, everything around genetics in IBD. was very hard to or, or there are some segments where I mean, everything is or used to be a steal, in favor. And there are segments where it's quite the opposite. And fortunately, you have really to go against the odds, because they weren't, there is complete lack of success stories, and, and it's really everything is still to be proven. We know that until we have our preference. And this is where the I mean, somehow these are things where if you are if you act on a segment or another, it's, it's you're on the hot one, or you're not. And there's nothing you can do about right other than try to explain why. If you're on the segment, that's not hot at the moment, you'll succeed anyway. So to go back to how to pitch investors, if you're on the wrong segment, it's going to be a lot of pain.

David Uffer  32:30  

Assaf, you are shaking. 

Assaf Barnea  32:32  

Well, within what I initially said, within digital, obviously, digital health, we've been seeing and we like, you know, we do digital health in devices as well as bio convergence via convergence means biology and tech biology and software or biology and physics, or biology and chemistry. These are the most cutting edge disruptive technologies that one can think of. Let it be platform to cross the blood brain barrier, let it be tiny robots for drug delivery, whatever. But we have quite quite a bit of those in Israel and we have in so now we invested in five of those so called Bio convergence, but I think the convergence term itself represents something that at least we like in terms of seeing, for instance, the gaming industry and now converging into digital therapeutics. So anything that has to do with this is a huge industry going into that. We have some companies then again in Israel, but not just Akili for that matter, went public now and in other companies to you know, necessarily to avoid drugs, some early in some setups or whatever. But but but the gaming industry is definitely converging then again to into healthcare, cybersecurity, cybersecurity, I've been seeing some fascinating technologies, which is becoming just I think last week, I read something about an ambulance services in New York was hacked by for ransom just just last week, I think. And it's becoming unfortunately more and more popular. So then again, those convergence of domains which were not typically involved in healthcare, like the gaming industry, like the cybersecurity converging now into healthcare, I think that's an opportunity as though there are definitely players over there. And even though the cyber space we've been seeing some exits already taking place, at least two Israeli companies were bought already. But I think there's a huge tremendous opportunity for those converging technologies to be major major players.

David Uffer  34:25  

You must have been six foot eight point guard because that's a good assistant.

Assaf Barnea  34:29  

I was it was for one year, I was point guard. I liked it

David Uffer  34:35  

Was a good assistant, a segue segue to a question that I was asked to as a panelist at a conference last week. Outside of pure digital health, somebody asked, are they going to have to be digital in AI elements to every med tech company that we see do they have to have some form of digital attack? to a DIN in traditional device.

Alexander Schmitz  35:05  

I mean, I don't think it's, it's a strict requirement. But for sure more and more of the companies that we look at have some element of digital or data in their offering. Some of them are, you know, like a soft mentioned, truly converging and integrating the tech into therapy delivery. That's probably one extreme. The other extreme, I think, is just the marketing of traditional medical devices is becoming much more digital. And I think that's been a struggle for a lot of traditional device companies, because it's not in the, you know, our industry historically was much more comfortable dealing with FDA and in notified bodies and insurance company administrators and hospital administrators, it's a pretty low tech kind of 20th century world. Even on the classic devices that have no, you know, orthopedic implants, there's no digital component to the implant, although some of them are incorporating sensors and accelerometers to measure performance of the implant, you know, after the fact, but even a plain vanilla screw, how you market that how you how you approach customers, how you find the patients and bring them into your portal. I mean, inspire has done a great job with that and sleep apnea in the US of creating patient poll for a novel therapy. I think, you know, even if you're selling a plain vanila device, you need to be digital in terms of how you market stuff. But I think more and more that technology is going to be integrated into the solutions into the products themselves.

David Uffer  36:33  

70 been at both ends of it. I think we've got about a minute. Yeah.

Samuel Levy  36:36  

With your thoughts. So I think there's certain categories of companies where the digital element is sort of an enabling technology to improve clinical outcomes using approaches that didn't exist 20 years ago. And so that that's one category where digital is important. I think the other is where the digital element improves the underlying business quality. So like, we've always talked about, you know, capital equipments harder than consumables, but I think, you know, a business that's closer in its characteristics to consumables is software as a service, you know, getting that monthly invoice paid by customers. And so the extent that, like digital is able to fundamentally improve the business quality of med tech companies, that's also an area where, you know, businesses become more interesting to us as investors.

David Uffer  37:23  

Well, thank you. I wish we had another three hours. It's such an engaging discussion, maybe at least for us. I don't know if you'd stay for three hours. But thank you so much for sharing your thoughts. And I'm not sure what your availability for the next 15 minutes is, if anybody does want to approach it in the panelists. I think we've got a few minutes to be able to do that before the next session. Thank you very much.