New Era: Finding The Right Place for APAC Within The Startup Strategy | LSI Asia '25

Joe Mullings  0:05  
All right, we've got 30 minute sprint here, so let's jump into it. If each of my guests would just introduce yourself quickly, who you are and company and perspective. Sure,

Ramin Mousavi  0:19  
I'm Ramin Sabri. I lead the team at CathWorks globally.

Omid Akhavan  0:25  
I'm Omid akivan. I run a family office, Anthro ventures.

Sabrina Wang  0:28  
My name is Sabrina Wang. I'm an IP lawyer and the partner at Kenobi Martens

Chris Eso  0:34  
and Kristi. So I lead M and A at Medtronic,

Joe Mullings  0:38  
fantastic. Okay, so new era, finding the right place for APAC within the startup strategy. So I'm not sure, in the last decade or so, anybody said startup, let's go to APAC and Ramin, I'll open up with you. That's a nice softball for you. With CathWorks, you've had some strategy around that.

Ramin Mousavi  0:56  
Yeah, you know, we are maybe one of those unique situations that, you know, we obviously have had great luck and success thanks to the hard work of the team in US and Japan. So Japan for us was the second place that we went. So we already had very early strong signals in Asia after we did the full round. And, you know, got Europe up and running, we are now back into looking at Asia more broadly. So we're looking at China and Singapore and Korea and Taiwan and all the places that, you know, probably were not part of the original plan. You know, in fact, we went back and looked at the original pitches that we had. I don't think we had Asia in it, but did Japan. Success definitely gave us a whole new perspective for what we are doing, and now we are very, very closely working on opening up as many markets we can. Kris, what

Joe Mullings  1:51  
as a strategic on M A do you look for signals coming out of a pack that might be unique to a pack at all as you look at properties in the market.

Chris Eso  2:02  
Yeah, I mean, we look at, you know, where they're actually starting to get some traction, both commercially as well as R and D and development side of the equation, more to play into the bigger strategy and how we're thinking about the technology and the opportunity on a global basis, we're not like going in seeking specific assets just for Asia, right? It's more of a global strategy that we're looking for.

Joe Mullings  2:30  
And Sabrina, when, when you think about Asia, what are the dynamics from a startup perspective, of course, that you are especially keen on navigating if you had to pick one or two.

Sabrina Wang  2:43  
We're definitely seeing from we're definitely seeing clients that are startups in Asia trying to expand in the US. And then we've seen us startup companies trying to strategically partner with Asian medical device companies, particularly from China and Singapore. For China's one hesitation is, you know, there's always some special cover out for the Chinese company to retain their Chinese rights, which can be navigated if, you know, if you just negotiate those rights ahead of time,

Joe Mullings  3:22  
and we wouldn't when you look as a family office leader in investments, you like predictability in your investments. Absolutely. APAC brings a little bit of a black box perspective to it, just in the way they go to market commercial IP concerns. What are you looking at in order to navigate around that black box? Or do you tend to wait a little longer before you invest in a property that has a focus here?

Omid Akhavan  3:53  
So it's interesting. You know, any anytime we've looked at companies, typically, we're investing in US, European companies and APAC is always very in the distant future in terms of the roadmap of market you're going to enter. In some cases, I've seen companies where they'll get a strategic partner from Asia Pac and they've given away the rights and one from a diligence perspective, you're always wondering, well, what do the strategics think? Right? How is Medtronic going to look at this opportunity for acquisition, and what is the discount you're ultimately going to get on the M A transaction? And I think that's for us as an investor, it's often a risk,

Chris Eso  4:34  
and we see that quite a bit for China, but not broader Asia, right? And that's usually the kind of distinction is China is giving rights out or they're giving rights to China commercialization a way for incremental investment. But, you know, we look at that as a the company needed to do what it needed to do at that time to fundraise and advance. The technology, but also we have to evaluate it and say, Okay, if China is no longer there as a as a territory for us, then we have to kind of weigh that into it. Most of the time, we're starting to see that there's rights to bring it back or to buy it back, which then makes it just a financial analysis that we have to look at,

Joe Mullings  5:20  
do you think that that sell the rights for China, usually it's in a non dilutive funding situation, as far as that offers them up? Do you think it's just that's too tough of a specific market and a pack to navigate? Because we've, we've heard the discussions around IP concerns about you never really own a business in China. You simply rent it. You know, those are the things that I hear from the market Ramin. What have you faced in that area?

Ramin Mousavi  5:49  
You know, I think one of the things that a startup you lack is that local knowledge. You know, we as, I think it's publicly well known. We very close collaboration in the partnership that we have at Medtronic. And as we've looked at China, I think the partnership has enabled us to tap into a local knowledge that I don't think that we could have had, you know, certainly can partner with, you know, consultants that can help you with this, but a group that has lived Chu, dat, you know, and I think I go back into that in isolation and vacuum the opportunity early on may not look big enough, but then when you look at the business that you're looking at the next 10 years of it, you know. And you know, we have a deal where I think shareholders of both companies want this to be successful for long term. You really can look the other way, you know. So you are encouraged to go back into it. But I do have a question, you know, just thinking about like our situation, does that earlier than expected? Success in a country in Asia like Japan? Does that solidify the investment thesis? Does it make it a stronger because, if I'm not wrong, you know, from a strategic this, from my days of being a strategic when we looked at the model, it was very heavily US centric, unless you were buying something for a specific region. So how do you like take that into account when the actual revenue comes before you were expecting for it to

Chris Eso  7:15  
come? Yeah, I mean, obviously Japan being a key market for us that we look at, right? And when we did the deal with with CathWorks, that was a critical aspect of the overall relationship, is us was approved, Europe was approved, Japan was approved, right? And we then had, obviously China as the next country to to go after. And so that did solidify kind of that thesis and that risk profile, because we're not taking on that risk of regulatory approval for a large market like Japan,

Ramin Mousavi  7:49  
yeah, this is a key thing to your question is that, where does that priority sit within the strategic perspective? You know? Because I think that is one strategic specific The other thing is not just getting approval. Wherever you can get approval is a place where you think that the depth of the market will justify all the risk that we are talking about.

Joe Mullings  8:10  
Yeah, the depth of the market. LSI had published a report out about a week before the show. You look at China, 1.4 billion population, almost 90 million surgical procedures at one end, when you think about market access. And then you come down to Singapore, 6.1 million population, 660,000 right? So clearly, the volume numbers are there for China. And then let's drop down to India. Similar numbers, 1.4 billion, 60 million procedures. But what's the challenge of unpacking that? Because you say the numbers are there, but it's not a straight route, whether it's value based pricing, whether it's the healthcare continuum and procedure adoption. So how do we think about that? In regards to that, Sabrina, would you take us into that one?

Sabrina Wang  9:09  
So I'll just talk about from an IP investment perspective, yes, of course, the number of procedures, estimated procedures is important. But in addition to that, you also want to think about things like, where is the company going to be manufacturing, and where are your competitors going to come out? Which market is your competitor going to come out? If they're coming out of China, then you'd have to file in China. In fact, we have recently had clients who had a pretty great technology and doing very well, but for a while, they were not very interested in pursuing IP protection in China. And lo and behold, it was the company coming out with almost the exact same device, and they aggressively filed patent protection in China so non con. It's really late in the game, and it was kind of a hard lesson for them to learn. You know that next time they're going to seriously think about filing in other countries like China.

Joe Mullings  10:11  
So so the IP in China that you just pointed to, let's look at the Stryker Nari acquisition recently, right? So you can try and bring Inari into China, but there's 14 other companies that are China based that are doing the same exact, yeah, technology. So is that a fight that's work worth taking on, even though the procedures are there. I mean, so,

Omid Akhavan  10:37  
you know, it's interesting as you think about markets. You know, anytime you think about value, it's about discounted future cash flows, right? And so what is the net present value of those cash flows? And therefore, what is your return on investment? So if you're putting $1 in, what is the value of that over time? And I think the biggest challenge for me, so you talk big numbers in India, for example, but the ASPs are very low. And so, you know, one of the questions that I think about is, if your main, let's hear your near shore manufacturing in the US, well, generally your margin, you're targeting a minimum 70% gross margin. And your ASPs are high because reimbursement is high. But as you look at the Indian market, a lot of it is cash pay, or if it's government pay, it's a very low ASP. And so the big question is, how do you make the business model work? I think in something like software, it's very viable because your your your development cost is amortized over time. But when you have a hard manufacturing cost of plastics, of labor, I think that goes back to Sabrina's comment around the IP, is that, well, maybe if you onshore manufacturing in China, right, and you go for the IP protection, you can get a low cost of goods that you're competitive to sell in that market. And so I think it's very it's very product dependent, and ultimately you have to look at the investment thesis and that market opportunity in the context of

Chris Eso  12:11  
reimbursement. I think in addition to that, right? It, it comes down to which country requires what kind of data in the local country, right? Obviously, China does, Japan does? India leverages European data and other regional data for their approval process. And so the barrier, or the hurdle to get approval is less or not incremental, I should say. But then the ASPs are lower. So then the opportunity of investment might not be there to build out the commercial infrastructure to actually get the volume that you need,

Omid Akhavan  12:50  
and therefore you rely on distributor ships, and that margin gets further diluted. So the question is, is it worth even entering that Mark That's right, right and beyond, you know, the altruistic or fulfilling the clinical need.

Chris Eso  13:03  
So then the desire by the government to incentivize to use local products versus imported or multinational products,

Ramin Mousavi  13:12  
yeah, you know, as you think about APAC, is something interesting that Omid was saying is, is this idea of, you know, there are places here in Asia that they never got landline and they went wireless, you know. So we digital technologies. You do have that opportunity, that because you have higher gross profit and you have the flexibility in the business model, you know, with places like India, you can be more flexible and then take advantage of the volume, because there's so many patients, and actually you get a better learning curve, because there's no such thing as a low volume operator. I think the last point of what Kris mentioned, of who you're going to have to compete with locally, then that comes into, I think, as a startup, when you go further and further from where you are building out, you more and more rely on partners. And the commercial channel that relies on the partners doesn't always work well. In fact, it becomes some sort of, you know, challenge when you do an exit. So if you do have an opportunity to partner with somebody that has existing channels, then I think you can get a lot of benefit from that, but if it's not there, then you may be chewing on more than what you want to do.

Joe Mullings  14:25  
You think, especially staying in that startup world, do you think we'll eventually have a stratification of med tech products, either SAS in nature, or plastic and metal in nature, that will have a higher likelihood of success penetrating the APEC market than not.

Omid Akhavan  14:45  
So, you know, it's interesting. I mean, I ascribe to the philosophy of, you know, the simplest design and lowest cost with a product that works and is. Efficacious will always win. And what's interesting is that, and as an investor, some of the opportunities I look at is, well, where has someone you know, developed and designed a product that would work in the Indian market? Because if you can make it work in the Indian market, and it's simple and easy to use for a physician, and it's widely accessible, then why wouldn't it work in the US or Europe? And so it's this frugal engineering that I think is really interesting, as an investor, to look at companies in Asia, PAC that are developing products with more limited resources, in markets that have more limited resources. And there's always a business model innovation like Ramin was talking about, is the cost of building the infrastructure for landlines was too high, so they jumped, they teleported in the future and implemented cellular. And then the question is, well, is there an opportunity to take all the learnings and build a simpler solution that then can ultimately be brought back and be successful in Western markets as well, and that that's an interesting opportunity

Ramin Mousavi  16:04  
to ask the moderate moderator question, since it's your area or expertise, what's the talent implication of that? Like, you know, if you look at it the other way around, trying to do like, how does that work? You know, how much more challenging it is for a startup if they want to expand out and get to Asia to find that a specialty. Because if I had to go find a very specialized channel and general manager in Japan, it takes a lot of effort. In fact, if you don't know someone, is really, really hard. How much harder does it get if you have to do it in

Joe Mullings  16:36  
Asia? It's an it's the same challenges in talent access, right? So each country is different. Each network is different. They don't use LinkedIn the way we do in Japan. They don't use LinkedIn the way we do in China. Access to individuals and the same tactics and techniques. Generally, you need a native, homegrown search organization in there. And then that also differs from executive level down to single contributor level. So it becomes a very challenging market, although clients come to us often for executive talent who have maybe been Americans, who have been in this region for two decades, have the network, distributor shift that work Japan, China, Australia, Singapore, and know the back channels and bring them in so that that is a more accessible talent pool than necessarily trying to get down and build from scratch

Omid Akhavan  17:33  
here. And so the key is to basically identify the senior leadership for those regions that can then build out the organ

Joe Mullings  17:40  
correct is having that network of already proven distributor relationships and relationships in general, because every country is different. We're in the States. We're a little we're a little spoiled, because, for the most part, 50 states, or 50 states, yeah, and we try and migrate that mindset, maybe unintentionally, over here, and the model just doesn't work.

Chris Eso  18:06  
I think it, you know, I try to boil it down to what's the core competency of each country, right? And so if you start to think about it from that lens, China obviously speed and cost efficiency and rapid iteration, right? Whereas Australia is early feasibility testing. I'm still trying to figure out where Singapore falls in. Maybe it's manufacturing, longer term in scale Japan, obviously, is about, you know, how do you actually optimize the therapy and make it so that it is cutting edge but but procedurally precise, and so each country has its own kind of core competency. And as a startup, you have to think about that of, where do you want to go? What phase of the development are you in? And where do you go and get that core competency?

Omid Akhavan  19:03  
So to that point, I mean, something interesting about Singapore I've only invested in one Singaporean company, is that there's a lot of innovation. There have been a lot of cross border partnerships with US and European institutions. But I think there's a big focus on the design ecosystem. And I think for developing an idea, because of the R and D tax credits, it's actually a very favorable environment for early technology development. It may be a small commercial market, but I think from an innovation perspective, there's a lot of opportunity here, yeah, and

Joe Mullings  19:41  
you get that in Australia, right? So if we're going to sort of again, stratify eight pack, if you want government subsidies for clinical trials, tremendous, if you want to run clinical trials on the neuro side, tremendous. So what seems to be emerging here is a conversation around, what's your initiative of the next 12 to eight? 15 months, and, you know, you've got to kind of play that chess board in that a pack region, especially if you're a startup,

Ramin Mousavi  20:07  
yeah, and I think it could play out really well, because if you go to the right place that has a competency, Kris, use Japan, you know, we initiate our first randomized control trial that we just did the results at PCR a few weeks ago in Japan. And because that's a place where they go for the optimization of the product and the therapy, they focus on that. And while we were focusing on commercializing in in the US, that was happening in the background, you know, that is five years of work. And you know, before you knew it, it it was done, and you get the results of it. So being able to do that now, to be realistic, if you are running a startup, you're always competing for the unavailable resources. So it does require a lot of foresight to be able to think this true. So I go back to what you said about a talent, a leadership, senior leadership talent who maybe has the experience of working with the strategics. Understanding the right back channels that can communicate goes a long way, because that's where you can, you know, actually make a smaller investment that gives a bigger return in time than you going sequentially, one by one. Because I go back to what Sabrina was saying, because what is the right answer? You know, it's a and we, as we enter the China market, I a lot of grief when we were spending, and to full disclosure, Kenobi is our IP partner, but for all the money that, you know, we were spending, I think outside of my CFO, everybody else yield is why we spend this money all the years before. Because when were we going to go to China now that we are coming in as though there's an IP that we have over there, when is the right time to make a decision of where you make your investment if you're first into market for something,

Sabrina Wang  21:52  
excuse me, I think for startups, it's really important to know where you are commercializing and when the timing is really important, because, as you might have already realized, filing in many Asian countries can be expensive, particularly when you have to pay the translation cost. So typically, we don't advise startup clients to file too early in in those countries and wait until you know what your final product design is going to be like. And also for the really, really few really, really core patents and patent portfolios you might want to file a little bit broadly in quite a few countries, and then subsequent incremental improvements, maybe you just select very, very few US Europe, and maybe like one place in Asia.

Joe Mullings  22:44  
So when we think about a strategy for a pack, and obviously, it's, it's, it's on the map now for most, most organizations in the startup site, but without, without Venture Partners, there's no startup business. I wonder my original question was, APAC is a little bit of a black box to most VCs for the most part, even to strategics for the most part, you guys act like you know how to work it, but you just, you're outsourcing it distributors here, right? So you have legitimately so, so you've got to get the VCs to buy in if that's not in your pitch deck to start. So let's put it in your pitch deck to start. The VC is looking and go APAC. We don't understand that. Therefore it's off the table. But then when you try and introduce it later as an afterthought, and they're not comfortable with it, then it's hard to have them stomach it, because they're saying, wait a minute. You need IP money, you need Partner money, distributor, money, clinical trial, money, we've never done that there before, and money's tight. So what? Where does the startup sit in that quandary as they try and raise money as part as an active go to market, or at least activity in a pack? So here's

Omid Akhavan  23:57  
what's interesting for me, and actually, part of the reason why I'm here at LSI, is when it comes to supporting startups, each investor brings something different, right? And to me, as you think about okay, some an early investor will often bring operational expertise in design and regulatory but as I look at our Asian Venture Partners, is that if we're looking at opportunities to invest in the region, then I'm looking for that expertise from the venture community here, right? Because they have supported other companies, or maybe they have worked in the Asia PAC region for a larger strategic and now have moved to the venture side and so understand what it takes to commercialize, and in a lot of ways, it can be a really interesting revenue opportunity, because from a regulatory perspective, you can leverage CE mark or other local approvals that may be faster, and you can start to get to revenue generation, whereas your US trial may take you a much longer. Longer, bigger investment, and so that can offset some of the burn. So I find it the dynamic to be really interesting. And I think the venture community here, if they can support and bring that expertise, that would be valuable for us.

Joe Mullings  25:13  
What's interesting as I think through the last couple of days in Singapore and some of the specific things you said, I think of the early days that I spent two and a half decades ago in Israel, where that government backed the Medtech community with very aggressive investments, with not as many strings tied to it as other nations do in the med tech community. And it almost feels like after sitting last night with the event here and listening to the government support of that non dilutive funding, and really becoming a hot spot, and again, having Australia nearby with certain core competencies, maybe this is the early days of why we get so many unicorns out of Israel. Now, can this be the next fertile ground for unicorns in the Medtech industry? Yeah,

Chris Eso  26:01  
I absolutely think so, right? I mean, with the government support and the backing that will draw companies here, startups here, investments, VCs, strategics, right to come here, because the ecosystem will be building and growing here Singapore, specifically, I'm saying, right? And so as you think about that, what does that mean? That spawns off new startups, that creates the talent pool that we talked about earlier. It creates strategics wanting to come here, because new innovation and new technologies and new ideas are going to be coming out of here. It all starts with that and, and that's what then spawns the the Israel 20 years ago, right? That's

Joe Mullings  26:48  
what it really feels like. Yeah, I don't know you've been involved, and I know you've been involved in heavy in Israel, but that's really, you know, small island nation for the most part, 8 million people, 6 million people, super smart pulling from other regions of the world that eventually get back to Israel, and maybe Singapore is representing that in the early days right now, and we're just going to be fortunate to be here earlier, so we only have two minutes left. So let's, let's go around the horn. What signals will you be watching for for the next 2436 months out of Singapore proper, but APAC at large that will be signaling you next generation for Medtech here,

Ramin Mousavi  27:28  
you know, I think there are some really good initiatives of trying to draw in. I think they've done a great job with larger multinationals making Singapore being a hub. I will look to see what smaller private companies maybe they can do. There's, as you know, now, both non dilutive and equity you know, possibilities. And I will look also for the manufacturing creativity, because I think there are benefits of being able to shift your outsource manufacturing into Asia and somewhere that geopolitically is very stable, could be a big role. Can play a big role into that. So that will be the signal to watch. The other thing that I think is a learning that we've had I will keep a very close eye on, is to see who breaks the barrier to be the next one to get into one of these countries, Japan or some other places. Because there's got to be more than just one off. There's some commonality that we haven't figured out yet.

Omid Akhavan  28:26  
You know, I think for me, it's really about the continued governmental support this venture ecosystem and, you know, this cross border collaboration where I, as a US investor, am getting deal flow here, also I can share my US deal flow and look at opportunities to bring technology here and to take technology here to the US Brita

Sabrina Wang  28:53  
IP lawyers, I think we're always looking for a country where The IP system is transparent and there's some predictability in knowing how to enforce your IP in that country. And I think for a country to be successful in attracting early stage companies and investors to come, that's that that very strong IP system is an imperative.

Joe Mullings  29:20  
Chris, 

Chris Eso  29:21  
yeah. I mean, look, I think it's everything that everybody's talked about. But I think it starts with investment coming from the government that will lead to IP generation and startup companies here that will bring money outside, outside of the government here, that'll bring strategics here, and then in three years, this conference will be 2500 people attending.

Joe Mullings  29:45  
Oh, out of your mouth. All right. Well, thank you very much. Please. A hand for our panel.