Surprising advice on applying for government funding
Christina Hernandez Sherwood, eMed Editor, MedCity News
Somnarus, a healthcare IT company that created a medical device for sleep apnea diagnostics, took a detour on the road to funding the business, said founder and CEO Maria A. Merchant. "The company is well funded," she said, "but it's less traditional." Rather than financing Somnarus largely through bootstrapping and venture capital, Merchant said, the startup has relied heavily on government funding.
The company received funding through the Small Business Innovation Research program, Merchant said, and learned a surprising lesson along the way. The simpler the technology, she said, the more likely it is to receive the government grant. Merchant suggested that healthcare entrepreneurs validate their product or service to prove its feasibility before applying for the highly competitive grant. "Focus on something that's really doable," she said. "They prefer something with a very clear path."
Here are other entrepreneurial insights from Merchant:
Choose team members carefully -- While it's intuitive to watch for glaring red flags that would turn you off to a potential team member, Merchant said it's the less obvious "pink flags" that can be more telling. "Finding the right people to work with is the most important thing in your whole venture," she said. "One bad apple can derail the whole venture, especially if that person is a co-founder or an investor." Pay attention to references, Merchant added, but make sure those giving references share your values. "Be very careful," she said. "No amount of money will ever compensate you for the headache of dealing with bad people."
Consider international connections -- As a resource-limited startup, Merchant said Somnarus has struggled to find people to do good work quickly and inexpensively. A Moscow native who maintains connections with development groups in Eastern Europe, Merchant has found people there to do Silicon Valley-quality work for a fraction of the cost. "The work is an incredible value," she said. But, Merchant cautioned, it's important to get a recommendation from someone you trust before hiring internationally.
Keep the end result in mind -- Medical device companies start each endeavor with a strategy, Merchant said. For instance, she said, a company that plans to work with corporate partners will need to find them early on. Some early-stage entrepreneurs assume they'll strike out alone if they can't find corporate partners, Merchant added, but those are two very different strategies.
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