One of the keys to Cleveland becoming a global hub for health care innovation is honoring the many dealmaking success stories the region has already produced, says Baiju R. Shah.
“We have 67 health care companies in the Cleveland region in the last 15 years that have gone on to be purchased or become public,” says Shah, CEO at BioMotiv and past president and CEO at BioEnterprise. “These are companies that have achieved a major entrepreneurial milestone with validation through an acquisition or through a public offering. But we don’t talk about it as a region. Look at Steris, nearly a $10 billion market cap company. We don’t even celebrate Steris as a startup success. Somehow, we think of Steris as a company that has been around forever when it actually launched in 1987. It’s younger than the startups we celebrate like Apple, Microsoft or Hewlett-Packard.”
In Shah’s eyes, this lack of credit for what the region has already accomplished limits what it can achieve in the future.
“We don’t recognize the startups that have grown up in our midst and are now global giants in their own sector,” Shah says. “It’s really important to publicize that success. We spend too much time in this region talking about what happened from the 1870s to the 1930s. That’s great and it formed a rich foundation for our community. It shows that it’s fundamentally in our DNA as a region. But it’s not dormant. It’s not something that needs to be re-activated. It is active. That is how Cleveland becomes the type of dynamic region and dynamic economy that we need to power ourselves into the 21stcentury.”
At BioEnterprise, Shah helped launch more than 110 bioscience companies in Cleveland that collectively received $1.3 billion in new funding, largely from venture capital and private equity sources. Now at BioMotiv and as co-leader of the Harrington Project for Discovery & Development, he seeks to continue accelerating breakthrough discoveries in the field of medicine. Dealmaking will continue to play an essential role in making that happen.
“No one organization — no one set of individuals — has all the necessary resources, be it the funding or the skillsets, to take innovation all the way from idea to the point where patients benefit,” Shah says.
In this week’s Master Dealmakers, Shah talks about his approach to building a team that can get deals done and the opportunity that health care innovation presents to other industries.
Be a difference maker
Investors invest in people, not in ideas.The most important thing when you’re bringing investors into an enterprise at any stage of technology is do you have the right people around the opportunity? Can you project confidence to the investors that you’ll be able to handle the multitude of unknowns that are going to emerge as you continue to move your enterprise forward? Having the right people gives you the entrée to have the types of serious conversations an investor is looking for as you’re looking to raise funds.
In my BioEnterprise days, our role was to assist entrepreneurs and get them positioned for these types of dialogue.I would often talk to entrepreneurs who would come our way about the team members and advisers that they had in place. Many entrepreneurs didn’t have a board of advisers. If they had a board, the advisers were limited to individuals who were friends of theirs and/or individuals that were also serving in some type of service capacity — their lawyer or their accountant.
All those people are good people, but they aren’t going to be difference makers with investors.If you’re developing a new technology, if you had your wish list of individuals that could give you guidance and entrée into credible discussions with either large industry partners, technology sources or investment sources, who would you want on your advisory group and why?
It’s critical to have the right advisers around you to have a chance of putting together the right team and the right investors. Be generous in what you’re offering them because you are going to draw upon their wisdom and their networks. People would come in and they just wouldn’t have that. Then there would be resistance to putting it together. ‘It’s too hard. People don’t live locally. I don’t want more people telling me what to do.’ You need to understand that in order to be successful, you’re going to have to manage these types of individuals and the complexity they bring to an enterprise.
Expand your dialogue
Nothing substitutes face-to-face conversation.It’s painful in today’s day and age how everyone reverts to a quick email or a phone call. It’s not a substitute for forming real human relationships. We’re not at a point yet where there is any substitute for face-to-face meetings in terms of understanding each other and talking in a way that is beyond the words you are using. You need to understand the meaning of those words and where people are coming from. It’s only then that I think you have a chance of pulling together the network of stakeholders that is required to move innovation forward.
Email for me is more around organizing and coordinating actions.But when you’re really trying to communicate with someone, email is terrible. Any type of one-way communication is terrible. You don’t have an opportunity to see how someone reacts or to have an expanded conversation. You lose the opportunity for any nuance in one-way communication. Then it starts to come across as very directive, rather than something that is collaborative. I encourage our whole team to communicate through two-way communication and it’s listening more than telling.
It’s about creating more options, more pieces or more strands of the potential partnership.The more opportunities you have to develop those strands of partnership and advance collective interests, the better the relationship is longer term. It’s not just trying to deal with it in a transactional way where it’s a one-off activity. That’s fine in the context of a single-time service contract. But academic institutions, our pharmaceutical partners, our comprehensive strategic service vendors and all sorts of groups we would want to partner with on a repeated basis, it’s really important to look at what are all those additional opportunities to work together beyond the individual transaction.
The Last Word
Health care today accounts for 20 percent of our gross regional product as an economy. It has enormous opportunity to continue to grow, especially around health care innovation. We are fortunate to have such wonderful clinical and research organizations as we do in the Cleveland area and we now have 800 health care companies that are trying to commercialize novel medical devices, biotech products, health care IT services. It’s an incredibly important sector to our region.
Health care is not an isolated sector. You can think about how in medical devices, it’s critical to have highly skilled manufacturing to be able to develop high-tech medical devices. We also need high-tech polymer sciences to be able to develop novel medical devices and drug delivery technologies. It draws upon the strength of our region in a very unique way, but presents a market opportunity that capitalizes on those strengths and can become a significant and growing sector of the global economy.