Your Network is Your Net Worth

Dave Rosa is working towards a world where brain surgeries are less invasive, more precise, and significantly safer through NeuroOne, where he’s the president and CEO. He is an industry veteran, brimming with invaluable insights and practical wisdom, thanks to his three-plus decades of experience ranging from sales in orthopedics to leadership roles in companies like C.R. Bard, Boston Scientific, and St. Jude Medical.

From reducing the invasiveness of brain surgeries to expanding the capabilities of the company’s technology from diagnostics to treatment, NeuroOne, under Dave's guidance, is paving the way for a future where neurological disorders are no longer life sentences but manageable conditions.

Born out of a partnership with the Mayo Clinic and the University of Wisconsin, NeuroOne was Dave's answer to a longstanding need for improvements in neurological procedures. Both of those organizations were working to develop thin film electrode technology, dating back to the 1950s, into something far more advanced: thinner and lighter electrodes with improved resolution.

Dave saw in NeuroOne not just a company but the start of a revolution. The technology promises a dramatic shift in how conditions like epilepsy and Parkinson’s disease would be treated. Traditionally, treatment required invasive surgeries where the practitioner needed to either remove the top part of the skull or drill holes into the brain. The end goal of NeuroOne and its two flagship products, Evo Cortical Electrode and the Evo sEEG Electrode, is to minimize the invasivity of these procedures through the thin and flexible nature of the devices. 

The platform could work for diagnostic, therapeutic, and surgical functions. Moreover, NeuroOne strives to harness the potential of machine learning (ML) and artificial intelligence (AI) to significantly improve treatment. Dave says, “The fact that it had multiple capabilities really excited me and it was the primary reason why I joined the company."

With two product lines already commercialized under 510(k) clearances, NeuroOne is ready for more. The company's ongoing projects include a drug delivery system and a device for chronic pain management. These developments signify not just growth but a commitment to breaking the glass ceiling of medical technology.

Key Learnings From Dave’s Experience

• Securing initial capital requires more than just a great idea; you'll need to make tangible progress like prototype development and hitting pre-clinical milestones. You can leverage local organizations and social media to target potential investors like angels, large companies interested in emerging technologies, and investors who already have a foothold in your domain.
• Embrace open communication for various purposes, including investment, consultation, and support. Surround yourself with a supportive and experienced team, including board members.
• Opt for shorter regulatory paths like the 510(k) to swiftly navigate through approvals. Focus on technologies with clear predicates to avoid regulatory complexities. Plan your timelines realistically, anticipating possible delays and iterations along the way.

How to Secure Initial Capital, Fast

"Way back in the Stone Age, when I started in this business," Dave quips, “you could raise money based on a concept.” However, a viable medtech venture now demands a progressively rigorous set of milestones such as functional prototypes, animal and human data, regulatory clearances, and even actual revenue. The shift is clear: investors these days are far less willing to take big risks compared to a decade ago. 

This elevated early angel investors to pivotal players, filling the gap left by venture capitalists' dwindling willingness to take on early-stage startups and the risks they carry. But there's a catch with angel investors — in exchange for their support, you often have to part with a slice of your company.

In this context, Dave advises pursuing conversations with strategics early. Even though NeuroOne did not have a final product design, it did meet the growth initiatives of Zimmer Biomet — a multinational medical device company. “They were willing to take a chance on us,” Dave reports. Thanks to the perceived fit, NeuroOne secured a $3.5 million accelerated milestone payment from Zimmer Biomet for EVO sEEG.

Dave also suggests researching the societies and organizations that may help startups, budding companies, or small businesses. Drawing on his experience in Minnesota with organizations like Medical Alley, Dave shares that these groups often have connections to early-stage and institutional investors and can even assist in talent acquisition. 

Networking, Dave emphasizes, is key in these initial phases. “Some people are trying to get NIH grants, which you can do, though it's difficult and time-consuming. But the fastest way to get money for me has always been to find a network,” Dave suggests. However, he also recognizes that not every entrepreneur has established connections. He shares his own experience of leveraging social media platforms to connect with investment bankers and analysts, “There were a number of relationships that have been really helpful in finding small pockets of money.” Getting your face and story out there can end in fortunate encounters. 

Another potential class of investors is the large corporations. They are always on the hunt for smaller companies in the hopes of finding the next growth platform. It’s important to be consistent in your messaging, however. “Keep saying the same thing so that you're able to capture people's interest,” Dave advises. “I was very skeptical, but I have become much more active on social media, and it’s enabled introductions to physicians, some of whom are entrepreneurs themselves, who are interested in investing in technology in their area, as well as other large corporations.”

You also need to understand that the competitive landscape doesn’t always mean a zero-sum game. In Dave’s experience, looking into the investors of competitive companies could prove fruitful, as they may be interested in making additional investments within the same sector.  “If they already like the space, and if they're already invested in the space, they may want to make a second bet in the same space,” Dave explains. 

If you keep at it, you're bound to make some connections and maybe even strike a few deals. But remember what Dave says, “No matter what an investor tells you, whether it's a wealthy individual or a small institutional investor, until that check is cleared in the bank, you don't have the money.” Be careful not to stretch your budget too thin banking on just a handshake.

Why Your Network is Your Net Worth

Dave knows how to reach out to people, and it’s important that you do, too. This includes engaging with someone to invest, to get them on board with your idea, to consult them, or just to check in. 

Let’s start with fundraising. Dave’s knack for networking played an important role in securing initial funding for NeuroOne. He points out that there are people out there managing high net-worth individuals’ money, who are willing to make smaller bets in companies that are at early stages, and Dave was successful in finding them. 

He even reveals that, at one point, NeuroOne was operating on a month-to-month basis, completely depending on those small investments. He says, “The formula is, get out in front of as many people as you can, find the people that have relationships with family-run offices or who manage high net-worth individuals, and you can find out who those people are by reaching out, whether it's investment bankers, colleagues, or friends.” 

Being open to talking to people has other benefits, too. As the CEO, you’re the ultimate decision-maker in a company, and it can feel quite lonely and draining at times. “When things go wrong, it will be your fault, whether it is your fault or not,” Dave says. You have to remember that you don’t have to know everything. Instead, surround yourself with supportive and experienced people. Dave emphasizes, “Put your ego aside, learn as much as you can on the way up, and hire people that have more experience and skill than you.” 

Inevitably, you'll make some wrong calls. What's crucial is learning from these missteps and moving forward, rather than getting bogged down. Dave continues, “You need to have a support network, friends, colleagues, a mentor to bounce things off and keep your sanity. It's the loneliest job that I've ever had in the world, and I've had it now for quite a while.” 

The significance of having the right people on your board cannot be overstated. As Dave puts it, “The wrong board, or even just an individual member, can really derail the company.” You need to be fastidious when choosing who joins your company, especially your board.

Realistic Clinical and Regulatory Strategies 

Investors don’t want to take big risks, full stop. That means if you fail to prove the safety and efficacy of your device, you risk losing the prospects of investment. This is where it gets close to a zero-sum game. “There are so many investors over the years that have been burned investing in a great idea that never got through FDA,” Dave notes. 

To mitigate such risks, Dave’s first strategy is opting for a shorter regulatory path, like the 510(k). It’s a tactical decision that’ll help you navigate the regulatory waters more swiftly.

A second tip to avoid getting stuck in the regulatory labyrinth is focusing on technologies that have predicates, or in Dave’s words, “devices that have already been cleared by FDA that you feel you're comparable to.”

Despite favoring the 510(k) pathway, Dave approaches it with the rigor of a PMA. He highlights the importance of collaborating with individuals experienced in similar devices and formerly affiliated with FDA. Working with people who have been in the trenches, who know both the business and the regulatory field inside out is of prime importance. He summarizes, “I try to find consultants that are former FDA employees or reviewers that were in the space that I'm in. I also try to find the people with the right attitude who’d say, ‘Tell me what you want to accomplish, and then I'll tell you if we can get there and what the opportunities are and what the risk is.’"

The last piece of advice Dave offers regarding navigating the regulatory and clinical landscape is making sure your timelines are realistic. He says, "Don't cut yourself close on what you expect the clearance times to be." In other words, you need to be prepared for possible delays, revisions, etc. Respect the marathon nature of this race and be prepared for the long haul while keeping your eyes on the finish line.