Silicon Valley Approach to Medtech

Key Learnings From Beth’s Experience

• Clinicians, regulatory bodies, and commercial stakeholders may have different requirements. Address each of them early in the development process. Engage with key decision-makers as soon as feasible to ensure your product is commercially viable.

• FDA can be your best friend if you engage the right way. Consider them a part of your team. However, before approaching the agency, evaluate whether it’s a real necessity for your product. Your solution might be eligible for a simpler and more straightforward pathway. 

• Fundraising for startups requires persistence, building relationships with a wide range of investors early on, and having a clear narrative about your technology. Engage with prospective capital partners even if they typically invest in later stages. And don’t limit yourself to investors strictly within your niche.

The irony is, as Beth puts it, “Healthcare is the fifth least digitized industry globally, just ahead of mining, where we're still using shovels. This is an industry that impacts everyone and is the largest part of most nations’ GDP. It's a trillion-dollar-a-year industry, and we're just ahead of shovels.” 

This is why Beth Rogozinski ventured into the space from the pure-play technology arena. She began her career in Silicon Graphics at Silicon Valley, where, after being on the digital media and entertainment teams, she joined the Visual Workstations team where her work raised the stock price by over a third. She later joined the team that built the digital video editing suite that became Final Cut and sold to Apple. Her resume is quite long and impressive, but ultimately, she transitioned to healthcare, when her work at a startup made her realize, in her own words, that healthcare was broken. 

She says, “The healthcare system is really well-designed for acute care. If you had a heart attack, you could be airlifted to a hospital, treated, and quickly return to normal life. However, the system isn’t well designed for chronic conditions, which today cause 90% of all morbidity and mortality.” What struck Beth the most was that, despite these odds, even in 2024, healthcare remains one of the least digitized industries. Inspired by this, she launched her first health app on Zen meditation to treat depression. 

Thereafter, Beth started working on clinical validation for these types of software-based interventions. She later joined Pear Therapeutics as Chief Product Officer, where they developed the first FDA-cleared software called reSET for the treatment of substance and opioid use disorders. From there, Beth helped spin up Oncoustics and stepped into the CEO role in late 2019.

At Oncoustics, the focus of Beth’s team is on chronic disease management using machine learning (ML) to analyze raw sound data from ultrasound devices, creating tissue acoustic biomarkers for early diagnosis and better management.

Currently, the startup is developing the OnX Liver Assessment Solution and is prioritizing liver disease due to its high prevalence and inadequate early diagnosis methods. Conditions like non-alcoholic fatty liver disease (now Metabolic Associated Steatotic Liver Disease, MASLD) are increasing globally, with up to 46% of the U.S. population potentially affected. 

Preventive diagnostics for liver disease are typically complex and invasive. Oncoustics simplifies this with a quick, painless, five-minute in-office test. Their liver assessment solution is pending FDA approval, and Beth envisions it becoming a standard in primary care settings, starting with hepatologists and endocrinologists.

Who is Going to Pay for Your Product?

To develop their AI model, the Oncoustics team directly engaged with clinics and healthcare professionals to understand their needs and expectations – specifically what they needed to know about patients' liver conditions. However, balancing these clinical needs with FDA requirements and commercial objectives presented challenges. While clinicians had specific demands, the regulatory groups had different requirements for approval. 

Many medtech startups fall into the trap of focusing predominantly on regulatory approval while deprioritizing the commercial implications, which often leads to slow adoption. Beth understood the importance of involving key commercial stakeholders, including payers, early in the development process to ensure the product not only met regulatory standards but was also commercially viable. She says, “You have to have the payers, their mindset, and their thought process in the room. It's a wonderful thing to innovate in healthcare, but somebody's got to pay for it. It's critical for us to figure that out early.”

For entrepreneurs, understanding how payer ecosystems work is essential. Many payer groups have innovation and venture arms. For example, United’s venture arm is Optum Ventures and their innovation lab is Optum Labs. Getting involved with Optum Ventures and Labs can be a great way to progress if you want to engage with United, for example. But you need to align your solutions with their different needs. “We want to address their pain points rather than sell something. It's really got to be mimetic to what their needs are.” she says. 

This is why Beth talked to an entrepreneur in Anthem Blue Cross Blue Shield and learned that diabetes was a major pain point for them at the time. Knowing this, Beth could position Oncoustics to address the bi-directional relationship between diabetes and liver disease.

You Don’t Always Need Clearance

When approaching FDA, Beth shares, “Fundamentally and strategically, I see the FDA as collaborators, and I really balk against the idea that they're antagonistic.” This type of framework is important when trying to foster a productive dialogue. You should get their feedback and advice early on, engage in pre-submission meetings, and think about FDA as a part of your extended team. 

This attitude helps in more than one way, as you should also carefully consider whether getting FDA clearance is truly necessary and beneficial for your specific product. Beth suggests that a regulatory stamp of approval shouldn’t always be the default goal. For example, at ModalityAI, a company where Beth is an independent board officer, they are developing a speech recognition diagnostic, which is considered safe and may not require a traditional FDA review process. Instead, they could be exempt or qualify for a simpler “generally regarded as safe” (GRAS) clearance, avoiding the lengthy and costly process of a 510(k) submission. 

Beth suggests that instead of asking "how" to get clearance, you ask “should” you get clearance. You need to decide if it will make your product more valuable or give you an advantage over competitors. Getting FDA clearance often involves making specific claims about how the product works and what it can do, and sometimes, it might be better to make fewer claims about your product’s medical benefits and get it to market faster.

Your Audience Might be Wider Than You Think 

Despite the challenging environment, Oncoustics successfully raised over $5 million through a Seed Round in 2022. 

“Fundraising is always hard because the easiest thing for an investor to say is ‘no’,” Beth says. It’s a numbers game that requires you to be persistent and resilient. “People invest in people” explains Beth, “I've been talking to people that only invest in B rounds even though we're still in round A. They get to know me, they follow our process and the traction that Oncoustics is having. When I'm ready to start raising that B, they won't be strangers on a Zoom call.”

Beth also suggests securing a strong lead investor to attract others, even if it means accepting a lower valuation. According to her, fixating on dilution and valuation at the expense of closing a deal is not a good idea, as momentum is a vital asset for startups. In her words, “Nobody ever died from dilution. Getting the highest valuation is often not the most important thing. You should think about it strategically and have a long view.”

When it comes to active fundraising efforts, her strategy is to go wide: reach out to a diverse array of investors and don’t be afraid to pitch to audiences that seem outside of your niche at first glance – they might not be. For example, Oncoustics is a hybrid of deep tech and health innovation, so it makes sense to target both deep tech and traditional health tech investors. Beth highlights, “Google, Meta, Microsoft, Apple, NVIDIA, Tesla. Besides Tesla, every single one of them is going after healthcare, and they're all really, very interested. Amazon and CVS are investing in health innovation today.” 

However, there is a challenge when approaching some of these non-traditional investors: they may be wary of FDA regulations while traditional healthcare investors might not fully grasp software valuation. That’s why bridging the gap with a clear and persuasive narrative is so important. Beth says, “We basically had to create a story and find those people that would meet us in the middle in a way that’s going to move this industry forward.”

However, Beth cautions against using buzzwords like “AI” in your narrative. For example, building an AI-centered technology is a hot topic these days. If companies claim to have AI, they should genuinely have AI and not just an algorithm. Beth explains, “People can see through those kinds of false claims really fast. Using AI as a buzzword doesn't mean that you're going to get funded or garner interest.” According to her, it’s also unrealistic and poor judgment to aim to replace doctors with AI. Instead, the goal of entrepreneurs should be to create systems that support and enhance clinicians' work, not replace them. Afterall, there are global shortages of doctors and ever-increasing needs of patients in a fast growing and aging world.