Building an Exciting Healthcare IT Company From Chicago: LaunchPoint CEO Terry Ryan (Part 7)

Sramana Mitra: Is there anything else from your strategic thought process that you want to share that has helped you achieve what you’ve achieved so far?

Terry Ryan: I would just like to touch for a moment on VCs, private equity, and growth capital, I’ve done all the above. When people talk to me about that kind of stuff, I say to those people, “I feel I’ve successfully worked with those markets.” I don’t have the story where someone came in and took over my company because something went sideways. They came and helped. Three years later, we exited and everyone was happy and I still have Christmas dinner with them every once in a while. When you’re dealing with those groups, you have to realize that maybe all of them won’t tell you that what you have isn’t good or that you’re positioned wrong. They’ll try to convince you that you’re always at the right stage for them. There’s a bunch of things that you need to do as an entrepreneur to size up the companies that you decide to spend time with. You don’t have time to spend with all of the companies that would want to spend time with you. You have to really read their website, listen to what they’re saying, and ask questions about their fund. It’s not a one-sided discussion.

When you start to understand that, it becomes a much more balanced discussion. It’s enriching for both sides because you appreciate them as much as they appreciate you. When you understand that partner meetings are every Monday and they have to go in to those meetings and get approval to go through the next gates, and you tell them you understand that, they smile. You have to understand how they operate as a business. Don’t think that it’s their job to understand you. It’s actually your job—just like with a customer where you have to understand their viewpoint and try to craft a solution set that brings the right parties together.

Don’t keep the ones that aren’t right because they will be wasting your time. They don’t consider it a waste. That’s keeping their sales pipe full. You’ve got to decide when it’s really becoming a waste for you. When you start to understand that there’s more alignment. You’ll feel that and you’ll understand that. It’s very wonderful when you get there. If you’re wondering if you’re there, you’re not there. That’s the point.

Sramana Mitra: Just like any lead qualification or sales opportunity qualification process, you basically have to decide whether you want to invest in developing that account—whether they’re serious or just wasting your time.

Terry Ryan: That’s right. I don’t think that a lot of younger entrepreneurs understand how important that is or rather how much those institutional potential partners appreciate the times you understand that.

Sramana Mitra: By the way, it’s not just young entrepreneurs. It’s people who don’t have the experience of fund-raising. It takes away from real selling. The time that you’re spending selling to investors is the time that you could be using to sell to customers. That actually builds valuation which is much more desirable. That’s the trade-off that, I think you’re absolutely right, is a massive problem in the industry.

We do this weekly free mentoring sessions every Thursday morning. We’ve done 240 episodes as of yesterday. Yesterday’s guest brought up a point that there were 70,000 angel-funded companies in 2013. That is a huge escalation. Whereas the number of VC-funded deals is just about at 1,000 a year. That has been constant for many years. Going from 70,000 angel-funded to 1,000 VC-funded, you can see what kind of odds you’re playing against.

It’s a pleasure talking to you and I really enjoyed the story. I think you’re doing something really smart and very astutely navigated. Thank you for sharing your time.

This segment is part 7 in the series : Building an Exciting Healthcare IT Company From Chicago: LaunchPoint CEO Terry Ryan
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