Josh Makower is one of the most accomplished, varied and prolific innovators, entrepreneurs, inventors and venture capitalists in the medical technology community. He is currently a general partner at New Enterprise Associates (NEA), a global venture capital firm, leading its medtech and healthtech practice. Makower is also the founder and chairman of ExploraMed, a medical device incubator that has created notable companies such as Acclarent, EndoMatrix and TransVascular; and founder of several other healthcare-related companies.
When he is not creating companies, he serves as a consulting professor at Stanford University School of Medicine and as mentor to the Fogarty Institute startups. Makower is also the co-founder of Stanford’s Biodesign Innovation program and holds over 300 patents and patent applications for various medical devices.
We had the privilege to catch up with Makower to discuss his career, his thoughts and tips for startups, the challenges and opportunities he sees in medtech and medical trends that excite him the most.
Q. How did you first become involved in healthcare and medical technology?
A. Since I was a young boy, I have always been fascinated by the wonder and complexity of the human body and finding ways to help people live healthy lives, with less suffering. I found my way into engineering and bioengineering at MIT to learn how technology could enhance and improve people’s lives. I then went to medical school to learn more about the body and its physiology, and to help play a role in helping shape the future of healthcare.
Immediately after medical school I joined Pfizer, where I had an opportunity to partake in the development of the next generation of medical devices and in identifying the best process for innovating new medical technologies. In 1995, I used that same process to create the incubator ExploraMed and, a couple of years later, to train medical students at Stanford. The Stanford program led to the co-creation of Stanford Biodesign, with Paul Yock, where that process is still taught.
Q. How did you get involved with the Fogarty Institute and what are your thoughts on the role the organization plays in advancing medical technology?
I have always had a very high regard for Dr. Fogarty, a medical pioneer and entrepreneur who helped lead the way with high methodical standards for improving innovation.
Dr. Fogarty was also a pioneer in creating a space (the Fogarty Institute) where early-stage startups could grow “strong” enough to convert to a bigger platform. The Institute essentially creates more runway for these startups to advance and potentially thrive, and, similarly to Y Combinator, offers a good transition for early innovators before they are ready for full investment.
Many of our Biodesign fellows have joined the Institute, which is a natural next step in the innovation process for these young entrepreneurs. The Institute has been transformational in the Valley for allowing companies to potentially create life-improving devices that would otherwise likely be challenged to survive on their own.
Q. What do you look for in a startups when you are considering an investment?
A. NEA manages fairly large funds and we have our own criteria. We are still dedicated to medtech; however, the companies need to be of substantial size. We look at how big the opportunity is – there are many great opportunities that unfortunately are rather small – and the technology needs to be “needle moving” for a firm of our size and scope. We also look at the impact a company makes on medicine and if it is transformational. We will likely be less excited about a company developing a device that is following a market rather then leading it. We also like to back strong leaders and extremely experienced management teams.
Q. What are your top tips for early-stage startups to best position themselves to secure funding?
A. First, they have to have an amazing team. The more experienced, the better. If the CEO has a strong track record, that goes a long way. Second, you need to have a sizable and significant opportunity you are addressing, and be able to describe it in a clear and concise way. Third, make sure you have good patent protection. Finally, you need to have a strong regulatory and financial strategy in place.
Q. What are the challenges and opportunities you see in medtech?
A. The challenge: The number of financial backers has dramatically decreased in the past years due to FDA regulations and the global financial crisis. The fact is that things are taking longer and it is getting more expensive to get a product to market. There is a lack of dollars available and there are fewer acquirers. Also, it’s a significant challenge to stay private longer, and it’s very expensive.
Because an environment exists where it takes longer and longer to gain market approval by regulators, an increasing number of investors are walking away from this innovative field.
The opportunity: There has never been a better time to go after improving people’s lives. It’s a tremendous dream and there are still many opportunities to make a positive impact.
Q. What are some of the trends you are most excited about?
A. I am particularly excited about the consumer healthtech space. Consumers are becoming increasingly aware of finding health solutions online, and they are much more active in seeking answers.
Technology embedded in phones, sensory technology and cloud-based products will enhance people’s quality of life and ability to find solutions directly without having to go to a physician’s office. This opens a whole new guild of device technology that is more accessible and will allow people to stay healthier and improve outcomes while reducing the cost of care.