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Scaling in the US
November 25, 2019
In collaboration with Silicon Valley Bank and Penningtons Manches Cooper, Bailey Fisher hosted discussion focusing on the potential challenges and opportunities of scaling a growing healthcare business in the US. We were joined by Nigel Pitchford, Kym Denny and Paul Kinnon, who generously shared their hard-won experience as our expert speakers. Key considerations from the discussion are summarised below:
Ensure you really understand commercialised healthcare
The US healthcare market is vastly different to that of the UK. It’s an obvious point, but it’s crucially important to understand how this system works, as it is not necessarily intuitive. The differences are numerous, however perhaps most important is an understanding of the payer model, and therefore who exerts the real influence when driving new technologies into practice; unlike the UK, healthcare in the US is ultimately paid for by employers and insurers, and it is therefore these parties who exert this influence, over and above the doctors and medical specialists themselves.
Strongly consider US VC involvement, but be realistic about what they can bring
In addition to the obvious differences between the US and UK healthcare markets, there are a host of more subtle nuances to be navigated as you grow. It is worth seeking investment from US VCs who have a more inherent understanding of the market and local knowledge networks, in addition to any US headcount you may choose to employ. British VCs will support this strategy, as the advantages are many and obvious, though ensure you remain realistic in your expectations; you will likely be entering unchartered territory with new technologies, and even local experts will be learning as they go. Be prepared to pivot, and adapt your strategy as appropriate.
Be ambitious, believe in the opportunity, and don’t be afraid of failure
An oft-quoted difference between US and UK VC funding is the sheer size of investment rounds. Whereas the UK mindset is more cautious, with local market opportunity restricted by the NHS’ own modest budgets, the nature of the US healthcare market means the commercial opportunities are huge, and US VCs therefore expect significant exit values, and early investment rounds to be aligned to this potential. US VCs expect to see boundless ambition, unwavering self-belief, and commitment to a US strategy, in addition to a clear commercial proposition. This ambition relates to both investment requirements and growth plans, so be bold in your attitudes.
Understand your value proposition, and communicate this early across all stakeholders
US VCs will be expecting significant exit potential if they are to fund your plans to expand, and as such their key interest will be your commercial plan and value proposition, rather than the science underpinning your product. However, the importance of this value proposition (essentially why customers will choose your product or service over others) extends beyond securing funding; the message needs to be clear and understood by all stakeholders (investors, payers, end-users, KOLs, patients, employees) as early as possible, and will require constant review and fine-tuning. This commercial value must sit at the heart of your strategy, and be understood across your organisation, as it is ultimately what will define your growth and success.
Know the key opinion leaders in your space, build relationship with them, and leverage them
Identifying and engaging with the US-based key opinion leaders in your space will be crucial to your company’s success, beyond simply providing guidance around market and product strategy; they are an additional guide through the intricacies of the US healthcare system, and are often the lynchpins linking the various relevant facets of your market; from payers (employers/insurers) to doctors to regulators and beyond, their influence will play a key part in your growth and success, so these relationships have to be a priority.
When the timing is right, consider relocating
Whilst a small local workforce is an important first step in growing your company in the US, the sheer size of commercial opportunity means that this may well become your most important market, and a time will likely come when it is worth considering relocating your company HQ stateside. Whilst smaller enterprises can be managed successfully from any location, a business that is scaling in such a key location will soon require more immediate and frequent access to a host of local resources, and positioning decision-making nearby is an obvious benefit; with rich technical, commercial and management talent pools, world leading technical authorities and knowledge networks, experienced and diverse investors, and significantly greater commercial opportunity, the advantages of a US-based HQ are numerous. The trick, however, is knowing the right moment to make the move!