Co-founder Jenny O’Neill told Dynamic Business that a quartet of private investors with “knowledge of and great contacts in the digital health market” participated in Medtech startup’s first-ever funding round, which will help it realise its sales and marketing plan, grow its customer support team and expand globally.
She said EpiSoft was previously awarded a $250,000 government grant in 2013 to prove the platform’s efficacy in cancer management. She added, “We now have cancer centres in five states of Australia and several more in plan for roll-out in the future.”
“We want to establish a global network of health professionals who use the platform to care for their patients and leverage information in the system to identify safer, more effective treatments for chronic conditions like cancer and Crohn’s Disease plus mental health and addiction disorders,” O’Neill said.
“Although we are in the early stages of that journey, EpiSoft has already generated many scientific publications and facilitated great careers in medicine and science.”
O’Neill is a graduate of SBE Australia’s Springboard Accelerator for female tech entrepreneurs, and credits the NFP program with playing a major role in not only crafting “a tight message for EpiSoft’s investor slide deck” but also “strengthening the team’s verbal pitch”.
Asked about the timing of EpiSoft first-ever funding round, O’Neill said investors have generally been reluctant to invest in digital health companies seeking to raise between $500,000 and $3,000,000 to grow beyond the ‘teenage stage’.
“Seed funding for early-stage companies is an easier cheque to write for a single investor and there are newly created government tax incentives for private investors to invest in innovative small companies,” O’Neill explained. “Once you reach a certain amount of revenue but have yet to achieve profitability, you end up wanting a funding round that is too big for the private angel networks and too small for most of the VCs.
“A lot of technology businesses struggle in this in-between or ‘teenage’ stage – they are no longer children but not fully grown up either. Most of them get bought out by larger businesses before they have a chance to prove what they can do using growth funds and with the management team they’ve got. It is much quicker to scale a global business from a position of solid market traction and revenue but I think investors look at the track record of how long it took you to get there running the business on customer sales and cash flow alone and think you are incapable of growth. There are a lot of businesses at the ‘teenage stage’ which represent excellent value for money for investors and hence a greater return on investment.”
O’Neill, who has served in health IT executive roles for more than 20 years, said the lack of funding for ‘teenaged’ digital health companies has been compounded by “a generally-held belief that female-led businesses should be bought out rather than backed because women aren’t bullish or technical enough to create and run a sustainable, high-growth tech business”.
“When presenting to an investor, men can talk about football and immediately build rapport,” she said. “So, there are multiple biases straight off the bat. I have also seen a lot of pitches by men and women over the last 18 months and have definitely seen a lot more men in the ‘show pony’ category than women. Women have a greater tendency to tell it like it is and play down their business accomplishments. Wise investors know the difference between being able to command a stage and incorporate the latest buzz words – and being able to run a successful business – but not all would-be investors are wise.
“I have met young men from investment backgrounds building digital health tech businesses and getting strong investment for pre-revenue businesses and I have looked at their business models and struggled to work out who is going to pay. On the other hand, if you have come from the digital health tech sector and have seen so many problems and opportunities up close and personal over so many years and know exactly who will pay and what for, and yet businesses like mine with our level of experience struggle to get investment, that tells me there is something totally out of whack in our investment sector. I don’t know what would eliminate the bias as it is pretty entrenched. More education on which globally successful companies were led by women would be a good starting point.”