Medtech Startup Podcast - Joanna Nathan - Prana Thoracic
Giovanni Lauricella: What do investors want to hear? Joanna: They all want to hear completely opposite different things. So that's a challenge, right? We probably have, at this point, a couple hundred different versions of our deck all tailored to whoever we were speaking to. If you say pitching to J&J versus pitching to Intuitive, two very different businesses, two very different perspectives on lung cancer and surgery, right? With angels, their motivation is different. Of course they want to make a return. Of course they, want to make money off of their investment, but often they're in it because they want to spend their time. They're retired.
They want to mentor you, right? So I think allowing that and making sure that that, that relationship is actually going to add value. Is really important. And then finally with the corporates they're putting you up against the rest of their portfolio. They're like, where did these guys fit? Where will they fit in five years when they're closer to commercial? It can fall apart because one person said no out of 50 people looking at it.
Giovanni Lauricella: Welcome to the MedTech startup podcast, where we get into the heads, hearts, and guts of medical device entrepreneurs. And today we're blessed with being with Joanna Nathan, co founder and CEO of Prana Thoracic. Thank you so much for being here with us. Joanna: Yeah, thanks for having me. Giovanni Lauricella: Absolutely.
So let's start Joanna, Nathan, where are you from? How do you build your life, your academic career, your professionalism, all the way up until the time that you became co founder and CEO of Prana? Joanna: Yeah, that's a good place to start for sure. So I was born and raised in Abu Dhabi in the Emirates. I'm a second generation immigrant. So I'm originally Indian.
And then I came here for college historically not very rooted, but I've started to now, build roots in Houston. I've been here for about 15 years. So I moved here to go to Rice University just down the street knowing that I wanted to pursue a career in biomedical engineering. Rice has an incredible history with nanotechnology. Some of the pioneers of nanotechnology, specifically in medicine.
And so that was what originally attracted me here. I was lucky enough to come actually tour Rice Campus as well as some of the other schools I was looking at right before right before my senior year of high school, and I just fell in love with how welcoming, how nerdy, how immense the Med Center was, just fell in love with this kind of part of town in Houston. I did the benchtop research thing in undergrad, that was going to be my path.
Most of my classmates in bioengineering either went to medical school or they went into academia. So those were the two paths at the time. And I was going down the academic path doing nanotechnology research.
And I realized pretty quickly that sitting in a lab in the dark, away from the sun for many hours every evening and weekend was not not something I was interested in. Definitely props to the people that are able to do that, but I really wanted to take a different path than that. And my senior year of college I just, I was applying to grad school because I was like, I don't know what to do.
So let me go ahead and apply to grad school and go down this path. And that's when I first got hit with the med tech entrepreneurship bug. So my capstone design in bioengineering was sponsored by this awesome guy named Mehdi Rezavi, who's a physician and electrophysiologist at Texas Heart Institute.
And he had, a great idea for a technology and it was my first exposure really to true medical technology as opposed to like benchtop biotechnology, that kind of thing. And I just, maybe it's a little bit of impatience, but the idea of being able to work on something that would be impacting patients in five years, maybe 10 years versus with a lot of the nanotechnology stuff that was 20 years, 30 years away, right? That inpatient part of me just, wanted to go for it. My senior year, I asked Meti if I could come work for him at the Texas Heart Institute, keep working on the project, and he said yes, so I got my master's while I was doing that and then went to work for him full time. So that's really where my career got started, is in the academic tech transfer benchtop research, all of those pieces, that's where you really I caught the bug.
and then quickly transitioned into the startup world. So we took one of those technologies that we were working on in the lab at Texas Heart Institute and spun it out into a company where I got to be employee number one, one of the first operators. I was 22 years old and running product development at a medical device startup, so I had no business doing that. But luckily, I had great mentors and people to support me And that was an incredible experience.
So that was really my first true kind of med tech startup experience. And I really haven't looked back since. Giovanni Lauricella: And then what were the additional steps until you became CEO of Prana Thoracic? Joanna: Yeah, I feel like I really touch not every aspect of med tech innovation, but quite a lot of them. As I mentioned, academic research, clinical research being an operator and an early stage startup. I really fell in love with the other side of things of telling the story of technologies, building the strategy so really more of that business and strategy piece. And I got advice from my mentors and peers and decided to go back to business school to really hone those skills.
And while I was in business school, I was given the advice that if ultimately I wanted to be in the CEO seat the best thing I could do was either go get the big company experience, go get, big for consulting experience or get the investor perspective. So I chose to go the investor route. I ended up working with a local fund here called Mercury Fund as a venture fellow there for awhile.
And I loved the process of traditional venture. I love diligence. I love that team. Everyone was so smart, but unfortunately they had the fund removing away from healthcare and biotech as I joined.
And my hypothesis going into that was that, working innovation, I'm going to be excited about it no matter what. But what I found was that really without the patient piece, it wasn't, I didn't have the intellectual curiosity to really do a lot of these technologies, the justice in terms of the diligence that they deserved. And so from there I went on to work for Johnson at their Center for Device Innovation, which they just opened up down the hallway from where we are. And manage a portfolio of early stage startups for them all medical device, med tech, traditional startups. So really got a bunch of different pieces, academia, operator, VC, corporate before eventually joining Prana.
Giovanni Lauricella: Tell us about what you're building. Tell us about the technology, the company, the status and stage of the company. So the world was listening in, what do they need to know about Prana? Joanna: Yeah, so Prana Thoracic is developing solutions for early intervention lung cancer. We're actually a traditional medical device company. There's no AI. There's none of that stuff.
We are a surgical tool for use by thoracic surgeons to drive earlier intervention in potential lung cancer patients. So we are a unique company in that we are we were seeded by J& J. So J& J is essentially our co founder as well as our investor.
So while I was at center, the Center for Device Innovation my co founders were thoracic surgeons on the West Coast, Drs. Ed Boyle and Rick Fischel. Brought this technology over to the Center for Device Innovation and they had, a couple of great patents, some early ideas on what the technology should look like, but then really, once it was paired with J& J's resources and fundings that, that's really when things took off, and so we got, ideas and original tech from the West Coast, funding from the East Coast, put it together with a team here in Houston, so and that's the basis for which Prana Thoracic technology was developed. At some point, after J& J had funded the early development from idea to, working prototype in animals we decided, I worked with the NewCo team at J& J, J& J's venture arm to launch this into its own company. So that's what I meant by J& J is both our co founder and investor. So they seeded some of the development and they got, founder shares for that, but they also actually invested in our deal And so we launched right into Series A as a brand new company, which is a little unusual.
Giovanni Lauricella: What does the name Prana Thoracic mean? How did you even come up with that? Joanna: Yeah, absolutely. So thoracic, I think is obvious, right? Thoracic surgery. And we wanted to make sure that people knew right away that, we were in the lung space. Prana is actually of Indian origin. So Sanskrit, the, one of the oldest languages in the world, older than Latin, older than a lot of the languages we're used to seeing names from, right? Prana means breath of life. And so I just thought that was such an appropriate and interesting name.
As I mentioned, I'm of Indian heritage and I was a little tired of the Latin based, medical names and thought we'd do something a little different. And so our team actually brainstormed a bunch of names together and came up with that one together. Giovanni Lauricella: What classification is Prana Thoracic technology? Joanna: So we're a de novo device we're surgical. It's definitely, minimally invasive, but still invasive and still some level of risk, but we're not leaving anything behind.
We're not, we're not implanting anything. Hopefully we're not, putting the patient's life at risk too much. It's really a tool for surgeons to use. Giovanni Lauricella: So, for all those engineers that want to be entrepreneurs and they don't know what de novo means for some reason, where does it fall on the spectrum? What makes it unique? What makes it maybe better or what makes it more challenging? Joanna: So the De Novo classification or that pathway really has only existed for, maybe a decade at this point. It did exist before, but there wasn't a way to apply for it directly.
So on the spectrum of ways to get through the FDA as a device. On one end you have 510K, which is devices that are not necessarily iterative, but there's enough technology out there that is close enough that FDA is comfortable with the level of risk to allow most technologies to get on the market through that pathway with, just a little bit of data. Most of the time they don't need clinical data, just animals, benchtop stuff. On the other end of the spectrum you have PMA, Pre Market Approval.
These are the heart pumps. These are the implants. These are the things that are really life sustaining. And De Novo is in the middle of those things. So De Novo is a way to get medium risk devices that are truly novel. So there isn't anything out there that's exactly like them.
So they can't go through this 510k pathway, but they're also not so high risk that, they need hundreds and hundreds of patients worth of data to get through the market. This is a middle ground in terms of risk, but also in terms of regulatory burden. That's the pathway that we're taking. Giovanni Lauricella: Thank you. I love this story that you painted where it's west coast technology, it's east coast capital, and then this visual of bringing it here in Houston and the talent that you've been able to assemble is here. Talk about that story, what's special about this culmination here in Houston and this team that you've built and how did it happen? Joanna: Oh, don't ask me what's special about my team.
I could go on forever and ever. So I do think it's incredibly special. At this point I'm about just under, like I said, about 15 years into living here, about, just over 10 years into working in MedTech in Houston.
And to be able to say that we got, a California physician to bring his technology to us. that we got a big medtech company to invest their dollars here in Houston. That's just such a rewarding thing to even those two pieces to start with are incredible. But then when you put it together with the fact that our entire full time team is based here, not only, are we based here now, but everyone was already here. So everyone was working here. Their talent had been developed here to some extent.
Every single person on our team had, worked with somebody on our team in some capacity. So everyone was a known entity, which with startups, the challenging thing is every new hire could totally transform your culture, could totally, be make or break. And so to be able to de risk that with talent that we all knew and were known entities was a really big deal.
Our team, I think the beautiful thing about our team. We do have quite a wide range of diversity in terms of experience, in terms of even just age a very multi generational team in terms of origin, all of these different things. But we really focused the Prana team in general, but especially, myself, our leadership team. Has really focused on building a culture of creating a workplace that you really want to show up to, that you're engaged in, that you enjoy, and that is mission minded and so we're now reaping now that a year, into our team kind of being together, we're really reaping the benefits of that in seeing how, not easy it has been to execute, but it has been seamless to execute when the foundation of that team kind of being glued together and having the the bond of that great culture how much easier it's been to execute on something as challenging as a new lung surgery device. Giovanni Lauricella: So I want to stay on this pulling of these coasts together here in Houston and just get your perspective. We're currently in TMCI right now, Texas Medical Center Innovation.
Talk about Houston and talk about what Texas gives as a support structure for medical device innovation. What's good about it? But also, what could also be improved about it? Joanna: Yeah, I think there are, in any ecosystem, there are always gaps. I'll start with that before moving into what's good about it.
I think that we are a budding ecosystem, so I wouldn't say we're nascent anymore, but we're still a young, growing ecosystem. And so there are gaps, I would say, in really experienced senior talent, right? Especially as companies grow into that Series B, Series C commercial stage in our world. We don't have a whole lot of that talent here just yet.
I'm sure they're coming, but we don't have a big base for that talent just yet. The other piece I would say is funding can be a challenge, right? I think Houston being, and Texas in general not necessarily having the history of medical innovation in terms of commercialization. We have plenty of incredible medical research that's done here. But in terms of actually translating that to the bedside we don't have, a million great stories like some of the other ecosystems do. And so because of that, the funding ecosystem, again, is not, it's not nascent, it's not, tiny, but it's budding and people are beginning to understand, investors are beginning to understand our space, but that there's still room for everyone to grow into really being sophisticated in this space.
So I think those are a couple of challenges, but I think where. We make up for that is really being such a tight knit community and even talking about recycling talent, right? Like I mentioned, everyone on our team had, worked with someone else on our team before. This is my third job pulling into the same parking lot in this building. So I think there is definitely.
That tightness of the community the tightness of the network is such a unique strength that even though, funding is limited, as I mentioned, I don't think I've ever hesitated or any of the CEOs you're talking to, today would, will hesitate to make an introduction, to connect you to an investor, to connect you to a resource because we know that honestly, we are Everyone's bringing it up together, everyone's better together. Giovanni Lauricella: So I've read the press release, congratulations on the Series A. Part of that also came from a Texas grant. Joanna: Yes. Giovanni Lauricella: Which is what? Joanna: we had an incredible grant from the Cancer Prevention Research Institute of Texas, so it's called CPRIT.
And this is taxpayer dollars that were really put together, the initiative was put together for two purposes. One is to retain the incredible technology that's invented at MD Anderson, at Baylor, at, Southwestern, all of these different incredible institutions. The IP that is created there was often being sent off to the coast to commercialize, right? And so retaining. That IP, and then also retaining the talent, attached to that IP. That was one purpose of it. The second purpose of it was to attract.
So retention was one big piece. Attracting talent, attracting technology to be based here in Texas. And to build out their clinical research plans, build out their teams here. That is the purpose of that granting entity. And it really, Our story aligns up pretty well with that, right? Pulling in these technologies and this funding and then putting our team together here we think aligns really well with kind of their entire purpose behind that grant. So we got about 3 million dollars granted to us in August of 2022.
So just over a year ago to take us through working prototype through our first patients. Giovanni Lauricella: Very cool. And the other 3 million, I believe your Series A consisted of 6 million all in, including the grant? Yep. The other 3 million, how did that break out? Joanna: So it really came from every existing source of funding that exists for MedTech.
Our lead was actually a group out of Florida. Your backyard, New World Angels was our lead. And we also had corporate venture funding from J and J. We had institutional VC so Texas Medical Center put in some funding, Science Center out in Philly put in some funding, and then we had angel, individual angels as well. So everything from, the CPRIT grant took about nine months of diligence, obviously state dollars are going to take a long time to, they're going to want to diligence that extra intensely which is appropriate. That took nine months all the way down to, an angel investor that I'd never even met, committed $200 K over email.
Like we never talked, we never Zoomed. Just thoracic surgeon and I get what you're doing. So here's a check. Giovanni Lauricella: I want to rip that up right now because there's a lot of fun stuff there. Let's start with the fun story. Was that just happenstance? Obviously, $250, 000 doesn't fall out of the sky.
Joanna: Yeah, it felt like it did in that case. Giovanni Lauricella: So that answered my question. Was there something that you believe you did, or is it just right timing, right place? And when raising money, it's whatever happens.
Joanna: I do think it's a little bit of both. I won't say that it's like 0 percent luck rate or 0 percent the environment that we were in at the time. In the middle of 2022, Dollars were flying out pretty fast. It's a very different environment, funding environment that we are in now. But there was also, there's an element of it really resonated with him as a thoracic surgeon, as somebody that knew these patients, knew this space. He really recognized the need right away and was, it was such a quick decision.
Like I said, we just exchanged a few emails. So I think it was a little bit of both. I think our story really resonated, but also the funding environment that we were in was a very different one than today. Yeah. Giovanni Lauricella: I'm going to keep on going back to what I wanted to talk about, but you mentioned a very crucial word that I also wanted to pick your brain on. Luck.
Medical device innovation. Luck or effort? Joanna: I think people. I know that's, I know that's not either. I think there is an aspect of luck to all of us, right? Because at the end of the day, medical technology, especially medical, traditional medical devices, you can't just throw a bunch of coders at it until it works.
There is an element of biology that is unpredictable and uncontrollable. And so you can do everything right. And when you get into patients, it may just not work out. So that is the only piece that I say.
You can have bad luck sometimes. The nice thing about medical technology is there's lots of pivots available, and I think that's a little different than what's available in pharma, therapeutics, biotech, right? If it doesn't work, phase one, it doesn't work. So I think there is a small element of luck. There's definitely a lot of effort, but I really think what drives this industry just like our network here is tight knit everyone knows everyone and even when you look broadly, nationally, or even internationally. That tight knittedness really expands beyond, local ecosystems.
And so I think a lot of success success in medtech comes from who you actively go out and get to know. Not who you know, but who you actively pursue and get to know. Who your mentors are, who you seek out to be your teammates and your coworkers who you align yourself with as your investors. That's really what ultimately, I think, decides how successful a company is. Giovanni Lauricella: You've mentioned the word twice now in our conversation, the word mentor. Do you have one that you want to give a shout out to? Joanna: Do I have to pick one? Giovanni Lauricella: If you have two or three, go for it.
But in your journey of this amazing career that you've built and what you've been doing with Prana, is there anyone that you can say, that's my mentor or even a small cohort of people? Joanna: Yeah, I think two, specific to Prana, I think there has been two that have been really significant. So one is Dana Deardorff, who's my boss at the Center for Device Innovation. He now is in a different, part of J& J over their kind of global venture arm.
But he really taught me how to be painstakingly focused on strategy, how to overthink, how to think about the 50 different, possible outcomes and play three dimensional chess with all of them to figure out, how do we make sure we can mitigate all of these risks. I learned a lot. I learned all of that from him. I'd worked in med tech before, but I think the process that he used to really think about company strategy that is, that has been crucial to even the, just the last year with Prana for sure.
The second is Ann Tanabe and she's one of those people connectors. So she's the CEO of BioHouston and she has been crucial in Making sure that we are in the right place at the right time in front of the right people. She's my first, she's my 911 call. Whenever I need advice, whenever something's going wrong, whenever I need connection of whatever kind, she's the first person I can go to. So I think those two have been really crucial in, specifically in, in getting Prana to where it is today. Giovanni Lauricella: I want to go back because you're unique in the sense that we're in TMC right now.
But you also receive funding from TMC Ventures. Speak about that. All the people who don't know that there's a venture arm, and I believe you call it the institutional capital.
There was also another one out of Philadelphia that you mentioned. TMC and TMC Ventures is here. We're in the building right now. And they believed in you. Talk about that cause that's unique. Joanna: Yeah.
So we, it was interesting cause I had spent the last two or three years at Center for Device Innovation sitting next to them at the table. So we would often evaluate the companies that come through TMC Innovations Accelerator through all of their different programs, even to their venture fund. They would often bring us in to give our perspective on the device myself and Dana on the device companies.
And so I was shoulder to shoulder with them for the prior three years. And then interestingly, when Prana launched, I was across the table from them. And I think the fact that I was shoulder to shoulder with them, it helped me really see, what motivated them, what drove individually them, the people involved with the fund, as well as how they thought about the fund as a whole. I think that again, that people piece, I'm going to keep coming back to that people piece. That was really crucial in, in.
In getting our story across to their team and gaining that investment, I believe. I also think a big piece of it is Billy Cohn is, head of our scientific advisory board. He's a repeat MedTech founder, entrepreneur, all of that stuff and he was a strong believer in the technology back when it was inside the Center for Device Innovation. He, loves this technology. His name is on most of the patents and he really was an advocate for us as well with the venture fund and with the team. And I think when a successful entrepreneur that's, that's exited multiple companies.
Is able to say, I believe in this one too. I think that makes all the difference as well. Giovanni Lauricella: So TMC ventures came in, J & J came in, Angels came in. What else am I forgetting? Joanna: Individual angels and an angel groups, yeah.
Giovanni Lauricella: So I wanted to pull that apart from an educational standpoint. What do investors want to hear? And how do they differ amongst these various bodies of investors? You have a corporate strategic, Yeah, you have institutional capital, you have individual angels and then angel groups. They all, I'm assuming, act differently, but from your experience, like what do investors want to hear? Joanna: Investors want to hear, if you group them all together, they all want to hear completely opposite different things.
So that's a challenge, right? I think one of the biggest challenges in medtech is. There is this kind of funding spectrum. You start with individual angels and some seed funding and some grants and you build up to the groups and maybe the smaller VCs and then the big VCs and then the corporates. All of them are looking for very different things. All of them are evaluating very different aspects of your business. And so it's really important.
I think if you're an entrepreneur trying to pitch to that, pitch to whatever group, within that spectrum. You're pitching to, to really understand how they think about investment in this space specifically before you go in and pitch them. So we probably have, at this point, a couple hundred different versions of our deck all tailored to whoever we were speaking to, right? Because even if you say pitching to J&J versus pitching to Intuitive, two very different businesses, two very different perspectives on lung cancer and surgery, right? So even, you can't even group within those groups, there is differences as well. So I think the message is different for each of them. I think if I'm going to stereotype, I guess with angels, their motivation is different.
Of course they want to make a return. Of course they, want to make money off of their investment, but often they're in it because they want to spend their time. They're retired. They want to mentor you, right? So I think allowing that and making sure that that, that relationship is actually going to add value. Is really important, as well as making sure, I think, as a medtech entrepreneur that they understand the timelines of how long it can take.
It's not an app, it's not, it's not something that's gonna go through quickly and be revenue generating. Making sure that they understand, how long it can take to actually get to an exit that it's years, not months I think is really important in that case. And making sure that they, the problem resonates with them that their mission oriented all of that stuff. I think with traditional venture, they're looking to see that you've checked all the boxes, that you've thought of all the risks.
Not that you've addressed all the risks, but you know what they are and that you have a plan to address each of them, right? And then finally with the corporates they're putting you up against the rest of their portfolio. They're like, where did these guys fit? Where will they fit in five years when they're closer to commercial? How does R& D feel about it versus marketing versus business development? So there's a lot of different hats coming into evaluating those things, and if they don't all agree that it's a good opportunity, it can fall apart because one person said no out of 50 people looking at it. So those are all very different perspectives and very different levels of preparation that you have to have when you're pitching those different groups. Giovanni Lauricella: So for these first time entrepreneurs who are thinking about getting into this game who have no clue about raising capital and they hear a story like that.
It's super beneficial because the messaging and the stories are different for the audiences. But then it becomes daunting because it's, like you mentioned, 200 versions of your deck. Right.Yeah. What experience do you have to go through to be able to figure that out? Because there's a magic day where you say, okay, I have this idea or this prototype or whatever it may be. Yeah.
And I have to go outside for money. And I'm, this is my technology child. I love this thing. And you're going to go out and tell that emotional What are those learning lessons that take you like, Oh, I had to tweak my deck that time and is it all trial and error? Joanna: I think it is trial and error and I think a key is to, especially early on, go out asking for advice and maybe you'll get some funding.
Don't go out asking for funding, right? Especially when in those early stages when you haven't been tried and tested, it's really important to approach people because when you ask for advice, it puts them in a different Mindset than if they're evaluating you right then and there for funding. Yeah. And maybe if you ask them for advice they can get into that kind of loop with you of, we'll do this and you go change it and you come back and they say, we'll do this thing now. That's a kind of relationship, especially with angels, I think. And, but even with smaller venture funds and stuff, I think having that feedback loop of advice is really important to try and get, especially if you can get friendly feedback early on.
I would definitely encourage, if you're a first time entrepreneur, do that for months first. Never say I'm going to go out and do the formal pitch right away because there's going to be holes and because you're going to fall flat on your face and because you're not going to have the answers prepared, the, you're not going to have thought of every question. And so use as much time as you can to go get that friendly feedback or to go get it in a different setting. You can get it from an investor, but asking again, asking for advice is very different than saying I'm pitching you right now for 500, 000 dollars. Giovanni Lauricella: So while you took various forms of investment dollars and they all have their own different feel and look, you also have a very varied background.
You're an engineer, you're an operator, you're a venture or you're an investor. You've been an investor and then you've been in a big, inside a big corporate as well with J& J and now you're running a small startup company that has raised its series A. Having investor experience, does that make you a better medical device entrepreneur? Joanna: Oh, definitely. It was transformative for my career, for sure. Because You're never going to have the empathy for the investor, right? Because especially, I think, when I, before I had the investor experience, I went in thinking, oh, all funds have these very they have these diligence checklists and they score you and they have, all of these very quantitative ways of deciding if you're a fit or not. And the reality is that's not true.
A lot of the time it is qualitative. A lot of the time they're calling up their buddy that's a thoracic surgeon or their buddy that's, maybe not even in your space and trying to get feedback there to figure out to figure out if what you're working on is a real problem or not. And so I think once you realize investors are just people too, and they're figuring it out as they go as well, and they're making stuff up as they go as well, that really helps, I think, from the entrepreneur's perspective.
One it makes rejection easier, right? And two, it helps when you're going into that setting, realizing that building that relationship is the most important thing to do. All the other stuff comes after that. So I think that was my biggest learning, for sure, was Working towards building that relationship, asking for advice, asking for feedback, being open to feedback, right? Knowing that no matter what, I'm not going to have the perfect deck that's going to impress them.
I think that really changed the tone of how I would approach these investor conversations. On the other side of having, been on that side of the table. Giovanni Lauricella: So while we're on the topic of decks, and this could be an overgeneralization, but for someone who has this romantic idea of a medical device technology that they want to build, but has never even put together a deck that tells that story, maybe it's all up in their head. What are some core fundamentals that should be in a medical device slide deck? Joanna: I think that.
One, I would say, however much you want to put in about the technology and the science, reduce that by 50 percent right away, right off the bat, because I know what most per stacks look like and we tend to focus way too much on, on those parts of it, right? Because again, med tech entrepreneurs are usually engineers, physicians, and they love the tinkering. They love the problem and that's what they want to talk about. That's not what most investors want to hear. That's not most investors background.
And they're looking for all the other boxes, right? So I think definitely trying to figure out how can you explain a complex medical issue in the simplest terms possible, right? And having almost different levels of ways to explain that. Cause you, if you're talking to a generalist angel investor, it's gotta be, down here, fifth grade levels, like explaining basic, anatomy, those kinds of things as simple as possible versus if you're talking to. A cardiothoracic surgeon that happens to be like a venture partner at one of these fun you have to be able to meet both of those people at their levels, right? So I think having that problem, you know the problem well enough to do both, I think is really important, but keeping it simple in your deck and speaking to the more complex parts of it is important.
I think one slide on your solution. One slide on your data. That's it. That's good. Talk about your team.
Talk about your plan to exit. I think that's the thing that a lot of people will forget. Is who is interested in this space? Who's gonna buy you, right? Or if there's any other path to exit.
I think highlighting that in, in a 15 slide deck is really important. And, yeah, I think timeline, those kinds of things. I, I think most of these things are pretty obvious.
The biggest. So that's a piece of advice I would have, is pull away from over focusing on the technology and the tech, and the science. Giovanni Lauricella: And to your point on the exit strategy, it's also even nice to have comparables. Yeah. It has received investment in a similar space, it has been exits in that similar space, to paint that ROI.
Meaning, if I'm going to give you money. I'm expecting it back in some capacity, right? Philanthropy. How can I at least understand that this is a space that's going to be exitable? Joanna: Absolutely.
Yeah. Because most investors, they're agnostic to the problem that you're solving. Unless they're a foundation or family, something where they have a personal connection to that specific disease state or whatever.
For the most part if you're in lung cancer versus heart disease versus something else there, it's more about what is happening in this space, how hot is it, who's acquiring in that space, what have clumps look like, as you said, that's more important than, this, what specific problem you're solving, I think a lot of the time. Giovanni Lauricella: A few more questions in terms of wrapping up, but I wanted to ask. Going back to that investor psychology that you have, has there ever been a time or even a one liner in your head where you were challenged as an entrepreneur by an investor, but because you knew that psychology, you were actually able to overcome a potential challenge? Joanna: Yeah, absolutely.
So I think my favorite story from the whole fundraising, and diligence process was. At some point we were pitching an angel network and they were really pushing, it was, a call, a Q and A call and they were really pushing me on what is my contingency plan? What if we go to patients, do our first clinical study and it goes terribly or the device doesn't work? Like what is our backup plan? What's plan B? And they kept pushing that. And at first I gave some generic answers and said this is how we can pivot or this is what we can do. But then eventually I realized, you know what, as an investor, what I would want to hear is that. I'm going to be as the entrepreneur responsible with your dollars. So that's what I ended up saying.
I said, listen, if it doesn't work, then what I'm going to do is I'm going to come back to you and say, thank you for the 2 million dollas, here is the 1 million that we didn't use. And please invest in my next idea because this didn't end up working. And so I think failing fast and showing that you have the maturity to be able to say that and actually do it. I think that really impressed them. And I don't think I would have had that known to answer that had I not had the investor experience.
Giovanni Lauricella: And I'm sure there's a thousand different stories that we could talk about here, but. That sounds like a really understandable investor, right? It's a very mature thing for you to be able to have that insight and be able to share that back. And it's great. But if I'm an angel investor with 2 million dollars and one of that million just evaporated, and I get my other million back, which is great. Is it the, what's that psychology of yeah, I'm going to follow you again.
Is it because of that maturity and that transparency and trust? Joanna: Listen, if I had to write a check to somebody, I would want to know that they are going to be as responsible with it as possible. And it's already a sunk cost, right? That check is already gone. And I think responsibility is not just being efficient. It's not just being lean. It's not just, being, not getting your coffees every morning for the whole team, all that stuff.
I think all that is important. But I think more important than. All of those small things is knowing when to call it and knowing when you're pouring money down the drain for no reason. And the challenge is it's really hard, especially for angels for the reason that you mentioned, if they're writing a check, to know when is, when it's time to call it. And when it's time to say, you know what, instead of continuing to write a check to something that's not working, I'm gonna go invest that in somebody else.
And I think if you as a founder are able to do that for them, it's just simply the right thing to do Giovanni Lauricella: Transitioning and thinking about the idea of being an engineer, like many engineers want to start their own thing, but they literally have no clue about what they're getting into if they go off and do their own company. Joanna: Yeah. Giovanni Lauricella: That transition from engineer to CEO, if you could speak to a room of entrepreneurs, what does that transition look like? What don't engineers with an idea know, about being a CEO that they're going to get a rude awakening when they go have to go run a company? Joanna: That it's about falling in love with the people and not being in love with the technology. I think that's the biggest change. And I think business school really helped me see that.
I, had organizational behavior classes, that kind of stuff. But I think as an engineer, again, even how I thought the investors worked, our, I think our minds are very focused on the quantitative, on the checklists, on if I do all of these things, then it will equal this, right? And that's really just not the case. Entrepreneurship is an art, even in a highly technical field like med tech, right? And I think a great way to transition into that CEO role is if you're an engineer, especially if you're coming just out of right out of school, it's your first job. I think being an operator to start up, being an employee at a startup is a great way to get started and watch and learn, right? You can, and you can learn from a bad CEO too. You can learn what not to do. But I think that would be my advice is jumping straight into A startup and running it is really challenging, I think, from, especially if, again, if you're fresh out of school, if all you've known is like, is problem sets and, late nights solving things with other people and tinkering, it's really hard to jump right into people leadership.
If you have the ability to take the time to see what people leadership looks like and to learn from somebody else that's something that you should really do. So that's the biggest, I think, challenge for engineers is. It's the art of transitioning into the art of leading people. And that really being your, the focus as a CEO, as opposed to the science of driving a technology forward.
Giovanni Lauricella: And what does accelerators play within medtech startups success? And have you been a part of any accelerators? Joanna: Yeah, definitely. We were part of MedTech Innovator. And I think the biggest piece, the curriculum, all that stuff is great. The syllabus, the courses, the speakers that they bring in, all of that is incredible. But I would say for me, the value that's been added most is the community. Medtech entrepreneurship can be really lonely entrepreneurship in general can be really lonely.
Being a founder can be really lonely, and these accelerators give you the opportunity to be around so many other like minded individuals, so many other founders that may be working on a different problem, but they're going through the same process, right? They're in the trenches alongside you in so many ways. And that has been the best part, I think, of being part of these accelerators, is that you are now part of the community that they've built over the years across multiple cohorts, right? And that's definitely been the case for both the co both the accelerators we've been part of, is we've been able to learn, not just from our peers in our cohort, but we've been able to extend into the broader network of those accelerators and reach out to others, get connected to others. That are farther along that we can learn from. Giovanni Lauricella: I want to sign off with a more philosophical question. For those engineers or physicians or those stereotypical personas that are not necessarily the party animals and the gregarious extroverts, how important in medtech entrepreneurship is networking? Joanna: It's crucial.
Without the people, it's really hard to succeed in this world. And I think that's true in any field, honestly. But I think especially when you are an early stage entrepreneur, that having mentors that open doors, having peers that want to connect you with the, investors that they have, that's crucial. So I like to say my metaphor that I use a lot is like med tech is like high school. So med tech innovation, med tech entrepreneurship is like high school. And as long as you're a little popular, eventually you'll get asked to prom, right? So you'll get that acquisition or that funding or whatever it is, but without connecting into that network.
It's really challenging. So I think the network piece of it is really all of it. The other pieces do matter, but that's going to drive your level of success more than anything else. Giovanni Lauricella: I want to say thank you to Joanna Nathan, co founder and CEO of Prana Thoracic.
This is the MedTech Startup podcast where we just got inside of her head, her heart, and her gut of being a MedTech entrepreneur. Thank you very much for your time, for sharing your story. Joanna: Yeah. Thanks so much for having me. Giovanni Lauricella: Come here.
. what'd you think? Joanna: I thought it was good. Yeah. Giovanni Lauricella: Flow? Joanna: Yeah, I thought so.
Giovanni Lauricella: I'm no Tom Solami, but I can pull some stories out. Joanna: I need, oh, there's so many times in the beginning that I was like, filler words, I'm using them, but I can't stop it.