Expanding Circle of Competence into Medical Technology?
My area of knowledge remain small, but once in a while through some inquisitive digging, I do wander into territories where I thought I may just understand a little bit better than other investors,
Circle of Competence - MedTech?
Medical technologies is an industry where i will usually avoid as
- The gestation period of the technologies is usually very long
- Working with hospital and clinician is usually painfully slow and long
- Return on investment seems inadequate for a industry that has high barrier to entry
It is an industry that relies on government and university grant to fund the initial research and development, then huge amount of private money to bankroll the clinical testing and on-boarding of the customers, As hospitals, clinician and other medical device firms have very little reason to change, the conversion of customers seems to be painfully slow even if you have a superior product both in price and quality.
If this superiority in price and quality had happened in any other industry, the wait to potential success could easily be halved.
With the recent push for Medical Technology development in Singapore, I managed to pick up some rudimentary understanding of Medical technology while volunteering in the Lean LaunchPad at National University of Singapore.
- Getting to clinician is tough and the need to maintain regular contact with them to create your product requires a close relationship which takes time and effort.
- Building on the previous statement, getting the clinician is tough and converting them is even tougher, thus the best chance to convert clinician would be changes in regulation.
- If your device or equipment had the requisite certification to solve that particular problem, the barrier to entry could be HUGE.
It seems that the only conclusion I could draw would be to not to go anywhere close to a Medical Technology company in case I am tempted to invest in one.
Never Say Never
So imagine my surprise when I started to come across a firm that exhibited some positive characteristics of a good investment in a Medical Technology industry
- The company has a close relationship with the clinician, they consult with them on what to build and how to improve their existing product.
- The good news is that they are dealing with Blood (which require more certification).
- Conversion is still tough, but this company is working with wind at its back. European health agencies are changing rules which should benefit this company.
- They had recently signed up a global medical equipment distributor to distribute their product
- And the best thing of all, I have a chance to invest in them,
Expanding your Circle
I guess once in a while when opportunity arises, it make sense to
- Be inquisitive and curious enough to do things beyond your Circle of Competence
- To never say never, sometimes we just happen to be at the right place at the right time, with the right knowledge
- It is always alright to take some risk to waddle into a new area
- And always be mindful that since this is a new area, I should wade in slowly and carefully
- If everything went awry as is usually the case when I invest in areas where I had little competence, this is going to be another expensive lesson...
Wish me luck!