{"id":42162,"date":"2024-07-18T09:56:29","date_gmt":"2024-07-18T07:56:29","guid":{"rendered":"https:\/\/semmelweis.hu\/english\/?p=42162"},"modified":"2024-07-18T09:56:29","modified_gmt":"2024-07-18T07:56:29","slug":"financial-challenges-of-early-phase-health-innovations","status":"publish","type":"post","link":"https:\/\/semmelweis.hu\/english\/2024\/07\/financial-challenges-of-early-phase-health-innovations\/","title":{"rendered":"Financial challenges of early-phase health innovations"},"content":{"rendered":"
The June 2024 event of the Science and Business Salon was organized within the framework of the Hungarian Startup University Program (HSUP). The presentations covered different aspects of the financial challenges of early-phase innovations. At the end of the event, the organizers announced the foundation of the Semmelweis Innovation Club.<\/div>\n

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Following the opening speech by Vice-Rector for Science and Innovations Dr. P\u00e9ter Ferdinandy, Dr. P\u00e9ter F\u00e1ykiss, Director of the Digitalization Directorate at the National Bank of Hungary, discussed the importance of capital investments in innovation-driven enterprises within Hungary\u2019s regulatory environment. Innovation-driven enterprises are essential for central banks because they significantly contribute to economic growth and stability, he emphasized.<\/p>\n

\"\"<\/a>Dr. P\u00e9ter F\u00e1ykiss highlighted the historical roots of venture capital and the necessity of supporting startups for exponential economic growth. \u201cInvestment in pre-seed and seed-stage startups nearly doubled between 2022 and 2023, showing a commitment to nurturing early-stage innovations,\u201d he noted. To address funding challenges, he introduced convertible notes and SAFE (Simple Agreement for Future Equity) notes, stressing their importance for startups with uncertain valuations. He concluded by underscoring the National Bank\u2019s initiatives to support the startup ecosystem.<\/p>\n

Carl Berke, Partner at Mass General Brigham Ventures, an inventor of six US-registered patents, a founding member of business angel organizations Angel Healthcare Investors and Mass Medical Angels, and a lecturer at MIT Sloan School of Management, delivered his keynote presentation on the venture path from invention to innovation, comparing it to the classic board game Chutes and Ladders. \u201cIt’s not for the faint-hearted. It requires a lot of luck, but as Louis Pasteur said, \u00bbchance favors the prepared mind\u00ab.\u201d So, his goal was to encourage the audience to persevere and anticipate the issues they would encounter during this process.<\/p>\n

\"\"<\/a>To justify his argument, he detailed the working scheme of Mass General Brigham (MGB), a not-for-profit\u00a0integrated\u00a0healthcare<\/a>\u00a0system\u00a0that engages in\u00a0medical research<\/a>,\u00a0teaching, and patient care and is considered the largest hospital-based research enterprise in the United States with its 65 startups since inception, 17 exits, and 25 active companies. Their primary mission is to improve healthcare in the form of products. The path to advance new technology from bench to bedside is commercialization, as inventions become innovations once brought to the market, Dr. Carl Berke emphasized. As he phrased it:<\/p>\n

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Invention is about turning money into knowledge, but innovation is about turning knowledge into money.<\/p>\n<\/blockquote>\n

However, it is only companies that make products, not hospitals, he noted. Out of the more than 10,000 scientific publications annually, Mass General Brigham only invests in 4-6 qualified opportunities, and only in the early phase. As venture is a \u201chigh-risk, high-reward game,\u201d venture funds operate on a portfolio strategy to spread risk, since only two out of ten investments yield high returns, with \u201cwinners paying for the losers.\u201d<\/p>\n

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Strong intellectual property protection is important because if an invention is in the public domain, no one will pay for the development, as what belongs to everyone belongs to no one.<\/p>\n<\/div>\n

Another key strategy is to have an investor team consisting of scientists with business and legal degrees as well as industry experience, Dr. Carl Berke warned the audience. Also, MGB never invests alone but partners with other venture capital funds, \u201eWe have to manufacture our own conviction that others will follow as lemmings.\u201d But MGB Fund also takes equity in the company, as with time, most venture startups lose focus and deviate from the original technology when it needs improvement. As a result, one way to get a return is for the institution to maintain its interest in the company that started.<\/p>\n

Carl Berke also emphasized that customers don’t buy technology, they buy what technology does for them. He advised inventors to accept the necessity of giving up their \u2018baby-invention\u2019 for adoption to more fit parents, i.e. investors, but also suggested that inventors be involved in the life of spin-offs as professional advisors.<\/p>\n

\"\"<\/a>Barnab\u00e1s Simon, Counsel at Bird & Bird, presented on venture capital investments and term sheet negotiations (negotiations on the terms and conditions of a potential business agreement). He explained that term sheets are the first formal document between startups and institutional investors, typically in post-pre-seed phase. Although lengthy and filled with legal jargon, they are usually non-binding. Founders should first check this non-binding status and the governing law, often favoring US or UK jurisdiction over Hungarian law. Barnab\u00e1s Simon outlined the principal transaction terms, including investment amounts and capitalization tables. He highlighted key investor rights such as voting rights, dividend rights, and sales-related rights, which protect investors\u2019 interests in high-risk ventures. He emphasized the need to understand these legal frameworks to align founder and investor interests effectively.<\/p>\n

Following questions from the audience, Dr. P\u00e9ter Ferdinandy, Vice-Rector for Science and Innovations, highlighted the university\u2019s commitment to fostering entrepreneurship and announced the foundation of the Semmelweis Innovation Club.<\/p>\n

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Semmelweis Innovation Club aims to support the foundation of spin-off companies in fields such as pharmaceuticals, medical devices, nutrition, healthcare, and data science. Club members will offer mentoring in business planning, development, marketing, and management, and will also provide networking opportunities and financing support.<\/p>\n<\/div>\n

Dr. P\u00e9ter Ferdinandy invited potential members to join the club, stressing the importance of collaboration and confidentiality, and mentioned that regular events would be organized to support the development of spin-off companies.<\/p>\n\r\n [slb_exclude]\r\n

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Dr. Bal\u00e1zs Csizmadia, Judit Szabados-D\u0151tsch
\nPhotos by B\u00e1lint Barta – Semmelweis University<\/p>\n

The project STARTUP-2024-HSUP-26 was implemented by the Hungarian Innovation Agency with the support of the Ministry of Culture and Innovation, with funding from the National Research, Development and Innovation Fund.<\/em><\/p>\n

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At the end of the event, the organizers announced the foundation of the Semmelweis Innovation Club.<\/p>\n","protected":false},"author":102255,"featured_media":42164,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[13,286],"tags":[210,121],"class_list":["post-42162","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-science","category-x-nyitolap","tag-research-development","tag-science"],"acf":[],"_links":{"self":[{"href":"https:\/\/semmelweis.hu\/english\/wp-json\/wp\/v2\/posts\/42162","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/semmelweis.hu\/english\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/semmelweis.hu\/english\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/semmelweis.hu\/english\/wp-json\/wp\/v2\/users\/102255"}],"replies":[{"embeddable":true,"href":"https:\/\/semmelweis.hu\/english\/wp-json\/wp\/v2\/comments?post=42162"}],"version-history":[{"count":1,"href":"https:\/\/semmelweis.hu\/english\/wp-json\/wp\/v2\/posts\/42162\/revisions"}],"predecessor-version":[{"id":42179,"href":"https:\/\/semmelweis.hu\/english\/wp-json\/wp\/v2\/posts\/42162\/revisions\/42179"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/semmelweis.hu\/english\/wp-json\/wp\/v2\/media\/42164"}],"wp:attachment":[{"href":"https:\/\/semmelweis.hu\/english\/wp-json\/wp\/v2\/media?parent=42162"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/semmelweis.hu\/english\/wp-json\/wp\/v2\/categories?post=42162"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/semmelweis.hu\/english\/wp-json\/wp\/v2\/tags?post=42162"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}