With more than 30 years of investment banking experience in the senior living industry, Dan Hermann, President, CEO and Head of Investment Banking at Ziegler (www.ziegler.com), understands the longevity economy like few others. He knows the ins and outs, the barriers to entry and the key challenges providers face. He also knows the immense potential the $7.6 trillion economic sector yields for both entrepreneurs and investors.
Ziegler has built an extensive network of alliances that keeps the national boutique investment bank dialed into promising emerging companies in the longevity space, scouring the showroom floors at major tech conferences and trade shows like CES and HIMSS for potential investment partners. The firm manages the Ziegler Link·Age Funds, LP, a joint venture that, to date, has invested in 24 companies providing solutions along the aging services continuum.
“At Ziegler, we’re interacting with care providers in the health system and senior living settings, as well as home care, on a daily, hourly and minute-to-minute basis,” he said. “We’re partnering with the companies that emerge with groundbreaking solutions that then grow, raise capital and are often enticed to merge or sell to the bigger strategic players. We’re in the flow and more integrated than just about any investment bank.”
Read below for more insights from one of the key investment leaders in the longevity economy.
How important is continued innovation in the senior living and longevity arena?
We’re in a capitalistic system where disruptive innovation gets rewarded and attracts capital - the health care system is no different. It’s approximately 20% of the economy...is immensely expensive and growing at a rate two to three times inflation.
So, it’s ripe for innovation. This can come from continued value-added services that provide and extend care. There are tech-enabled services that will save money through acceleration, elimination of waste and so forth. Then there’s new disruption that leads to broadened areas of care and experience - an incremental new element like virtual reality. It’s becoming beyond novel for the senior living marketplace...it actually helps reduce loneliness and create emotional engagement, giving seniors experiences that they couldn’t accomplish on their own. Companies like Embodied Labs are booming with virtual reality right now.
What do you look for when investing in a company?
Ideally, they’ll be adding clear, incremental new value, usually focused on at least one point solution. PayActiv, for example, improves the process of getting cash to employees instead of them getting (high interest rate) credit cards or payday loans. It’s very affordable, and we knew our senior living clients would pursue it.
We look for a long enough runway, with limited competition, to give a company time to grow. And then we look for quality management teams that are led by passionate leaders who understand how to grow a company with third-party venture capital and private equity.
We also look for partner investors that bring strategic input to table.
What advice do you have for entrepreneurs in the aging/longevity space that are seeking funding?
It’s rare that the companies we invest in need regulatory approval, so that makes our area much easier.
Prior to looking for your first institutional capital, you want to have your product refined, be in market with a start of clients beyond the pilot stage and have an understanding of how you plan to grow the company through incremental new sales within the space. The bigger you can build the real client base, the easier it becomes because then it’s about scaling.
And be aware of the competitive environment. While you’re working on your solution, don’t be naive. There might be a company in Boston and a company in California working on the same thing, trying to solve the same problem.
What’s the benefit for entrepreneurs and investors in attending events like the Silicon Valley Boomer Venture Summit?
When done well, it’s a great opportunity to bring together like-minded organizations that have the same interests.
Mary (Furlong) has a good understanding of entrepreneurs that are emerging in the aging services space. The companies that participate in her events typically have a very legitimate point solution or new service that adds unique value to the sector. She also does a great job maintaining relationships with companies that previously participated and have grown and can provide guidance to others.
It’s a good matchmaking effort that always leads to an engaging conference.
It’s a long and winding path from conceiving a solution to a problem and turning that idea into a marketable product, but it is plenty doable with the right amounts of determination, expertise and support. Entrepreneurs and innovators who are uncertain how to navigate the process might consider taking cues from Carrie Shaw, CEO and Founder of Embodied Labs.
Embodied Labs has developed an immersive learning system that uses virtual reality (VR) to simulate challenges and scenarios faced by older adults and their caregivers. The company creates research-based VR experiences that give caregivers and others a first-person glimpse at specific conditions, and helps caregivers navigate interactions with those who have the conditions. Embodied Labs offers a growing catalogue of experiences, or labs, that address such conditions as Lewy body dementia, Parkinson’s disease and macular degeneration. The goal is to offer caregivers a holistic perspective on how certain conditions affect brain activity.
And, as is sometimes the case, the platform’s origins are rooted in the founder’s personal life experience. When Shaw was 19, her mother – only in her 40s – was diagnosed with early onset Alzheimer’s disease. “My relationship to my mom’s illness was to avoid it because I didn’t really know how to be helpful,” she said. But, as time progressed, Shaw became her mother’s caregiver. She also earned a degree in Public Health from the University of North Carolina at Chapel Hill and joined the Peace Corps, serving as a health education volunteer in the Dominican Republic. Around the same time, she learned about medical illustration as a potential career option and decided to pursue a master’s degree in Biomedical Visualization from the University of Illinois at Chicago. While Shaw doesn’t consider herself “a techie,” she met a fellow student, Thomas Leahy, who was focused on human-computer interaction, specifically through VR.
Shaw’s personal life and educational path were converging. She and her sister, Erin Washington, along with Leahy, founded Embodied Labs in 2016, the same year she graduated from UIC. The next step for the newly minted business owners was to secure funding – and, like most start-ups, Shaw said they took “...a lot of interesting, crafty paths to stay afloat.” The group leveraged personal networks and found willing investors in friends, advisors and others. They also found success with pitch competitions such as Creative Startups Winston-Salem and USC’s VR Hackathon Challenge, and they received a $50,000 grant from the U.S. Department of Education.
The group funneled all of the money into product development and took the platform to market in early 2018, with a narrow focus on home care and senior housing. Sales were solid, which helped the company close additional pre-seed investment funding. The group also kept traveling to events to speak, network and pitch their platform to industry experts who provided valuable feedback and a pipeline to additional capital.
One such event was The Bill & Melinda Gates Foundation’s XR in Education Prize Challenge, which netted the company the $250,000 grand prize. Another was the AARP Innovation Labs Pitch Competition, held during last year’s Silicon Valley Boomer Venture Summit, which is hosted annually by Mary Furlong & Associates. The group won the competition, and Mary Furlong also connected them with venture capital and investment firms that have since backed the company.
Embodied Labs has raised more than $1 million in seed funding to date and now has more than 100 subscribers and counting. The company has appeared in The Wall Street Journal, Forbes and the Journal of the American Medical Association (JAMA), among other well-known national media outlets.
Shaw advises entrepreneurs starting where she did a few years ago to remember that the product itself is only part of the equation. Other crucial success factors are having the right business model and infrastructure, and connecting with the right people.
“Create an ecosystem that supports the topics your business is involved in,” she said. “Really, the world is small once you start building a web of people that can contribute to your business.”
“I have always carried in my head images of the women I’ve met, and I keep photographs of the ones who have moved me the most.”
– Melinda Gates, The Moment of Lift: How Empowering Women Changes the World
One reason that the 16th Annual Silicon Valley Boomer Venture Summit and Business Plan Competition stands out in the longevity field is that it intentionally shines a light each year on the women investors and entrepreneurs that use their insights and innovations to grow this marketplace. Forbes recently reported that between 2007 and 2018, the growth rate of businesses owned by women achieving revenue of more than $1million exceeded the rate of business growth in general. This type of success comes as no surprise, especially when this year’s Summit agenda is packed with women achieving great things in their businesses and beyond:
When you register for next month’s Summit at the Claremont Hotel and Spa in Berkeley, California on June 5th and 6th , you are signing up to spend quality time with these inspiring women. The women speakers, sponsors and exhibitors at our event are those who are making strides when it comes to design, innovation and investment in the longevity marketplace every single day.
Early bird registration rates are limited, reserve your seat today.