Duane Mancini & Rich Mazzola Discuss How the Project Medtech Team Created a Life Science Consulting Powerhouse

Anthony Codispoti : Welcome to another edition of the Inspired Stories podcast where leaders share their experiences so we can learn from their successes and be inspired by how they’ve overcome adversity. My name is Anthony Codispoti and today’s guests are co-founders of Project MedTech.

Duane Mancini, who is the CEO and Rich Mazzola, who is the CFO. Now, Project MedTech is a company dedicated to helping innovative medical technology startups succeed by providing guidance on product development, regulatory pathways, and go-to-market strategies. Founded in 2020 and based in Cleveland, Ohio, Project MedTech focuses on supporting breakthroughs in areas like medical devices, diagnostics, digital health, and more.

Under their leadership, the organization continues to expand its reach, launching events, podcasts, and collaborating with industry leaders. Duane holds a Master’s of Science in medicinal and biological chemistry from the University of Toledo and has previously led business development efforts at well-known organizations in the MedTech space such as LabCorp and NAMSA. Rich holds a Bachelor’s of Science in Business Administration with a focus on accountancy from John Carroll University. He has served as Director of Finance at a technology SaaS startup and consulted at several CPA firms, always focusing on growth and operations and finance. He also brought his financial leadership to Coologix and Resavent Medical as a CFO. Now, before we get into all that good stuff, today’s episode is brought to you by my company, AdBAC Benefits Agency, where we offer very specific and unique employee benefits that are both great for your team and fiscally optimized for your bottom line. One recent client was able to add over $900 per employee per year in extra cash flow by implementing one of our innovative programs. Results vary for each company and some organizations may not be eligible.

To find out if your company qualifies, contact us today at adbackbenefits.com. All right, back to our guests today, Duane and Rich of Project MedTech. I appreciate you making the time to share your story today. Yeah, thanks for having us.

And be here. So you guys founded Project MedTech at a time when the world was in a state of flux. What inspired you to make that leap in 2020? And how did you guys navigate some of those early uncertainties?

Duane Mancini : Yeah, yeah. So I guess, you know, to kind of go back to a little bit of maybe how we founded the company, you know, we, or how we had the idea. I was at a company called NAMSA and, you know, just kind of working through with MedTech companies and because you get to do business development, you get your finger on the pulse of what’s going on within the startup industry. And, you know, I had, so I had this idea, hey, I think we could do this better. This would be a cool concept.

Started thinking about that a little bit. But that was February of 2020 is when I really started to give that some serious thought. March 16th, I took my last flight from Minnesota and then the world shut down like the next day. April 4th, my wife is like, hey, we’re pregnant with our first kid. How great. And I’m like, oh, this sounds like a great time to start a company. And then, you know, the end of April, the COVID is you know, everything is still shut down.

No one has any clue of when this is going to let up. And so the idea was, hey, maybe just launch Project MedTech as a podcast. We’ll just launch the media side of the company, put the rest of it kind of on ice for now. And so that’s what I did.

I took that job at LabCorp and moved over there into business development there, but kind of launched Project MedTech in the background. Rich was episode 19 or 20 of the podcast series. I had known Rich before. He was oddly enough, he was a plus one to my wife and I’s wedding. And so I had known of him. We had talked a little bit. I met one of my other co-founders previously. He came on board in November of 2020.

Rich ended up coming on board of May of 2021. But just, you know, with those guys really kind of thinking through, hey guys, this is what I’m seeing. Does this line up with what you’re seeing in the industry? We all had different skill sets. I think that was a really important feature of this as well, the founding team. And we didn’t go full time until I went full time in January of 22. And Rich and Aaron, Aaron Tenhuisen, who’s our chief operating officer, went full time in August and September of 2020.

Anthony Codispoti : So what is it that you guys were seeing, Duane, that made you move forward with something here?

Duane Mancini : Yeah, I think it was for these early stage startup companies, it was the ability, honestly, I’ll share my experience first because this will make sense for Project MedTech, right? When I had the idea, I knew what my weaknesses were, right?

Like if I’m looking at a staircase, I can see the top of the staircase where we need to go clear as day. That’s my skill set. I will most likely fumble on the first three steps. And then once I get there, I’ll fumble again a little bit.

So I needed someone to help operationalize what we were doing. Rich and Aaron were perfect compliments to that. It does help that Rich has a very strong financial background, right? I mean, that’s a big key. But he also is very tactical in what the next step is.

And so was Aaron. And so, you know, that same concept is what startups in the MedTech space needed, especially at an early phase. You can’t afford to go out and hire a CFO, a chief commercial officer, a chief operating officer.

That’s way too much capital to use when you’re not actually hitting any milestones yet that are meaningful. And we’ll kind of get into that in a little bit. And so that was kind of the concept was can we provide fractional support in some really key areas that need to be integrated?

That was the key. They overlap so much that if we could have it under one roof, is there an opportunity here to provide real value in the proformas and cap table dilution scenarios and fundraising strategies that also bleed into the regulatory and quality and operational piece that also bleed into the health economics and commercialization strategy. And so that was the main concept was how if I can’t do it, then how would we expect anyone else to any of our companies to do it? And so that was kind of the genesis of the idea.

Rich Mazzola : So just to just to sprinkle a little bit onto that too, I think, you know, one of the things I was doing a lot of fractional CFO work within these CPA firms for startups at the time. And, you know, anybody that walked in the door, I would be selling fractional CFO work, I wouldn’t sell regulatory or ops or people’s operations or anything like that. So the value of what you’re providing at specific times within the startup is also crucial. And there were no one stop shop solutions out there that could provide every type of resource that a startup would need at these earlier stages in the med tech space. There’s parts that have or you know, NAMSA does a little bit and LabCorp does a little bit and some CPA firms do a little bit, but nothing together in cohesive words collaborative across multiple consultants and multiple different verticals. So that’s I think the part.

Anthony Codispoti : Thanks for that additional context, Rich. So are you guys providing mostly sort of this high level like fractional CFO, COO level service? Or is there also like back office functions, like, you know, basic bookkeeping, accounting, HR payroll functionalities?

Duane Mancini : Yeah, I mean, that’s those those I can remember those conversations so vividly specifically, you know, with the co founding team. I mean, me and Rich were sitting at a Starbucks, right, in Strongsville, Ohio, in May of 21, talking about this, right, of, hey, we can’t just provide guidance of like, hey, and Rich will love this example.

It’s worn off on me. This is a direct Rich quote. We can’t just be, hey, go dig the trench over there.

We have to go dig with the startup. That’s the difference, right? So, you know, when you think about finance, yes, we help with the pro forma, but we do all the back end bookkeeping. You want regulatory strategy? Sure, we’ll do that. But we’ll also do the submissions for you. You want to know how to build a QMS, we can help you with that.

We’ll also build it for you. So with all of these, it was strategy, but also tactical execution to get these things done. And that’s a really big differentiator. And what that led into is that we want companies to feel like we are actually part of the team. I mean, every consultant group says that. But when something goes wrong or something goes right, who’s the first call? If that could be project medtech, then we have something really good going on. And that’s what we’ve pretty much driven towards. What’s QMS? Quality management system. Sorry.

Anthony Codispoti : So Rich, what were you doing before Duane roped you into all of this?

Rich Mazzola : I was, I call myself a recovering CPA these days. So I spent most of my career in CPA firms. I had fallen in love with the venture space pretty early on and out in Oklahoma City of all places where I lived for a few years. But then coming back, I said, I’m going to jump on the other side of the fence and join tech startups. So I joined a group called Squintz, Inc., down in Akron, which blossomed out a product or a company called Dripps, which was the spin-off company.

So a shout out to AC or Aaron Christopher down in Akron. They had a really cool telecommunications product with an AI engine before AI was the hot thing to invest in these days. And really loved that worked with them for about 13 months. And after we were done thinking about raising money, I said, this is great. I can do this for a lot of companies. So I brought that concept and Dripps back as my first client into fractional, you know, fractional CFO, fractional finance space for startups and launched that practice at a couple of different CPA firms. And, you know, there’s regulatory compliance stuff within CPA firms and restrictions. But then, you know, seeing what Dwayne was thinking about with this project MedTech, and I had worked both with life science companies and technology companies.

I said, this is great. We can get this out of a regulatory environment, but focused in the consulting space along with other education events and eventually a venture fund. And so that’s really attracted me to what Dwayne was kind of building. And I had a lot of that infrastructure kind of set up for what a consulting practice would need to operate off of to help with that. So that was kind of the blessing in disguise.

Anthony Codispoti : So how many groups in sort of this MedTech space have you guys touched over the years?

Rich Mazzola : Just trying to get a picture of your experience. Over 80 companies now. Yeah.

Duane Mancini : Okay. Yeah, I’d say we’re, you know, over 80, probably nearing 100 and any given time, you know, 40 to 70, it just kind of, it fluctuates. But the duration of our engagements are the coolest piece. I mean, Rich, you mentioned Resavant in his intro. Rich has been with Resavant for five years, maybe. And a lot of our engagements are 18 to 36 months. And, you know, we’re just really engaged with these startups. So we stay with them for a while.

Anthony Codispoti : So touch at least 80 startups, you know, approaching 100. What are some of the most common challenges that you see MedTech startups facing when they first get to you?

Rich Mazzola : Yeah, I think from our end, it’s, it’s, everyone comes to you with funding requirements. Everyone needs money, right? That’s the first thing I think what we’ve found is that what the challenge with fundraising is usually the strategy around what you’re doing. And what I mean by that is startups would come and say, Hey, I need to raise this much money.

It’s like, okay, what’s that money going to? And they can’t really articulate that. And so there’s a lot of back end information they haven’t thought through foundational stuff they haven’t thought through. They know what they’re supposed to do. They have a gut of feeling for what they’re supposed to do, but they haven’t really put it on paper. And that’s where we can help them articulate in a better fashion. Hey, here’s what you’re raising today, but here’s also the next round we need to be thinking about which impacts valuation in your negotiations today. And so we’re kind of broadening their view.

And Dwayne likes to say this all the time where the Sherpa’s on Mount Ampharous, we’re going up there, we’ve been up this trail before we tell you don’t go down that road, go up this road. And that’s a big value and we’ve saved startups countless thousands of dollars of time and money by educating them on the broader picture. And I think that’s where we start with a lot of companies. It’s our foot in the door investor readiness assessments or just giving them knowledge of the space a little bit more than they already have. And then helping broaden their view with some of the strategic stuff we know those investors who we probably have connected to or been through a diligence cycle with before will ask for.

And so that’s the big help we have is kind of dropping those hurdles for them so that they don’t have to have the bumps in the road. But also by broadening that view and looking at the subsequent rounds and subsequent milestones and what the valuations could be, it helps them better negotiate with the investors what a proper valuation and a proper ownership structure would look like.

Anthony Codispoti : Do you guys get involved in those negotiations with them?

Rich Mazzola : Quite a bit. Finance, everyone on the team does for sure, but definitely from a finance perspective absolutely. And Dwayne from his investor connections as well does from some of those partnerships and relationships he has. And so that’s those negotiations are kind of, we’ve seen that before.

Why don’t we help with this? I’ll give a great example really quick of one company came to us and said we want the valuation at, I don’t know, 7 million. But this lead investor is going to come in and they want it at 5. The problem with that lead investors are taking a portion of the round and all the other investors will follow in suit. And as we walk through this with them, I said well what is that investor, why do they want it at 5? Is it something with the exit where you’re growing to?

What’s the problem? And it was really about a percentage of the cap table they wanted. They wanted a specific percentage.

And I said, well that’s an easy one. Why not help them go at the higher valuation and provide them with a board seat or an advisor position on a board and at that point give them shares for their time. That equates to the same level of ownership that they wanted, but it brings the valuation up where not everybody’s as dilutive at the 5 versus the 7. And so that type of idea, that was a 30 second conversation, a couple minute conversation with the startup. But that idea was, because we’ve seen that before.

Anthony Codispoti : You’ve been there, you’ve done that. But somebody on the outside like me is like, oh, wow, that’s brilliant.

Rich Mazzola : Right. And so that’s the kind of stuff we get into where it’s they’ve reached, they’ve done all the legwork, they’ve done the pitch, they’ve built the relationship with the investor, they’ve gone through the diligence, we probably helped with a little bit of that as well. And then at the end of the day, they’re stuck. Okay, what’s the situation? Why are you stuck? And then how can we help with that?

Duane Mancini : And Anthony, just to layer on here, that’s a great example that kind of leads into just the kind of value that we bring to a startup company. So when we we have, we had three different podcast series, we talked to a ton of investors, we have a lot of investor connections, every single one of them says they’re betting on the team over the product and anything else, right. And I think for a lot of entrepreneurs, they think, oh, well, that means I have to have a full time team. Early stage investors don’t care if you have a full time team, they just want to know that you have a good team, right, because the less money you have to raise means the better potential multiple at the end of the day, right? This is all it’s advantageous for the founder, the first investors, everybody. And so what is beneficial to what you just saw here is if you can get a rich to join you on that call and show that, hey, this is the kind of person who I’m going to when I have financial questions, that bolsters your team.

And hey, by the way, I don’t pay rich a $200,000 salary, I use them when I need them. It’s just like that story for a long time, everyone thought, oh, we need to have this full time team. And that’s just what we’re telling you, we have all these conversations with these investors, it’s just fundamentally not the case. They’re totally okay with this kind of arrangement.

Anthony Codispoti : And so what is that relationship between you and your clients look like? Are you guys on the cap table yourselves? Are you taking like a monthly fees at a combo of the two?

Duane Mancini : It’s a whole hodgepodge. And I’ll tell you that if there’s anyone who probably felt the frustration of when we started Project MedTech, it was rich on the billing side of things. Because we have to do everything, right? We do the invoices, we have to pay people, we got to set up all the structures, all these things. And one of the major points we talked about was the first few years is going to be frustrating, guys, because we need to meet clients where they’re at.

And so that’s going to mean a hodgepodge of different relationships. It’s going to be some fixed fee project based contracts. It’s going to be some retainer based contracts. It’s going to be some hourly contracts. It’s going to be some equity contracts. It’s going to be a mixture of all these things.

Eventually, they’ll sort into buckets and it’ll be a little easier for us. And yeah, it depends on the situation. I would say in terms of taking equity right off the rip, that’s probably pretty rare for us. We’d rather date a little bit before we get married. But we’ve also have very flexible engagement models. So we’re kind of all over the place.

Anthony Codispoti : It sounds like just from my own experience, when you’ve got a fixed fee, you’ve got retainer, you’ve got hourly, each of those is in a sense its own kind of business model. I mean, there are companies that are dedicated oftentimes to one of those models. Does that create, I don’t know, a lot of internal angst or extra work having to shift between those?

Rich Mazzola : No, no, I don’t think so. I think the way we look at retainers is you’re basically taking a chunk of our calendars, or a chunk of the team’s calendars, in that, okay, I like to work with Frank in New York, or I like to work with somebody out in Indiana or West Coast, whatever the case might be. But retainers, you’re taking a chunk of their time on a calendar. We have that dedicated time for you. Hourly is, you call us when you need us, and that’s a very flexible arrangement at the same time. We might not have the availability you want to suit your needs, but we will make sure we do the best we can.

So it’s just, it’s a different type of arrangement. But to your question internally, we look at productivity and utilization like any other consulting groups, and we’re making sure that the team’s productivity ratios are where they need to be for growth and performance with buffer to then take on those hourly engagements where they need to have some flexibility.

Anthony Codispoti : Before we kind of get into rounding out more of the services that you guys offer, because we haven’t hit everything yet, can you explain to us what kinds of companies are a good fit for Project MedTech?

Rich Mazzola : Yeah, so we always say pre-seed to Series B companies are where we specialize. And if you think of that as a bell curve, and when we say pre-seed to Series B, there’s pre-seed, fundraise, seed round fundraise, Series A fundraise, Series B fundraise, and beyond. There might be bridge rounds in between or different types of arrangements there, but those four major fundraises, that’s where we operate really well at. And if you think of it like a bell curve, a lot of advisory at the very beginning, because there’s not a lot of tactical stuff we need to work on.

And then it’s a bell curve of seed Series A. There’s a ton of stuff we need to do, especially in the MedTech scene. I always say MedTech is kind of wash and repeat, not that things are difficult or different, but it’s that you follow the same regulatory pathway through seed.

You get your clearance or approval, depending on your regulatory pathway, you then go commercial with the product or your fleet of products, and that’s your Series A growth capital and beyond. And so the playbook is somewhat similar across that echelon. And so we’ve worked with companies beyond Series B, but it’s a different type of work because it’s more advisory focused, rather than we’re in the seat helping you be tactical and execute on things. It’s more of advisory. So I would say seed Series A is where we’re very tactical and very execution, and then pre-seed and beyond is, you know, more advisory.

Anthony Codispoti : It’s always in medical technology, and that could be hardware, software, combination of the two.

Rich Mazzola : Oh yeah, MedTech for us is defined as wearables, diagnostics, anything that has to go through the FDA process excluding, you know, basically the easy way to say it is everything but small molecule products.

Duane Mancini : So pharma. And then I would say too, you know, we’ve, from an expansion perspective, the last probably year and a half, we’ve really gained traction in accelerators, incubators, and then hospital and university innovation groups. Right. So helping them evaluate technologies that they may be considered spinning out. Right. What that could look like, is it venture-backable? Is it, you know, what’s the regulatory pathway look like?

Reimbursement? What’s the competitive landscape market size? But really evaluating it less from a technology perspective and more from a, could this be a standalone company? And so we’ve been doing a lot of work there and then also helping VCs and other investment groups either determine, you know, kind of step in and help with some of their portfolio companies, or also helping them with due diligence for a follow-on round. Hey, did they make as much progress as one would have expected, that kind of thing. So really started to expand our client portfolio that way as well.

Anthony Codispoti : So you mentioned, you know, getting more traction with accelerators and incubators. Are you also kind of at this stage, like helping them validate the market fit? It’s like, oh, I have an idea for this thing that I wear on my ear and it gives a, and you’re like, no, there’s nobody who’s gonna buy that kind of a thing.

Duane Mancini : I think this is where the diversity of the groups we have internally really shines a little bit here. So on the commercial side, we have two former hospital executives. We have a team of 1099s who are salespeople in some of the larger strategics. And then we have a health economist and reimbursement expert. Right. So we can get a full 360 view in terms of, hey, is there a reimbursement code for this?

Can we get this medical device paid for? Okay, the answer is yes. Great. Hey, Jake, can you sell this to a physician? I don’t know. I’m not sure it’s going to create much value.

Okay, well, let’s say it does create value. Okay, let’s go to Jamie and Sean. Jamie and Sean as a former CEO of a hospital system. Tell me if I check both these boxes, are you interested in this product? Absolutely not, because of X, Y and Z, right?

So that’s cool. Let’s say we check all those boxes and commercialization. Generally, if you are a hospital innovation system, you have access to those resources we just described, right?

So you could probably evaluate that side. But then the next question becomes, which what we like to do is take that over to the finance side of the house, right? And say, hey, Rich, this is, it checks all the boxes. Do you think someone would pay for this?

Like, is this a business model that can integrate into a strategic? Yay or nay. And sometimes that answer is, you know, a little more convoluted or it’s an easy yes or an easy no. But that’s the kind of value that we can provide when looking at an early stage opportunity, at least a good gut check of like thumbs up or thumbs down.

Anthony Codispoti : Okay, so we’ve talked a lot about sort of the different types of consulting that you guys offer. But there’s also an education component to what you guys do. Can you talk more about the podcast that you’ve already referenced and the events that you guys put on?

Duane Mancini : Yeah, so we, you know, the vision is to create an ecosystem where med tech companies thrive. And we kind of, from the very beginning, took that and said, hey, we need to focus on building a network, because it’ll be beneficial to all the startups we work with.

We’ll build a network in three main areas. Who buys these companies? Who buys the products of these companies?

And who invests in these companies? If we can build that network, we would provide a really good platform for the startups to integrate with. Also, can we take some of the information that we’ve gained and give it back to the community, right? So when you think about those few missions and creating this ecosystem, we started with the podcast and we scaled into events. The podcast is, you know, we had Project MedTech. We produced MedTech Money and we also produced and hosted Funding MedTech. Rich was the host of that one.

MedTech Money and Funding MedTech are still out there. You can go to Spotify, Apple Podcast and find them and listen to them. There’s some really great content there. Project MedTech continues. That’s kind of our only ongoing show. But there, we’re providing network connections. We’re providing educational resources.

We’re really helping in aiding the development of some of the ultimate customers we’re going to work with, but then just the industry in general. And then events was our next step there. And there, we have two real main events here in the US. We have our Midwest Showcase and our Startup Symposium. Our Startup Symposium is excellent because it takes companies from ideation through exit. Everything you need to worry about. IP, forming your company, finance, M &A, raising capital from angels, family offices, VCs, corporate VCs, non-dilutive capital.

So grants, we cover regulatory, reimbursement, commercial strategy. And then the Midwest Showcase is all about showing off innovation in the Midwest. For a long time, everyone thought it went Boston, New York, and then San Francisco when it comes to the MedTech and health care scene. We have, there are a number of top tier institutes, health care institutes, and universities in the Midwest that are doing really cool things with really cool innovation coming out of them.

And so, we wanted to take that. And we’re all Midwest guys, right? Rich is from Cleveland, still lives in Cleveland. I’m from Youngstown, went to school in Toledo, live in Cleveland. Aaron’s a transplant from Hershey, Pennsylvania, but we’ll lump them into the Midwest.

Our Chief Commercial Officer is from Cincinnati. And so, we really just wanted to kind of show off all the cool stuff that we know is going on here. And so, we run that event as well. And then we do have an event in Denmark this year called Coming to America.

But if you’re thinking of the Eddie Murphy movie, you’re spot on. And really just helping companies think about how they come to the US and commercialize the MedTech product here, because they’re two drastically different systems. One is generally a single payer health care system, and the other is not. And so, it’s a little complicated for them to understand and setting up your company here. There’s so many facets of it that are difficult.

Anthony Codispoti : And just to clarify, are you guys also helping to make introductions to investment capital? Or are you kind of counting on those folks to come or find their own relationships and then you kind of help to mentor them on how to navigate that space?

Duane Mancini : The mentoring is definitely a big one for us, but we do help with introductions. We’re not an investment banker. So, it’s not like there’s any percentage of the raise we take or anything like that. We maintain a network. We will send deal flow to the investors and say, hey, this is a company that’s raising. Here’s what we’re doing with them.

Here’s what we know about them. But you should have a conversation directly with them, right? And we kind of let them make a decision. And really, the network was built because we sent good deal flow, well-coached companies to these investors. And so, the investors are more than happy to take the email, look at it, say, yay or nay to another conversation. But from there, it’s kind of in the entrepreneur’s hands.

Anthony Codispoti : It’s kind of like a level of validation to the investor. It’s like, oh, you guys work with Project MedTech. Okay. I know at least that you’re serious. I don’t know if it’s a good fit for me. I need to do my due diligence, but I at least know that you guys have taken the proper steps. This is worth the time for me to take a look.

Duane Mancini : We’re totally honest in that email. Hey, we’re working with them on finance, ops, and commercial. Or, hey, we did one project with this group. We really don’t know more than you probably know. Totally transparent with the investors. And again, if you’re transparent and if you create value, it generally works out.

Rich Mazzola : And just, I think the types of opportunities we’re putting in front of our investors, we know what they’re looking at or we know what they want to look at. We know their thesis. We know their check size. We know what rounds they like to invest in. We understand their diligence process to a certain extent. And so when we put a deal in front of them, it’s not like we’re sending a seed level company to a series B investor, right? We’re sending the right company at the right times to the right investors, or in some cases proactively stating that they’re not here yet. Just keeping you aware of them and pay attention to these guys. They got something going on.

Duane Mancini : And Rich, great point because that advice while helped us build relationship with investors, startups need to understand that as well, is just, you are going to meet people in this ecosystem who are like, hey, I know Bill Trainor and mutual capital partners, you should go talk to him. And they’ll go talk to Bill Trainor. They’re a pre-seed company. Bill’s mutual capital partners fund likes to invest in companies that have annual recurring revenue. So if you’re a pre-seed company and you go talk to Bill, he’s your only VC you’ve talked to so far. And he says, well, hey, I got to see some revenue before I’m interested in investing.

Okay, that startup is going to go back and take that advice and say, well, I got to get revenue to get investment dollars. They should have never been talking to Bill. He’s not.

Anthony Codispoti : It’s not right for you. They’ve got the wrong idea now. They think that every investor is going to think that and they just, they talk to

Duane Mancini : the wrong guy at the wrong stage. You’ve got to talk to the right investor at the right stage and some of that is, that’s where we can lead you and say, hey, you know, because what happens there, Anthony, is then they focus on revenue instead of clinical data.

And there you have a broken problem right off the rip. And so, you know, while Rich was talking about how that helped us build relationships in the investor network, it helps us lead our startups in the right direction too.

Anthony Codispoti : That’s a gold nugget there. Dwayne, I wonder whether you or Rich have another sort of tip for startups that you think would be like spot on that you see a lot of people sort of get confused about or tripped up on.

Rich Mazzola : I’d say there’s probably too many to, we don’t have enough time for, but no, I think it, when it comes to understanding your market, I think the, it’s go to market fit, right? Most MedTech startups have a predetermined pathway to market. And in some cases, to Dwayne’s point is they have the ability to sell their product prior to some sort of clinical data point because it doesn’t require regulatory approval.

That’s actually a detriment because clinicians value committees within hospitals or vac committees, they’re going to want to see some of that data to actually say, okay, I’m interested in buying this product. And so, to Dwayne’s point, they’re just reiterating just because you have multiple pathways and one is closer to revenue than the others doesn’t mean it’s the right one. I think the other thing that tends to get people in a bit of a tickle is when you talk about investments, you’re really always focused on the first round that you’re in right now. You’re not focused on the subsequent rounds and understanding what the dynamics of those rounds will be. And so sometimes startups will take a deal today because it’s quick and painless, but it will mess up their subsequent rounds, the value of the rounds.

It will require a lot of rework with attorneys to redo documents or whatever. So paying attention to the full landscape and starting with the exit in mind. Why, you know, we’re building this to exit, we’re building this to get this to market. What does that exit look like? It might be multiple different types of exits, but understanding what those are today will help influence your decisions across that entire timeline. And so start with the end in mind and work your way back.

Anthony Codispoti : So what’s an example of how somebody might mess up the cap table or the structure of the deal early on that affects future rounds? Is it just taking a bad valuation or is there more nuance to it?

Rich Mazzola : So this wasn’t a client. This was just somebody picking our brains at one of our events, but there was a situation where they had raised money from. And I’ve seen this multiple times where we’ve had startups raise money from a couple angels, high net worth individuals is what the angels refers to versus an angel group with a diligence process or a venture capital group that has a diligence process.

They raise money from one person or a group of small individuals. And the idea there is that that discussion, that diligence, that pain you have to go through to get an investment to debate about their questions versus your answers and what your product’s doing. If that’s missing at the beginning, you tend to have, that’s actually a negative in my view and I think most of the team’s view is because valuations can be higher for a lower amount at an earlier stage, which then what will happen in the subsequent round is no one will invest in you because in order for them to invest, they have to invest a higher dollar amount at a higher valuation. And so we had an individual come to us with a pretty absurd valuation in terms of what their product market fit was. And at the end of the day, it was influenced by some folks that didn’t work with startups in a financial world.

And what we ended up having encouraged them to do is we called it reset your cap table but basically go accept a down round and renegotiate that prior investment at a lower valuation because you won’t be able to raise money now when you need it. And it’s just a matter of you need the right people in the room. A lot of people say they work with startups and I would say most people don’t. If you don’t work in the negotiations, you don’t understand the landscape, you don’t understand the timelines, you don’t understand the exits. That becomes a bit of a problem because something might look correct today but it’s not going to be correct in 18 months.

Duane Mancini : Rich, Dwayne, did you have more to add to that? Not to that. I have a keep going on the finance piece. I have another big, big kind of like we see companies screw up.

Anthony Codispoti : No, let’s go there because I was going to kind of shift gears anyways.

Duane Mancini : Okay. So he mentioned the finance, the clinical data piece. The other one that is huge and this affects your timeline, it affects burn rate, all of it is just because you get for regulated products, just because you get your regulatory clearance does not mean you’re commercializing. So like you can’t, if I see another pitch deck that says I get 510K clearance and then January 26, I’m going to generate $4 million that year and then 20 the next year, it’s probably not going to happen. And the reason for this is like my background is in the regulatory pre-commercial side of the business. It is a walk in the park compared to commercialization. Commercialization is the hardest thing you’re going to do. There’s so much to it. The sales cycle into hospitals is long but also we talked about the clinical data need. It’s also just, hey, get your first few sites, your first few customers up and running and then let people interact with your device because when we’re talking about the development side, you’re generally there. You’re with the physician, you’re with whoever’s using it.

You’re there to help answer questions but when it kind of gets out in the quote unquote wild, what happens now? Do other physicians adopt it okay? Can you move from the third floor of the hospital to four, five and six? There’s so many things that you kind of just need to figure out before and you might go back and then reiterate your product again. And now your real commercial one is version two but if you don’t plan for that in your pro forma, you’re going to, this is where bridge rounds happen, this is where down rounds happen, this is where companies run out of capital. I mean, commercialization is, it’s a dogfight. You got to be ready to really get after it there and it’s going to take, however long you think it’s going to take, it’s going to be much longer.

Anthony Codispoti : And what’s your best advice for folks that are approaching or in that commercialization phase? Like, is it, hey, find somebody who’s led a medical device sales team before, let them come in and kind of lay the roadmap or is it, hey, you got to do this because you’re the founder and figure it out?

Duane Mancini : I would say your first full time hire, if, you know, when you think about like as you get closer to that should be on the commercial side. I don’t know if it’s the skill set of, oh, they’ve ran a commercial organization before because you’re probably not going out and hiring a ton of people just yet. I don’t know.

I’m not sure on, I think I could be swayed either way. There’s more ways to, there’s other ways to do it. But, you know, the advice there is just be realistic on what it’s going to take to commercialize. I mean, Rich and I see it all the time where they’re like, oh, we’re getting clearance and then we’re going to hire like 50, 10, 99s and they’re going to sell in all these hospitals for us.

Maybe, but they, they’re carrying other products in their bag, you know, and so they’re not thinking of your company every step of the way. And so you just got to think through whatever strategy you’re going to deploy, what are the pros and cons of it, where the weaknesses and how are you going to tackle those weaknesses if they come to light? You just, they need to be more prepared. And so you need to be thinking about that, but that starts early on. I mean, all the companies we’re working with, we’re all talking to them about commercialization strategies, what’s going to work, what’s not, who’s your first adopters.

And then there’s that aspect of it too, Anthony, which is first adopters, that’s easy. It’s easy to find a doctor who’s jazzed about your product, right? And we’ll use it and push for it and be your champion. How do you get the laggers to come? And that’s where an experienced commercial person is super valuable.

Anthony Codispoti : What is it that people don’t understand about the regulatory process? You said, Dwayne, you’ve got a background. That’s pretty heavy on that.

Duane Mancini : Yeah, the first thing is the FDA has a mission to make sure products that go to market are safe and effective. And they’re also human beings, right? So getting frustrated with the fact that you need to get regulatory approval and getting frustrated with your FDA reviewer is not going to set you yourself. You’re not going to be set up for success. That’s the first area everyone gets frustrated with. If you have never been in the regulated environment, it’s like, well, why is the FDA asking for this and that and this? It’s like, they need to make sure that if you’re going to put this in a human, it’s safe and effective.

So just maybe put yourself in their shoes for a second. The second thing is the easiest regulatory path is not always the best. You need to evaluate those things. Generally, the FDA will classify medical devices as class one, class two, class three. As you step up in classification, it’s more risky. So class one, you can think of like a Band-Aid.

Class three, you can think of as a pacemaker. If something fails in a Band-Aid, you’re going to be okay. We might have an upset toddler, but we’re going to be okay. If your pacemaker fails, well, someone dies. And so where there is nuances though is in class two medical devices. There’s two different pathways.

There’s a few different pathways there, 510K and DeNovo being two different ones. And so one is a little bit longer. One’s a little bit easier. Just determining which one you want to do. It’s not always, we’ll take the easiest path. Also, you can do a stepwise process and change your claims. And so there’s a lot behind it, but some of those basics are generally where some companies fail.

Rich Mazzola : And I’ll just give a tactical example here. So, you know, for example, a DeNovo might require a clinical trial. And you might think, oh, 510K will get my product to market faster. And I can start sales earlier, but then that creates an environment where competition can come in.

And so by creating doing a DeNovo, it builds a bit of a moat, right? Where that forces other products to go through a clinical trial now. If they want to use your device as a predicate or what’s called a precursor device. And so there’s also intellectual property strategy behind this. If you don’t understand that landscape and you pick, most people would probably just jump to the 510K because I can get to market faster. But then they don’t understand the ramifications of that from a strategy and a protection standpoint.

Anthony Codispoti : That’s fascinating. You know, I think about this and I think about the other example that you gave earlier about, you know, the creative solution to that person who ended up giving equity to somebody for their board seat contribution to help keep the valuation where they wanted it to be. Can you guys think of another interesting example that’s maybe hit, you know, helped your companies hit like an important milestone along the way? I think these are really fascinating stories for people to hear. Like when it’s real, it’s like, oh, yeah, that makes me sort of connect the dots to what I’m going through here too.

Rich Mazzola : Yeah, I have a lot of examples in the fundraising space. I’ll give, wait a minute here to think about one from his end, but you know, from a fundraising example side, you know, we’ve had situations where investors have gone through diligence and there might be just a hold up.

There might be other investments that are evaluating to at the same time as the company we’re working with. And so I call them levers, but how do you, or icing on the cake, but how do you sweeten that up? How do you encourage somebody to jump faster if they’re waiting for other things to happen? And so we’ve had situations where things have stalled and we, hey, we’re close to closing this round out. Do you guys want it or not? And where there’s some strategic value to having this partner in on the cap table, like a strategic that would potentially buy the company at some point or the product at some point. You know, we encourage companies to go through a warrant. Okay, let’s offer a warrant. And warrants could be anything.

You’re explaining what a warrant is, Rich. So that is an agreement to buy equity at a certain value. And it’s like an option.

If I was an employee of a startup and I got an option to buy equity in the company at a specific value, I would wait to buy it until the value of that equity is higher than the price I’m buying it for. So I’m getting a little discount apart of it. Now, warrants can be anything from, you know, less than a penny per share or it could be something like 50% of the value you’ve already paid for. And so where we’ve seen strong examples of warrants that work really well is by offering a strategic investor a warrant that gives them 25% or 50% coverage, warrant coverage in the next round. And what that means is if I invested, I’m going to use simple math, $100,000 today at a $10 million valuation. And I get, I got a $50,000 warrant or 50% warrant coverage into the next round. And then the next round is $20 million in value. I can still invest 50,000 of my hundred at the same valuation before.

So as if it’s in clients, like, wasn’t that more dilutive? And I say, of course it is, but it’s as if they invested 150 in this round. So don’t don’t think of it like you’re losing out on the back end. It’s really just encouraging a further investment. And it’s a sweetener for that investor to jump into the round right now.

And so that’s kind of some of the uniqueness we can provide. And there’s, I mean, these are standard terms and standard offerings out there, but some startups just don’t have the knowledge of those or they might have partners that understand this like attorneys or CPAs. But because they don’t work in that strategic fashion, they’re working more on the documentation side or making sure it’s proper. They’re not willing to offer that advice because it just doesn’t ring a bell.

Duane Mancini : Yeah, I think the example I give can maybe validate a little bit more the importance of that regulatory mixed in with reimbursement at the beginning. And I’ll keep it less, I’ll keep it a little more generic, just not to disclose anything. But, you know, this happens frequently where folks come in, they had a regulatory assessment done by a regulatory consultant. You tell them, hey, this is what I want to do. This is what the product does.

What do you think my regulatory pathway is? And sometimes when it is a 510K, which means you’re looking for a predicate that’s already on the market there, they’ll give you a bunch of ideas and then they’ll tell you which one might be the quickest pathway to market. Well, generally when we come in, we always ask the question, OK, well, what market are you trying to attract? Where can you make the most amount of revenue?

Where’s the margins the best? Where’s the reimbursement the best? And this has happened on a number of occasions where we’ve kind of come in, asked those questions, we do a deep dive into that, and you find out that the product code they were going to go for, it may have been the easiest pathway within the FDA, but the reimbursement was not where they thought it was going to be. And so we actually made a pivot to another product code. And within these product, go ahead, Anthony.

Anthony Codispoti : Yeah, just to clarify, so a particular product code may have helped speed up the approval process in the early FDA stages, but because of the way that insurance reimbursements work, that product code is going to get them a lower reimbursement from the insurance companies than if they had taken a different product code that had a more difficult process of getting approved through the FDA. That’s right.

Duane Mancini : Or they both could have been 510Ks, but maybe they were more testing requirements to Rich’s point earlier that one needed over the other. But within product codes, it’s not just your technolod, like what you’re doing from a technology standpoint. What claims are you trying to make? What’s your indications for use?

What are you treating? And those, if you look up WoonCare, for example, there’s like 28 product codes within WoonCare. They might even be more, but they differ based on some technological features, some types of claims you want to make, and so really meshing those two things together. That’s an area that we just see a lot of companies come to us with their headset on one area and you’re like, this is a bad idea because of this.

Anthony Codispoti : What is shift gears now? And whether it’s personal or professional, I’d like to hear about a serious challenge that each of you guys have overcome. How’d you get through it? What did you learn? How did it help shape you into a better person today? Rich, you want me to go first?

Rich Mazzola : Yeah, I’m sure we probably have the same story.

Duane Mancini : Yeah, I think starting a company at the same time you’re starting a family is difficult on a number of fronts. It’s difficult from a time perspective. It causes strains in a lot of your relationships in your life. And I think figuring out how to navigate that and let people in on your journey is really hard.

At least for me, it was definitely an area I struggled with. And I mean, it strains with your spouse. It strains with other family members. It strains with your co-founders.

It strains with friends. It’s just you don’t have as much time as you used to. And there’s also different stresses that you’ve never felt before. And then when you feel those stresses in another area, you’ve never felt before like becoming a dad for the first time. It is overwhelming to deal with at times and allowing others to come on that journey with you is just different for me at least.

I was generally a person who when I felt stress, I kind of kept it in a little bit. I conceptualized it. I dealt with it and I moved on. But when there’s so much new stress, that’s really difficult to deal with. And then you end up kind of shutting down a little bit.

There were multiple times where my wife, Emily, who’s an absolute saint, she’s the best, she would look at me at dinner and be like, where are you? And it’s like, oh, I’m thinking about how Rich and I got to work with this company or the state of Project MedTech or hiring someone and the stresses that come with that. I mean, it’s just like, it’s very easy for you to not be present and that’s not a good thing.

Anthony Codispoti : So what pathway did you find to letting people into your journey?

Duane Mancini : Talking to them, like letting people in real time, hey, this is what’s happening. And just talking about it out loud with them, seeking help, being okay, talking to people. Like you have, at least for me, I have such a great support system. I have friends that I’ve been friends with for 30 years, right?

Like literally since we were five. Being able to talk to them a little bit, talking to my parents. My wife, 100% all the time, she’s the first one you go to. But then also just a little bit of relying on the other co-founders and executive team members. Rich and I were going through a very similar thing at the same time. And sometimes me and Rich, we definitely have a tendency to just talk about work. And it’s like sometimes you need to take a step back and be like, man, how are you dealing with this right now? And so I think just being aware of that. And I just, I think I was poor at that before, was being aware of how those stresses were affecting me. And talking about them feels a lot better.

Anthony Codispoti : Rich, is this the same story you were going to tap into?

Rich Mazzola : Well, yeah, I think what, Dwayne, your first born was a month old when you went over full time, right?

Duane Mancini : Or was just about to be born? Yeah, this is the second one. Yeah, Julie was born in December of 2020 and Penelope was born in July of 23. So it’s just like, yep. And then my first son was born May of 22 and I joined full time in August, right? So neither of our wives were happy with us. But I think echoing what Dwayne said, I think one of the things that helped us get through this is two things. One is taking solace in, we look at things today and we’re dealing with the pains of everyday growth and this and that and growing pains or whatever you want to call it. But then you look back and you’re like, wow, look at how much we’ve grown this in two years, three years, four years. The pains of yesterday don’t feel as important as the pains today. And so taking that memory and saying, we got over it, you know, tomorrow you won’t feel this, you know, kind of thing. And so that was one.

But two is when you’re having this abundance of stress in multiple different areas, whether it’s personal or work and you’re working with people so closely like Dwayne and Aaron and Jamie and I do, it’s important to under develop communication strategies with those people and understand, you know, the love languages, right? Not that kind of thing. But here it’s more of, I’m a Palmer guy, right? Growing up in Parma, I need to deal with things head on. And if you don’t show emotion on your sleeve, then I think you don’t care. And it’s that kind of thing where it’s like, okay, well, how are you feeling today? What’s going on? So developing that kind of dropping the walls of or having any type of emotional wall is kind of needs to go away because we all need to be very transparent with each other about how things are going. And once that happens, we communicate so much more fluidly.

Duane Mancini : Yeah. And there are so many funny stories of specifically Rich and I with this one where I didn’t realize that, right? I thought, hey, as the CEO, I need to be calm and even keeled and deal the situation in here. And Rich is like, no, I need to see that you care.

Like you have this emotion to it. And so, but that’s, that was like, that’s super helpful now. We both know that, right? And so, yeah, that’s a great example, Rich. I forgot about some of that.

Anthony Codispoti : Yeah. I mean, you guys think about what you put yourselves through. I mean, two of the biggest stressors in life, you guys had happen roughly in the same time period starting a new business. And it was your first business, right? And so you guys had worked in other places before you had a lot of great operational experience, but you’ve never started your own thing from the ground up.

There’s so much in that stage. You didn’t know. You didn’t know what you didn’t know getting into it, right? And so you’re tripping over yourself. You’re making mistakes. You’re trying to figure things out.

It’s frustrating. And then you bring it, you bring a new child into that mix. And it’s, it’s the very same thing. It’s, I don’t know what I’m doing here. I don’t, I don’t know how to help this creature. I don’t know how to help them stop crying.

I don’t know why they’re, you know, up now, why they won’t eat. And, and so, yeah, you’ve sort of layered these two huge life events on top of each other. And it just creates sort of a tornado of emotions. But what I think was great is that you guys had each other, right? And you were, you were going through similar things together. And once you kind of learned to open up, you had that safe human connection there. You know, I think you said it, Dwayne, like, you know, when it’s just rattling around in here, all it’s doing is burrowing a hole in your brain. And when you can sort of give voice to it and bring it out into the open and have somebody else be like, oh, yeah. You know, you have me too. That sucks. It’s like, it doesn’t fix everything, but it deflates some of that pressure that’s been building up inside of you.

Duane Mancini : Yeah, for sure. And I think, you know, the one group too that was key for us is having good advisors, right? Mentors that, you know, you can kind of rely on to say, oh, yeah, we’re working through this right now. And they could say totally, totally understand, right? So it was good to have professional and personal mentors. That’s awesome.

Anthony Codispoti : Gentlemen, I’ve just got one more question for you. But before I ask it, I want to do a couple of things. First of all, everyone listening today, go ahead and hit that follow button on your favorite podcast app. We’ve had a great interview today with Rich and Dwayne from Project MedTech. I want you to continue to get more wonderful content, wonderful interviews like we’ve had today. Rich, Dwayne, I want to let people know the best way to either get in touch with you directly or to follow your story, to learn more about your events, find your podcast, kind of give us the rundown there.

Duane Mancini : Yeah. Projectmedtech.com, great website to go to. That’s where, you know, you can reach out to us through the website. You can see our events. You can, we have 220 episodes of the podcast.

If you want to keyword search something, you can do it on our website. So you can’t do that on Apple or Spotify. We were on Apple and Spotify, but if you want to get all the regulatory episodes and go in there, keyword search regulatory, click on those things. If you want to see, hey, how many times has Rich Missola been on the podcast?

You can do those episodes. And then LinkedIn is a great place to follow us on. We have a YouTube channel as well. In terms of getting ahold of us, we’re both very active on LinkedIn.

Feel free to connect with us and send us a message. And if you want to reach out to Project MedTech, info at projectmedtech.com is a pretty good place to start.

Anthony Codispoti : And we’ll give links to all these resources that Dwayne just mentioned in the show notes. Last question, and this might be the one I’m most looking forward to the answer to. You guys get, you know, a front row seat to a lot of really cool developing technologies. What are some of the either trends that you’re seeing or the specific emerging tech that you’re most excited about?

Rich Mazzola : I’ll take this one first, Dwayne. So I think trend-wise, and we have folks like Sappyrus and Pitchbook come to our events and do quarterly updates all the times. And I think we tend to hear the same things, you know, all that moving in different fashions, but AI, still a big push for AI, surgical robotics, still a big push for surgical robotics. And what both of those are highlighting is the fact that it’s a talent need, right? When we looked at the nursing shortage, the doctor shortage, you know, the same type of quality of clinicians across the United States or the world, having access to an AI engine that is the best in class or having access to a surgeon in New York, providing a surgery in Montana through a surgical robotic system, something like that.

That’s where we’re still seeing a lot of trends come into play and a lot of, I would say, doing correct me if I’m off base here, but a lot of hospital venture groups investing in those areas as well, because they see the need in their own hospital systems. I think from what I get most excited about, and I still do to this day, that’s going to be probably consistent for the foreseeable future, is a simple product treating a complex problem. And I think when you talk about simple products, and I would encourage you to look at Reservant or Coologix, and I’ll do a selfish plug of both, those products. Reservant is a product that’s treating, it’s a skin glue for surgical incisions, right? It’s a simple product that’s not having to use sutures and staples, which have been going on since the millennia, right?

This is a new product, new class of product that is focused on closing incisions and helping with scarring. So that’s a great product I like to focus on. And another product is Bliss, which is Coologix product treating bacterial vaginosis. And it’s a simple product treating a condition that women suffer in silence for, and I think it’s a great product. And my wife has told me I’m not allowed to talk about Coologix product at the dinner table anymore.

So that’s been a new rule in my house. But no, I think the simpler the product, treating a complex problem is something that I always will get excited over. Yeah.

Duane Mancini : Yeah, those are, those are all great. And those are real real life examples too. I’ll stay generic in terms of a space. So Rich talked about the shortage of clinicians, whether it be nurses, doctors, imaging techs, those types of things. I think the other areas that I love to see are products that are helping to take care from the main hospital to either other areas to consume health care or even rural places as well. Because there’s a huge untapped market there to be able to do procedures, imaging, a number of various different things just where people don’t have to travel, you know, an hour to a hospital.

They can do it at a smaller regional hospital or a more rural hospital. Those ones are also really, really interesting. And so anything in that space, I think is pretty cool.

Anthony Codispoti : You know, searchable robotics, AI, fascinating tech. The one I want to actually ask a follow up question on though is the Reservant, the skin glue. Because I know that there are similar products that exist out there. I cut my finger, I don’t know, about a year ago, pretty good. And they were like, ah, and it was right in the nail bed. And they’re like, we could do a stitch. They’re like, but that’s going to be pretty painful in your nail bed. Like we’ve got this skin glue that we can get.

And so we did that instead. And it worked pretty well, but it didn’t keep the wound closed as tightly as it should. Is that sort of what Reservant is doing a better job of? It’s just a better adhesive? Yep.

Rich Mazzola : And so I would promote the fact to go to ReservantMedical.com and watch the graphic. We have a nice animation up there, but that it’s a different type of chemistry. You’re right. There’s a lot of different products out there. This is a silicone based molecule over a rubber based molecule, which is the basis of super glue.

Right. And so silicone based molecules like this, the Sinoacrylate, allow for a more cohesive and cross layered bond, which means it’s going to stay secure longer, create a microbial barrier longer. And so, you know, infections are always a concern with skin glue. Longevity is always a concern with skin glue. And so these are kind of tackling those things.

And I say that simply because I’m not a technical person on the chemistry side, but it’s through that new type of chemistry with the silicone based molecule that changes the game of skin glues. So that’s the big innovation here.

Anthony Codispoti : That’s cool. It’d be fun to have you guys back on in a year or two and hear what kind of advancements have been made and sort of that combo of AI and surgical robotics.

I think a lot of fun advancements coming out. Gentlemen, Rich Duane from Project MedTech. I want to be the first to thank you for sharing both your time and your story with us today. I’m very grateful.

Duane Mancini : Thanks for having us. Thanks for having us, Anthony, and real quick too, because I’ve hosted 220 episodes. Kudos to you as well from just being a great interviewer because that’s not easy and so appreciate it.

Anthony Codispoti : I take those kind words. Thank you, Duane. Nice having both you and Rich on today. Folks, that’s a wrap on another episode of the Inspired Stories podcast. Thanks for learning with us today.