How the CEO of the largest medical device accelerator molds medtech startups
If Paul Grand weren’t the CEO of MedTech Innovator, the largest medical device accelerator in the world, he might have been a keychain salesman. Maybe a producer of the “X-Files.” Or even invented Quizlet.
The son of a teacher and a dentist, Grand graduated from selling neighbors keychains and washing cars as a little kid to programming software that made his parents’ lives easier. He created a test question generator, a digital flashcard software called Microflash, and a system to let his dad know which patients were due for teeth cleanings — all while in high school.
He didn’t create Quizlet, or a booming electronic health record business. It was the ’80s, before you could Google “entrepreneurship 101.” His parents weren’t really into the software thing; they saw their son in medicine. Looking back on his adolescence, Grand, now 55, wonders whether having inspiring mentors around him would have made a difference.
“I always used to say, if I grew up in Silicon Valley instead of North Miami Beach, Florida, I would have been a booming entrepreneur at age 16,” Grand told STAT.
Mentorship is the guiding principle of MedTech Innovator, a Los Angeles-based accelerator for early-stage medtech companies that Grand founded in 2013. He started it to empower entrepreneurs discouraged by a funding dry spell precipitated by the 2009 financial crisis, and to fill the void of a medical device-specific accelerator. But his primary motivation? As an investor, he kept meeting medtech founders who made silly mistakes.
“A lot of companies were making mistakes that were avoidable,” Grand said. “You chose the wrong CEO, you worked with the wrong vendor, you designed your clinical trials wrong, your device was too expensive. You name it.”
What started as a startup competition called MedTech Idol at an industry conference is, ten years later, practically an institution. Any new med device founder worth their salt knows to apply to MTI: for the mentorship, but also for exposure to the most powerful companies in the industry. Grand and his team comb through more than a thousand applications each year and narrow the group down to around 50 accelerator companies, culminating in $800,000 in funding, including $350,000 prize for a grand winner. Six hundred twelve companies have gone through MTI, earning $7 billion in follow-up investments.
The organization still has much to prove when it comes to patient impact; its graduated startups are too young to have become lifesaving powerhouses. But 45 have successfully exited, including Hillrom buying heart monitoring startupBardy Diagnostics for $375 million in 2021 and Abbott buying insulin management company BigFoot Medical this past September.
According to participants in the program, Grand’s biggest success is creating a vibrant community of medtech innovators, injecting a youthful spirit into a somewhat bloated, stodgy industry.
“I don’t think there’s a single startup in the medtech space that has not heard of MedTech Innovator,” said CL Tian, founder of sterilization startup Phiex Technologies and 2022 MTI winner. “It’s that prolific.”
“I don’t think there’s a single startup in the medtech space that has not heard of MedTech Innovator. It’s that prolific.”
Grand scratched his entrepreneurial itch in college, helping a friend grow a company called “Movie Munchies” that sold healthy snacks to theaters. Movie Munchies didn’t strike gold, but it led Grand to the entertainment business. He helped produce a show documenting extraterrestrial sightings, building a message board on Compuserve where alien enthusiasts could connect.
That work led Grand to start a company creating websites for movies and studios. He created a series of early internet companies over the years, until the dot-com bubble burst right as he planned to launch an internet advertising platform.
“I finally said, I’ve had enough of this,” Grand said. “I don’t want to keep starting these companies that really aren’t making a difference in the world.”
An oncologist friend introduced Grand to a neurosurgeon looking to start a company treating brain tumors with electromagnetic waves. Thus began Grand’s entry into the medical device world. While raising money for a blood-brain barrier drug delivery company, he found himself drawn to venture capital.
“It’s a really great job because as soon as people find out you have money, everybody wants to talk to you,” Grand said.
He started working for Research Corporation Technologies, a unique VC firm in that its money comes from a 111-year-old fund full of royalties from previous technologies. Unlike other firms, which often rely on outside investors and are beholden to quick exit timelines, RCT had more time to nurture companies and consider pitches.
Grand loved the work, but hated saying no to companies. He remembered all too well the challenges of being a scrappy entrepreneur. When the financial crisis hit in 2009, the funding and by extension, the scrappy entrepreneurs started to disappear. Grand, taking in the scene at the JP Morgan conference in 2013, remarked on this absence to medtech lawyer Casey McGlynn.
“We have to do something to get the innovators to come,” Grand said. “What if we did a contest and put the innovators up in a competition of some kind?”
McGlynn told Grand he would give him an hour at the end of the 2013 Wilson Sonsini Medical Device conference to run the competition. Grand called it MedTech Idol, and it became an instant hit on the device conference circuit.
“Everything was so doomy and gloomy back then,” Grand said. “Then we had MedTech Idol, which was fun.”
One cease and desist letter from “American Idol” and 10 years later, MedTech Idol has become MedTech Innovator. The culminating, crucial event is a final pitch contest at the MedTech Conference, the ultimate industry event hosted by device lobby AdvaMed. Five companies pitch in front of a live audience, while Grand MCs.
The sun slowly set on the first evening of the MedTech Conference in Anaheimlast month, semi-blinding the innovators gathering on the Hilton’s roof. One could just barely make out Grand bobbing and weaving through the crowd, chatting and introducing and handing people drinks.
After a year of intense mentorship and pitching and travel, the grand winner was to be announced the following night. The mood was celebratory and unpretentious; it gave off the vibe of a family reunion.
“You think you’re going to be competitive and somebody has to be the winner,” said Ellington West, CEO of respiratory monitoring company Sonavi Labs and member of the 2023 cohort. “Instead, it was a Greek life moment, where you realize, these are my people. They understand and see me in a way that I thought I was like, isolated and alone and crazy.”
This is a conscious effort on the part of Grand and his team, who organized the first hour of the Hilton reception to be just for women before adding men from the cohort into the mix. The atmosphere is not meant to be cutthroat; it’s meant to be welcoming. Natasha Bond, an MTI judge and “fairy godmother” of the accelerator according to one founder, recalled karaoke nights and a birthday cake celebration in the Trinity College Library in Dublin, where food is not typically allowed.
That’s not to say Grand and other mentors are easy on the founders. Almost all of the participants STAT spoke with had applied to the accelerator multiple times. West gave an impassioned pitch in 2021 to become one of the chosen accelerator companies, only to be dressed down by a “tough cookie of a judge.”
“World-renowned reimbursement expert Leslie Wise called us out and recognized every single hole that we had,” West said. “Totally annihilated everything that came out of my mouth. I was mortified.”
The moment ended up being a boon for West’s company, though, as Wise became her mentor and guided her to a feasible reimbursement strategy. West applied again, earning a spot in the accelerator.
Reimbursement tends to be a common stumbling block for founders, Grand said, and a major reason some companies are rejected. Grand only chooses companies that clearly show potential patient benefit, and that MTI’s corporate partners want to work with.
MedTech Innovator partners with, and is funded by, a host of large medtech companies. Johnson & Johnson was the original sponsor, but Baxter, BD, and others quickly joined the ranks. Executives from those companies judge the pitch competition and work closely with founders. Sometimes, they even acquire the startups they nurtured. Joe Smith, chief scientific officer for BD, found Grand’s approach and the group of innovators special from the start.
“I liked his sensitivity to the fledgling entrepreneur and his ability to put rather seasoned people back in their spot,” Smith said.
Kathryn Zavala, MTI’s COO, said Grand has an incredible Rolodex from his days as a venture capitalist. He knows everybody, and is eager to connect them with each other. His optimism is relentless, Zavala said, even when MTI lost BD as a sponsor (the company eventually came back).
“Paul is always looking at the glass half full,” Zavala said. “Never trying to find blame, really looking at what is the issue and how do we fix it.”
Alex Ballatori, CEO of stroke diagnosis company StrokeDx, was shocked by how available Grand made himself to founders for advice. His company won the grand 2023 prize after squaring up against four other companies on the main stage at AdvaMed. The competition was fierce, with one company developing a custom finger prosthetic and another repairing nerves with silk. Just days after winning, Ballatori answered messages from investors he’d previously been unable to book meetings with.
“It brings the entire industry one or two degrees closer to you as a founder,” Tian, last year’s MTI winner, said. “I had maybe 200 meetings with customers, investors, manufacturers that arose out of the four months with MedTech Innovator.”
The Grand vision for MedTech Innovator is to create a shift in the larger medtech funding ecosystem. Medical device deals — when early investors are able to exit — are smaller and less frequent compared to the biotech and digital health industries, where financial returns are greater and faster. The median pharma deal was $513 million in 2021, according to Deloitte. Medtech’s median deal was $268 million.
Grand acknowledged that dynamic is unlikely to change unless medtech company exit values reach the billions. But one of his moonshot goals is to generate that potential for early medtech startups. He believes medtech fundraising shouldn’t be as hard as it is, where founders can spend six months scrounging for $2 million.
“The next AI startup, with no revenue and really, no idea how they’re ever going to make money, is already a $3 billion company,” Grand said. “Yet a medtech company that’s going to allow people to avoid an early death from something that’s preventable is valued at 400 million.”
Like most in the industry, Grand is frequently frustrated by Medicare’s reimbursement process for breakthrough devices. He wants the agency to be more transparent about what data is required for positive coverage decisions. The current structure sets many up for failure, he said. Getting clear signals from the Centers for Medicare and Medicaid and passing them on to the accelerator is his other moonshot.
“How do we provide, through MedTech Innovator, a glide path or a framework for innovators to get to payment as early as possible?” Grand said.
Squeezing those goals into his day-to-day is a challenge, as the meetings tend to pile up. He’ll typically schedule three calls with founders and one call with an industry partner, devoting the rest of the day to answering emails from interested applicants or future sponsors. He’ll lend his ear to stakeholders across the industry.
The next few months are a bit of a respite from this busy schedule, as Grand, Zavala and the 20-person MTI team wait for the 2024 applications to roll in. But soon enough it will be time for Grand to act as MC on AdvaMed’s main stage again, channeling his high school days as an extemporaneous debater.
Bond, one of the early MedTech Innovator mentors, said Grand’s immense passion for the accelerator became clear to her while observing him backstage at an early competition. Some audio or visual component wasn’t working properly, and the founders were bouncing around with nerves. Grand, who Bond says was likely running on very little sleep, kept it together nonetheless.
“This was his baby and it mattered and he cared,” Bond said. “I think that’s why it works.”
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