This document discusses resources, activities, and costs for digital health startups. It identifies key resources like physical assets, financing, intellectual property, and human resources. It also discusses revenue sources, costs like operating expenses, fixed vs variable costs, and important metrics like burn rate and cash runway. Key milestones and funding needs are outlined to project timelines and calculate fundraising requirements. The document emphasizes the importance of being metrics-driven and selecting the one metric that matters most to focus the company.

1. Resources, Activities, and Costs
Lean Launchpad: Digital Health
UCSF Entrepreneurship Center!
November 12, 2013
Abhas Gupta, MD!
Mohr Davidow Ventures!
@abhasguptamd

2. Partnerships and Operations!
Revenue and Costs
This Week
This Week
This Week
What are the most important assets required
to make the business model work?!
What are the costs to operate the business model?!
What are the most important metrics for the business?

3. Key Resources
Physical Resources
Financing
Company location, office space,
products/services,
data (virtual)
Friends & family, angels, grants,
institutional venture, corporate
partners, debt financing
Intellectual Resources
Human Resources
Trademarks, copyrights, trade
secrets, contracts, patents
Qualified employees, mentors,
coaches, teachers, advisory board
Physical products/supplies and patents are
often less relevant in digital health

4. BIG IDEA:
Risks, Milestones, & Capital
Seed
<$2MM from friends/
family, angels, micro
VCs, grants!
Series A
$3-7MM from
institutional VCs,
corporate partners!
Series B
$5-15MM from
institutional VCs, growth
equity, and corporate!
!
!
!
Searching for
product/market fit
Supporting initial
customer base
Scaling customers
and products
Investors provide venture capital to create
“enterprise value” and reduce risks

5. Value Creation Milestones
Product /
Technology
Customer
Traction
Revenue and
Costs
Alpha, beta versions!
1st vs. 10th customer
per segment!
Revenue Sources!
!
Value-relevant
functions!
!
Health-economic, ROI,
and outcomes data
!
Repeatable sales
process!
Revenue (monthly/
annual) & forward
projections!
!
!
MUVs, % MoM
Growth rate
COGS & margin
!
These factors among others (team, opportunity, etc.)
help define a company’s value and risk profile

6. How Much To Raise?
Identify Key
Milestones
Calculate
Funding Needs
Project Time
and Costs
2014%
2015%
Q1%
Q2%
Q3%
Q4%
Q1%
Q2%
Milestones)
%
%
%
%
%
%
Alpha%Version%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
Execu=ve%Leadership%
$50K%
$50K%
$50K%
$50K%
$125K%
$125K%
Engineering/Development%
$75K%
$75K%
$75K%
$150K%
$150K%
$200K%
Sales,%Customer%Service,%etc.%
K%
K%
K%
K%
$25K%
$25K%
Other)Expenses)
%
%
%
%
%
%
Rent,%U=li=es,%Etc.%
$10K%
$10K%
$10K%
$10K%
$10K%
$10K%
Equipment%
$10K%
$10K%
$10K%
$10K%
$50K%
$50K%
%
%
%
%
%
%
$145K%
$145K%
$145K%
$220K%
$360K%
$410K%
Beta%Version%
First%10%customers%
Headcount)
Total)Opera6ng)Expenses)
OpEx%
Leave yourself a
6+ month cushion!
!
Balance cost of
capital with security
It takes time to fundraise and even the best laid
plans… so leave yourself a cushion!

7. Fixed & Variable Costs
Examples
Insight
Fixed Costs
(Don’t change
with volume)
Salaries, leases,
insurance, utilities,
hosting, etc.
Fixed > variable costs
for virtual goods/
services
Variable Costs
(Tied to volume)
Product materials/
delivery costs, shipping,
hosting usage, etc.
Calculate unit costs by
dividing total variable
costs by volume
Important Costs Metrics:
Burn Rate = R-C = Negative Monthly Cash Flow!
Runway = Cash Balance / Burn Rate!
Cash Out Date = Today + Runway

8. BIG IDEA:
Value-Driven vs. Cost-Driven
Product Life Cycle
Value-Driven
Focused on delivering on customer
needs/expectations and establishing
brand; non-competitive environment
Cost-Driven
Value-Driven
Cost-Driven
Aggressively manage costs (via
outsourcing, automation, supplier
leverage, etc.); highly competitive
Erecting barriers to competition and leveraging technology to
reduce costs help keep companies profitable over the long term

9. Key Metrics and
Being Data-Driven
Comprehensive
Collection of Metrics
Importance of
Metrics-Driven Culture
!
Identifying meaningful
metrics (“The metrics that
matter”): actionable metrics
> vanity metrics!
!
What’s often meaningful is
the ratio of metrics (i.e.,
LTV/CAC)!
!
Recognize that what’s
relevant changes with time !

10. BIG IDEA:
One Metric That Matters
Tie it to the most important
question you have
?
?
?
?
?
?
Clearly define what success
and failure mean
?
?
?
Shared widely to focus
your company
OMTM
Inspire a culture of
experimentation

11. For Next Week
Identify the Metrics
that Matter (+OMTM)
and Resources Needed
What are you going
to do next?
Diagram the
Finance and Ops
Timeline
2014%
Resources
Needed
2015%
Q1%
Q2%
Q3%
Q4%
Q1%
Q2%
Milestones)
%
%
%
%
%
%
Alpha%Version%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
Execu=ve%Leadership%
Rationale
Define
Success
$50K%
$50K%
$50K%
$50K%
$125K%
$125K%
Engineering/Development%
Beta%Version%
First%10%customers%
Metric A
Headcount)
…
$75K%
$75K%
$75K%
$150K%
$150K%
$200K%
Sales,%Customer%Service,%etc.%
K%
K%
K%
K%
$25K%
$25K%
Other)Expenses)
Metric B
%
%
%
%
%
%
Rent,%U=li=es,%Etc.%
$10K%
$10K%
$10K%
$10K%
$10K%
$10K%
Equipment%
$10K%
$10K%
$10K%
$10K%
$50K%
$50K%
%
%
%
%
%
%
$145K%
$145K%
$145K%
$220K%
$360K%
$410K%
Total)Opera6ng)Expenses)
OpEx%
a) Is entrepreneurship for
you? b) Is your idea worth
pursuing? c) What will
you do next?

12. Resources, Activities, and Costs
Lean Launchpad: Digital Health
UCSF Entrepreneurship Center!
November 12, 2013
Abhas Gupta, MD!
Mohr Davidow Ventures!
@abhasguptamd