Alex Forshey - Revival Healthcare

[00:00:00] Alex: And you also have to understand that when you talk about family offices, where did the money come from? How did they generate their wealth? What's their background? What are the capabilities of an individual family office? Did they have a full investment team or is it a few people in the family who are allocating out to people who allocate?

[00:00:20] There, there's another overlay when they start thinking about generational wealth and the decision and what that's going to impact down the line, right?

[00:00:27] So for them, like the risk of permanent loss of capital in a lot of cases is significantly worse than missing out on, some return in the near term. Something that's stuck with me and having that sort of, overlay, would you want to own this forever potentially? You've got to put yourself in the mindset of somebody who's, investment horizon might be 10, 20 years out. That's an interesting sort of difference, I think, within family offices.

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[00:00:52] Giovanni Lauricella: Welcome to the MedTech startup. Podcast. We're here at TMCI, and we're about to tell an investor story and get inside the head, the heart, the guts of a MedTech investor. So we have with us today Alex Forshey, who is the partner over at Revival Healthcare Capital. I want to say thank you very much for giving your time to us, and we'll start off with a nice Texas cheers.

[00:01:20] Perfect. Thanks for joining us. Thanks for having me here. So I think for the audience, I, right? To start building on the concrete of the story that we're gonna get out of you on being an investor and you're based here in Houston, but we'll talk about where Revival's based and what you guys do. We first want to learn about you. So who is Alex Forshey?

[00:01:37] Were you born? Were you bred? Were you built your life, your academic life, your professional life leading up to being a Partner at Revival Healthcare Capital and then we'll get into what is RHC after you're done. So who are you?

[00:01:50] Alex: Sounds great.

[00:01:51] Thanks again for having me here. It's a pleasure. I was born here in Houston.

[00:01:54] Alex: So I'm a Texan moved to Dallas when I was younger and then just started migrating south. So I did my undergraduate work at Texas A& M. Studied finance and graduated 07, which was a really exciting time to go into finance, if everybody remembers. And and coming out in 07, I really made a big bet, which, I came down to Houston mostly because this real good looking girl who I was dating at the time was coming here.

[00:02:20] That was my decision criteria. So I ended up in Houston and it was a good bet. She's now my wife, got three kids. So I ended up coming down to Houston and working with a small company, initially doing some trading. And thenmy sister, who worked for a health care VC out of Austin introduced me to the CFO of a family office down here and it was great introduction, everything just seemed to fit So I made the move over to that family office and joined them and I don't know how much you know about family office platforms but they're all so different and this was this is no different than that when you go in and you see just the variety of things that they're involved in and so I initially was working with their real estate team but ended up working across the entire portfolio.

[00:03:03] It was a fantastic experience, just, wonderful family here in town, it's a large office, they had a lot of capabilities but like I said, we covered everything from real estate investments in infrastructure, oil and gas, both direct and through funds, public equities and debt, really anything but that family was also the sponsor of the Venture capital firm at Austin on the healthcare side.

[00:03:26] So they were, they had started the fund They'd gone out and found managers and brought them in and so from time to time part of their model was to do co-investments And so we would look at deals at the family office alongside them. So that was you know, one of the first interactions with what at the time I believe was PTV Sciences then PTV Healthcare Capital and that's how that evolved. While I was working at the family office, I could spend a lot of time talking about it.

[00:03:51] I actually did my MBA at Rice, which was, a great experience. And when you're actively looking at investments and companies, it's a really great adjunct to do that kind of thing. But after that I ended up making a move to investment banking.

[00:04:05] it was a experience I could recommend or depending on your demeanor, I might not, but ultimately just great experience, but, it didn't really give me the fulfillment of, really allocating capital and building businesses in the sense of, the way an investor might approach it.

[00:04:20] So I was really looking to get back onto the investment capital allocation side. And, it was very fortuitous, but around 2018, my sister And one of her partners decided to start what is now Revival. And this was at the inception stage, and so my choices were pretty, it was pretty obvious.

[00:04:38] It was like let's do more, some more investment banking. Or, you can come take a flyer and we'll start this, MedTech focused investment firm. And there was a deal in the chamber that, we were working on at the time. Look, at the end of the day, you don't really get a lot of opportunities to go do something that's in the sense that you want to go, change back to investing. It was a, a new really area for me. It wasn't one that I had focused on necessarily MedTech up until that point, I'd had some exposure to healthcare when I was at rice, and even a and M they have the student run investment funds, which I'd participated in both and covered healthcare both times I was there at some point.

[00:05:11] But to be able to do something entrepreneurial and something new, and also to get to do it with family, was a unique opportunity. That's what landed me at Revival.

[00:05:19] Giovanni Lauricella: That's so cool. I'm a lot to pull out from that, and I'm going to do it in a second, but what I want to do is now get the Revival story.

[00:05:25] So here we are, Revival exists, you guys have a fund, you guys are deploying capital. Sure. There's an investment thesis. Tell us about Revival.

[00:05:34] Alex: Yeah. The best way to think about Revival is a flexible capital platform. Revival as I said, the prior group at PTV had brought a lot of what they liked about the prior experience there and brought it to Revival.

[00:05:50] But, we refined that into what we are today. And today we're a group of operators and investors. So we have people on our team who are. Deep operating experience type folks. 30 plus years MedTech executives have started companies and run big companies. And then you have people like mewho exclusively are focused on investments or have finance backgrounds.

[00:06:11] And so our platform operates and really only focuses on within MedTech. We only focus on medical device and diagnostics. So we don't do the software, health tech and don't get into the molecules, anything like that. And we operate through three different sort of verticals. The first of which is growth equity.

[00:06:31] Your traditional bread and butter, investing. This is commercial stage businesses. In this bucket, we're looking at companies that have some commercial experience. Love to see five million in run rate revenue. Everybody would. But usually, the key there is, it's really retired a lot of the clinical and technical risk and approval risk that you might see in, something earlier.

[00:06:50] And so we'll invest there and we're typically a minority in terms of ownership, but we usually have, board represent, board representation and outsized control versus our ownership. The next sort of area we look at and this kind of goes back to some of the prior experience, but we have a strategic growth partnership, which I'll come back to.

[00:07:09] And then we also have what we call kind of special situations and. The first deal I alluded to was one of those that sort of brought me in initially. We didn't ultimately get that deal, but those are interesting. They're few and far between, but something representative might be a corporate carveout, uh, where we get a call from somebody to come in to look at a business they may want to carve out.

[00:07:29] It might be a tactical capital investment into a public company, which we've looked at several of those. And that's convertible preferred to a public company. Things like that. So kind of those things. And then lastly, the strategic growth partnership, which we've raised the 500 million fund behind this is really, we internally call it build to buy, but what this is focused, focused on is, working with founders, and strategics in partnership to create these sort of bespoke investment partnerships that benefit all the parties and probably best to give an example of how that works.

[00:08:04] But so these are usually larger programs. If you think about the ecosystem, building a company from an early stage, taking it all the way through commercialization or an acquisition is usually pretty expensive. So necessitates the size of the fund, right? And these are larger checks, longer term commitments.

[00:08:20] And for us, when you're thinking about it from each individual perspective, for the founders, the worst thing that they have to do is go out and fundraise, right? So we can provide, for them sort of certainty of, being capitalized through the necessary milestones and the way that we would align them with the strategic, right?

[00:08:38] The unique thing about this is the way that these typically come to us is they got to come from the strategics. Part of, what we know and our team's got a lot of experience in big MedTech is these guys know the market better than everybody else. They know where they want to be, where it's going to go.

[00:08:53] And, they've got the capabilities to, build markets and do these things. But they've got a lot of demands on their capital. So what this enables us to do is work with them to, for example, if they've got this company that they know fills a spot in their portfolio, But it's just too early for them, and, VC, everybody hears you're just too early all the time.

[00:09:13] We can bridge that for them. Say, okay we'll work with you, we'll capitalize this program, minimize their capital outlay at the strategic. Maybe lets them utilize some cash on their balance sheet, right? Which, doesn't hit the P& L necessarily right away. But it allows them to leverage their business.

[00:09:29] And what we can do is and here, there's benefits down the road as well, but when you build a company in that type of partnership, the typical route of, acquiring something in the open market, maybe in a bid process, this can ultimately be less expensive for them for the strategic, right?

[00:09:47] So they're getting something that's tailor made for them. So mapping systems and other things over that might otherwise require a lot of time and investment post acquisition. So you can solve a lot of that stuff on the front end. But ultimately, everybody comes out better off, and what we like to do is and these can be in, varying flavors, but sometimes they can be completely structured on the front end and other times, not necessarily quite so prescribed, but that's the nature of it, it's a tri party negotiation it's a complex deal and every single one of them is, bespoke for the strategic's needs.

[00:10:20] Giovanni Lauricella: There's so many questions I want to ask you, I gotta figure out where I'm gonna go and how many questions in a row I can ask on everything from your background to Revival.

[00:10:29] Alex: Sounds like I should sit back.

[00:10:30] Giovanni Lauricella: Yeah, now it's your turn to drink beer. With regards to a $500 million dollar first fund, it's fund one.

[00:10:40] Typically speaking, when you hear first funds becoming first funds, It's a $10 million fund, a $50 million fund, something smaller, right?

[00:10:49] Alex: Sure.

[00:10:50] Giovanni Lauricella: Was the ability to land that larger round based on the premise of who was coming in as the partners with their previous experience in venture? Or how do you just go off and sell that we're going to do this tri party negotiation with this very unique platform?

[00:11:04] We're not a typical institutional venture capital that you might think we are. How does that work?

[00:11:09] Alex: Yeah, so again, going back to the idea behind that particular strategy because we're fully funding these programs, right? And, for example, call it a 50 to 100 million dollar kind of program to get a company from, early stage all the way through a commercial milestone or a milestone where a strategic might be able to buy them.

[00:11:29] So just merely the type of program necessitated a larger fund. Okay. And we had a deal that we were working on at the time and one of the partners we'd been introduced with actually through a special situation that we were working on, ultimately didn't consummate, but that we were working on we, we kept in dialogue and this really just became a really interesting idea that we evolved and were able to execute on it and put this sort of, structure behind it to support this going forward programmatically.

[00:12:00] Giovanni Lauricella: So we like to use this platform as an educational piece.

[00:12:03] And if we think about a bunch of medical device entrepreneurs in the room that are listening into the varying forms of potential investors that are out there. Angel groups, family offices, which I know you're a specialist in, which we'll come back to. And now classical institutional funds. And now you have a platform, which is quite unique.

[00:12:21] Would you call yourself VC or PE? Private Equity.

[00:12:25] I'll go back and say the growth equity we're very much private equity there. It's commercial, risk that we're typically taking same thing with your sort of special situations. You're talking about usually something that's larger with the strategic growth partnerships because of the type of agreements that we have, we're allowed we're able to be very stage agnostic.

[00:12:43] Alex: So I would say that's the one area where, We might be looking at something that's pre first in man, whereas everything else is very much a commercial strategy. So we have a lot of ability to navigate that based on the way that we structure those partnerships.

[00:12:57] Giovanni Lauricella: So then on the platform or the middle option piece where you can come in earlier, I'm gonna use a hypothetical situation.

[00:13:05] Alex: Sure.

[00:13:06] Giovanni Lauricella: There is a hot market in a medical device development and Boston Scientific There's maybe, we'll call it five to seven players that are innovating in the space. And Boston Scientific has their hearts set on one of them. They bring that deal to you. And then you basically shepherd that deal along until it's possible that Boston takes it out.

[00:13:35] That's a pretty... Yeah, that's a pretty like bridge way to talk about it. But a lot of things happen in between. But at the end of the day, you have to have, so from the strategic perspective, it has to be, an important market to them. And, you'll, you find out that it's sometimes it's very obvious, right?

[00:13:53] Alex: You know what it is, what they're solving for. And so we really like to understand that from their perspective, from a company's perspective if say, Boston Scientific, for example, is, bringing them to us and making the introduction and saying this is what we'd like to do. Yeah, the interaction might go through a negotiation process.

[00:14:11] So there's a couple things that might happen. It might be such a massive market and they're so far along that maybe they don't want to have a predetermined outcome potentially. Maybe they think it's too big and they'd rather have the option to go run an option, an auction process later. So that might not be a fit.

[00:14:26] So all of this ends up being negotiated and really, at the end of the day, it does have to be a fit for everybody. From a company standpoint, you're thinking from a founder standpoint, how could you access something like this? Yeah. Yeah, and it really goes back to, first principles and, when you're doing something in, in MedTech, right?

[00:14:43] It's got to be something that's innovative. It's got to be disruptive, potentially. And, it can't be a, a tool looking for a problem, right? Yeah. It's got to have a clear need that's out there. And I think all those things, it just goes back to building great businesses.

[00:14:58] And, a lot of times we see, we see companies that are like me too. It's the world doesn't need another pedicle screw kind of thing. But then you see these other companies that are truly innovative and disruptive. And that's where we see a lot of the focus.

[00:15:13] The other side of it is, for big companies who are in competitive spaces, they sometimes have competitive needs just to, keep what they've got. I've got to add something to their bag, whatever it might be. And that from a, from that company's perspective might be highly strategic.

[00:15:28] Giovanni Lauricella: In picking up on the phrase that you used earlier, you said build to buy. Once again, staying on this educational aspect, what does that mean in medtech?

[00:15:39] Alex: Yeah, at the end of the day, we didn't really invent this concept. They've been doing it in pharma for a long time, if you think about it, where small co's partner with capital sources and they shepherd along things, ultimately be acquired by large co, right?

[00:15:51] And most simplistic way to think about it. But the decision framework, if you think about it, the building part is the idea that you know, we can leverage our capital rather than, say, the strategic having to run it as an in house R& D, right? Our capital is being spent in real time versus their P& L being hit every year by additional R& D.

[00:16:12] That's us on the build side. And these are typically, like I said, large programs, large checks. We typically have control here. A lot of hands on work. We have the ability, just given our, Partnerships and our partners experience to if somebody needed to, drop in and actually act as a CEO, they could right.

[00:16:30] We have people with those capabilities. And so really, what we do is we bring resources to actually if you think about it from like large strategic, that's got a lot of red tape, just within the organization, we effectively can run this like with more of a startup mentality off of their program. But have it tailored to bring back in.

[00:16:50] Giovanni Lauricella: And simply to wrap my head around it. You mentioned it earlier about coming from an entrepreneur's perspective all these entrepreneurs who are currently raising capital right now in all their various capacities. Yeah, and they hear about this model of. While there's an investor out there who works with strategics who could possibly help grow us and then shepherd us along, right?

[00:17:09] is even a side where they can put their hand up and pick me or is it literally coming? From the top down there. One of these big guys has to be able to share the opportunity with you.

[00:17:18] Alex: Yeah, I think it's a key part of how we think about this, because again, these guys know their markets better than anybody.

[00:17:24] So J&J Boston Scientific and Edwards, they're, they're experts in what they're doing. And I think for an entrepreneur, it is really important to have those touch points with strategics, right? And part of that interaction, really understanding, where you might fit.

[00:17:37] I think some of that naturally evolves, but, at the end of the day, we don't pitch them to strategics, and that's a principle of ours.

[00:17:44] Giovanni Lauricella: And, once again, to wrap my head around it, you can go earlier than first in man on some of these deals, right? If they're brought to you early enough, or mid stage enough, or even later stage it's pretty much almost stage agnostic as long as the deal's brought to you.

[00:17:56] Alex: Yeah, absolutely. And it's all, and the premise there is the structure really matters after that. So the actual sort of nuts and bolts of what we do, but and putting the deal together, but that's interesting.

[00:18:08] Giovanni Lauricella: So how many deals have you guys done so far?

[00:18:11] Alex: So we have we've done four deals as Revival.

[00:18:14] One of them is a, pure growth equity. And then the other three are within the build to buy structure. Cool. The growth equity deal super interesting. It's augmented reality technology for, spine surgery. Called LogMedX out of Chicago. Originally technology from Israel. Very interesting.

[00:18:32] Giovanni Lauricella: I want to touch on the, I don't know if it's dichotomy, but the possible parallels between being a startup, raising capital from a typical angel group or a VC, versus a VC raising capital and philosophically or objectively speaking over the past, let's call it year. It's a pretty tough and I want to dovetail this conversation into your insights as to how family offices work. So VC is raising capital, raising funds and then having to deploy that in startups. We've heard about the bloodbath over the past year or so of startups having to raise capital at various stages. We've also heard about the fact that funds are more difficult to be closed. Your finance background, your family office background, what's been going on and is it challenging for VCs to raise capital right now?

[00:19:21] By all accounts I've heard that it's been, certainly when you go back a full year, it's been really difficult. I think there's a lot of things that factor into the fundraising environment. When you think of it all from a large capital allocator standpoint, markets corrected wildly in 22 on the public side, but private markets don't respond as quickly, right? So you had this sort of mismatch where people look like they were over allocated on private investments Even though if you really did them if you had a daily mark to market on those, you know It would look different.

[00:19:50] Alex: So I think there was definitely some capital allocation decisions, and constraints that were beating into that But there's also some just general uncertainty. I think that's impacting both people's desire to put capital out And actually commit capital. Everybody's talked about, the sort of unprecedented, 400 plus basis point raise in 22 interest rates than another 100 this year.

[00:20:11] If you think about that, you just change something that had been true for the past 14 years when interest rates were effectively zero, which is there is an alternative. And in the face of uncertainty, people could sit there in cash and earn a reasonable return. All of a sudden, it was cash isn't trash anymore.

[00:20:26] But yeah. And to dovetail that into the family office concept, that's, the ability to wait for the right pitch is a superpower of, I think, some really great investors. And I think institutions who don't have to do things, and have the ability to hold, they, they really take advantage of that in times like these.

[00:20:43] Giovanni Lauricella: And if you're a family office, it doesn't necessarily affect your lifestyle, right? So when the world comes crashing to the end and you have alternatives where you can gain bigger basis points in a bank account versus deploying in a risky asset, that is what you're talking about, right?

[00:20:56] Alex: Yeah, absolutely. For a family office who, they make investment decisions like the rest of us do, but then there, there's another overlay when they start thinking about generational wealth and the decision and what that's going to impact down the line, right?

[00:21:07] So for them, like the risk of permanent loss of capital in a lot of cases is significantly worse than missing out on, some return in the near term. If you have the ability and, like the Allah Ted Williams wait for the pitch, you can hit I think that's something that's stuck with me and having that sort of, overlay of if you're looking at an investment, would you want to own this forever potentially? You've got to put yourself in the mindset of somebody who's, investment horizon might not be the life of your fund, but maybe three of your funds or four of your funds, right? 10, 20 years out. That's an interesting sort of difference, I think, within family offices.

[00:21:43] And you also have to understand that when you talk about family offices, where did the money come from? How did they generate their wealth? What's their background? What are the capabilities of an individual family office? Did they have a full investment team or is it a few people in the family who are allocating out to people who allocate?

[00:21:59] So there's a lot that goes into it.

[00:22:02] Giovanni Lauricella: And there's likely not a silver bullet answer here, but if we spend more time on family offices, it sounds like they can come in any shape, size, color.

[00:22:09] Alex: Absolutely.

[00:22:11] Giovanni Lauricella: If you're a medical device startup company and you're looking to raise capital and you have your angel groups, you have your institutional venture capital, but there is this silent money group, if you will, called family offices.

[00:22:25] Is there a way to prepare for that? How do you find them? Is it all through networking? Do you have to meet them at cocktail parties? And then, even when you finally do get a chance and a shot at them, they literally all act differently?

[00:22:37] Alex: It's a really tight group. It's a really difficult group to get into.

[00:22:42] And if you think about it, the family office has evolved quite a bit. At its core, family offices are wealth preservation vehicles, right? Wealth transfer, preservation, and growth. If you look at stats third generation most wealth is gone, right? That was created. And for a lot of these large families, institutionalizing has been something that's been a focus.

[00:23:03] And the result of that has been these interesting investment platforms, I think. And the group I worked with, what, you know, I in my view, they were, they're fantastic people. They're really smart, but they created a really interesting structure and it allowed them to be, really patient long term investors and still serve everybody's needs.

[00:23:20] And I think that's really important when you consider approaching a family office is really understanding who you're talking to. So to answer your question, yes, they're all very different. You really have to understand what they do, what they like to do or. What they don't do I've run across family offices who strictly speaking will not put a dollar into health care because they view their philanthropic giving is sort of their allegation, right?

[00:23:43] That's how they do health care. And that's their choice, right? And that's how they like to do things. But, there are others who do. Maybe the, I think I'm trying to think of one specifically, but I'm pretty sure the founders of the patriarchs a surgeon, so they do a lot of health care and it just varies.

[00:23:59] But, the levels of institutionalization also matter because when it's just, a few people, then I think the decision making potentially is less institutional, but when they have built a platform. It starts to look a lot more like one of your capital allocators from like a pension or other institution.

[00:24:17] Giovanni Lauricella: So when you hear these one liners, and there's a difference or a line to toe between philanthropy or impact investing at times. And you have these family offices that are 100 million, 500 million. And the patriarch passes away of heart failure. And whether or not there's an investment team in place or they're dealing directly with the family.

[00:24:40] There's a heart failure technology that pitches them, however they get to them, and they're raising a seed round, or a series A, and they throw them a million dollars. Or maybe it's two million dollars, three million dollars. But, in medical device, whether it's a 2x to call it 5x, if they turn that two million into ten million with a 5x return, and you have a five hundred million dollar family office, it really doesn't move the needle. When you're a medical device startup company raising from a family office, and you hear this I'm trying to move forward heart failure technology because the father of our family passed away from it. Is that impact investing? Is that philanthropy because they don't really care about if the money comes back in those quantities?

[00:25:24] Or when does the preservation come in versus the, I'm trying to foment science?

[00:25:30] Alex: Yeah I think what you're talking about. It totally makes sense. It's a really, it's a really interesting question when you think about, if from, the perspective of, not having 500 million, right?

[00:25:40] That's personally mine. So if you were, doling that out because, something had happened and you were supporting that, as a mission, I totally think that would, that does walk a very interesting line between philanthropy and, I think the mindset's definitely philanthropic, whether or not it comes back, being irrelevant in that case.

[00:25:56] But I think that, a lot of times, and we've even seen it amongst our team where folks have, had their parents or other health issues and, you do take a little bit harder to look at those things. So I think there is a tendency, once a problem gets close to you to pay a little bit more attention to it.

[00:26:12] And that, that may be what draws somebody into MedTech, but. I do think there's something virtuous about the ecosystem itself. You're, from my perspective having spent time across other industries I get a different sense as an investor in this industry than I did say in, oil and gas, right?

[00:26:29] Punching holes in the ground is a little different than, what we do here and potentially saving a life or something like that through, an investment in a startup. So I think it's important to consider all those things. It, but it's very interesting when you think about the impact investing and that's become a buzz thing, recently, and a lot of people are thinking about that but I think that might just be a mindset shift, potentially generationally for if you talk to younger and younger folks, like more and more people are, first and foremost, looking to have an impact as opposed to just go, get a job or build wealth, whatever it might be. So I think that might be a broader theme. I guess stay tuned to that. But I think if that is the case MedTech's definitely, in the right area to benefit from that sort of, wave.

[00:27:10] Giovanni Lauricella: I wanted to come back to a question on your build to buys strategy, but also just in general, Revival's focus on investing in healthcare and medical device. Is investing in MedTech luck or effort?

[00:27:24] Alex: It's a really interesting question. It's a good one. I think there's always, A friend of mine has this really great painting over his desk. It says, the harder you work, the luckier you get. And there's a school of thought around all that, right?

[00:27:38] You make your own luck and all that. I think luck, to me more means timing in a lot of cases. It's timing and chance of, maybe meeting the right person at the right time. So when you think about investing in MedTech, like you can't go build something in a dark room and raise the money off the phone and in a dark room, by yourself, you have to be out.

[00:27:58] You have to be connected. Really, be a part of that ecosystem. And so I think, there is a, there's certainly a component of you've actually got to put in the effort to do that. If you're a founder, for sure. Yeah. And to be connected to folks like us because there's a lot of great companies out there that I'm sure we've never heard of, right?

[00:28:18] And so everybody actually trying to find one another is I think probably an age old problem amongst, folks with capital and folks, who need capital for an idea. But but I think the effort part of that from, founder perspective, definitely there's massive effort part of that.

[00:28:33] And the luck part about, it's the right encounter at the right time. For us it might be and, I guess maybe more traditionally for VC, if you have a fund, right? You can have, other than investment criteria, make a decision for you, right? You might have a fantastic investment, but for whatever reason you can't do it, because you have other constraints.

[00:28:50] So I think, that's the sort of thing that I would equate to, luck really playing a hand, having a hand in it. It's just who you might run across at what time. But I think in terms of. understanding, you know what you're actually making an investment in from my perspective, it's not a let me make 10 bets and hope to work out like I think the way that we interrogate and due diligence.

[00:29:10] We're focused on making sure we're making the right call and we're swinging at the right pitches. So I think we try to minimize the chance factor as much as we can. But, we've all lived through, most recently something that nobody's not coming with like a COVID or there's things that can disrupt you, externalities that can happen.

[00:29:27] We're having a trifecta of it right now with, government shutdowns and, all kinds of things looming all at once and, you can't necessarily guard against everything. I think I see chance and, the luck concept is more of a timing and externality concept, but, you just have to be aware of it. Cause it can go. Luck can be good luck or bad luck.

[00:29:48] Giovanni Lauricella: I wanted to understand your background. You mentioned that you were an investment banker. Does being an investment banker make you a better investor?

[00:29:58] Alex: I think it, I think it certainly does. From a toolkit perspective, and just from, an understanding of, how things work in a lot of cases.

[00:30:07] If you've never sat on that side you may not. Have seen like an IPO get done or an actual M& A transaction, like how it gets done. So I think, yeah it's absolutely, it's an education that you can't get any way else, I think. But to go and actually do it I think the one thing that's difficult about it the pace of what you do in a lot of cases, it's not it's not the same as investing.

[00:30:30] It's more transaction oriented versus, in, in my view, investing is a little bit more contemplative. So you have to spend more time really thinking and understanding because ultimately, you're putting the capital at risk, whereas from the banker's perspective, they're not necessarily putting capital at risk.

[00:30:46] So I, I see the mindset is different just from a risk perspective.

[00:30:49] Giovanni Lauricella: And as it, does it truly entail the a hundred hour weeks?

[00:30:52] Alex: Oh yeah, absolutely. Every, everybody has at least one of those. Yeah. Anybody who has kids or has, been a lawyer in banking probably,

[00:31:01] Giovanni Lauricella: I wanted to spend some time. We're here right now at Texas Medical Center Innovation TMCI in Houston.

[00:31:08] You're born in Houston, raised in Dallas, eventually made it back down south. You're here right now. Technically speaking, RHC is headquartered out of Austin, but nevertheless Texas based. When it comes to Houston and it comes to Texas and MedTech, where do you see this falling on the spectrum? What resources does Houston have?

[00:31:30] What resources of Texas have, is it a Boston? Is it a California? Is it a Minnesota? What's great about it? And what could we also work to

[00:31:38] improve on it?

[00:31:39] Alex: That's a great question. And I, I really the, I like the setup. If you think about Texas just from a macro perspective for, even before COVID, but COVID certainly accelerated the idea.

[00:31:49] There's a lot of people coming here for a lot of reasons. It's a, a pretty business friendly state. It's a humongous economy unto itself. It's a really big economy. We've got fantastic academic institutions. We have places like this that are, nascent in the sense that, we don't have, a dozen of them like Y Combinator type things everywhere.

[00:32:07] But we're starting to build this ecosystem and I would say the table is set for Texas to be a really important hub for, both innovation and for, VC and, and private equity in terms of medical technology and other. So again, the Med Center, just a stone's throw from where we are.

[00:32:26] We're basically there. It's like the fourth downtown of Houston, if you think about it. And so just the amount of, innovation that's happening somewhere, within a couple hundred yards where we are, we know that's happening, but right now there's not really a focus in the investment ecosystem.

[00:32:41] I would say on that type of investment here in Houston. I think if you look at a lot of the venture capital here in Houston, a lot of it is focused on tech, but the tech might be, your traditional software. A lot of it's focused on clean energy tech, right? And Houston's an energy city. So if you look at a lot of other private equity and whatnot, it's focused on, traditional Houston businesses around oil and gas, real estate, logistics.

[00:33:05] It's a port city, so we've got, massive logistics hubs here as well. But I think the table's really set for, the ecosystem here to grow. And I think that places like , TMCI here, and the what the guys at Capital Factory are doing also is great because I think a lot of it just has to do with bringing people together.

[00:33:24] Again, if, there's folks with capital and, I, there's a business that I haven't met, I, how do I bridge that except for, the opportunity to meet people like this in a forum like this,

[00:33:33] Giovanni Lauricella: And then do you have a feeling that on this trajectory of growth and building this ecosystem, additional venture capitalists, a more educated angel base that's consistently growing. Because certainly the innovations here. We've also talked about and conversations have been going around about there's great talent here. But the executive management piece could get a little bit of an uptick that will happen with time. So there's a couple of pieces that there could be improved upon. But it seems that inertia is. It's already happening and it's in play and Houston's on the map and Texas is on the map. Do you foresee Texas and Houston being in that, that identifiable spectrum of major MedTech hubs in 10 years from now or less?

[00:34:19] Alex: I really think that's very possible. And I think if you look at the triangle of kind of the Austin, San Antonio, Houston as well Austin's attracted a massive amount of just technology companies, Google and others coming out of California. And I think a lot of what's happening in medtech is really an intersection of technology with, traditional medical devices and other things.

[00:34:39] I think there's a lot of exciting things going on there. And, it's not lost on me that, innovation's been happening, out of the UT system, particularly near Austin for a long time. Dr. Palmaz has brought the stint out of, UT like decades ago, right? That changed how people do things.

[00:34:53] And If we have another winter storm, then maybe some of the executives who live in Minnesota will feel a little more at home, but I, I don't necessarily see them acclimatizing, but yeah, look, I agree. I think, the opportunities that sort of end up being more organic here in Houston and Austin, I think you're certainly going to see talent come, right?

[00:35:13] And I think that's going to be a function of, really seeing good innovation and seeing a really supportive ecosystem here. Which, Revival obviously wants to be a part of, and, we're committed to doing that.

[00:35:23] Giovanni Lauricella: Quick last couple questions, but I wanted to get back to the value add of Revival. The build to buy concept is obviously, speaks to itself, right? You're literally building and, I get that, especially in the age agnostic investments that you can jump into. But, there's this notion of bad, neutral, and good money, right? Bad money can make a bad board member. Neutral money is like, Hey, I wish you all the best - here's some money. Go for it. Just keep me posted. There you go. And then good money is what comes in terms of a value add beyond a check. What does Revival pride itself in being able to deliver to the companies that invest in beyond just providing a check?

[00:36:03] Alex: Yeah, so a really important piece of our investment evaluation anytime we're looking at something. If we don't feel like we're the right partner to add any value whatsoever post investment. And that might be, through our network, through the capabilities of our partners or operating partners or, our operating advisors who have, in some cases, really deep domain expertise and, call it, reimbursement or, regulatory, things like that. Or within our team, folks who have run businesses and really understand how to scale something commercially. Or if that company is in a... sector, in a space where, we have really deep expertise we typically shy away from that. It's not really our, mode to be a passive investor, although that probably be a lot easy for us in some cases.

[00:36:47] But we do like to be, as much as we can be a force multiplier for, our portfolio companies. So we typically take active board roles. And, even, I sit with on the Oligometrics Board as an observer. But, I spend time, if there's somebody over there who wants to just talk strategy or something like that, we can go through that.

[00:37:06] Or if we think there's somebody who'd be a great fit for, in terms of like talent, we can help facilitate the recruiting. And us doing that as opposed to somebody at the company spending their time doing that, can be a value add. We. We very much try to engage where we can.

[00:37:21] And I think I mentioned, even when you look at our uh, Build a Buy, where, we're much larger investors, typically, in terms of ownership. We, if we have to deploy people directly into those companies, we can do that. And, I'm not going to say we had to do it all the time, but, it's certainly, something that's come up.

[00:37:38] And so we definitely want to fall onto the side of, Like our, Like we're going to drive a hard bargain and do an investment, we want great alignment with the people that we're investing in. So having that sort of trust and rapport is really important.

[00:37:48] And just knowing that, if CEO from a portfolio company is going to call you up and ask you to help that, we're going to say yes, right? Because we want to be able to positively impact the outcome there.

[00:38:00] Giovanni Lauricella: My sign off question for you is. If you were to speak to a room of medtech entrepreneurs, first time at it, building their companies, and you're now the CEO, so you're the founder, there's no one else left in the room, and you gotta be the CEO, and even the CEO eventually gets bosses when they start building the board, what constitutes a good board member in your opinion?

[00:38:23] Alex: That's a really great question. Look, I think it's hard to say necessarily just one good board member. I think... it's really important to have a good board. So part of that's diversity. I think you need to have, a lot of different perspectives, but somebody who's a good board member probably does a lot more listening than talking.

[00:38:42] And I think you, you want somebody who's got enough expertise or knowledge or at least is thoughtful enough to listen and develop insights. As opposed to just trying to tell people what to do, potentially. You don't want to be talking the whole time or for a good board member. That's not really what constitutes it.

[00:39:00] But, I think a good board member is somebody who, thoughtfully listens and, is really engaged with the company. And it certainly doesn't help, it doesn't hurt if they've got, expertise in that particular area. And likely they would because they're sitting on that board.

[00:39:12] But, and you do have to have other points of view, right? On a board, it's great to have operators, former executives, potentially, you might need somebody who's a, a finance person. So I think if I was thinking about good board members, I think realizing that you're going to have to, live with these people for quite a while and ultimately you're going to be talking to them probably on weekends and at night, late at night, and you may have to tell them bad news from time to time as a, most startups, the road is long and it's full of potholes I think you want people who are thoughtful and measured and, really, I think being able to listen is really what makes probably the biggest difference in my opinion.

[00:39:49] Having observed some really fantastic board members they're, the ones who sometimes talk the least, right? But what they say has, real insight and real value. And then lastly, I think you need a board member who's engaged enough to, if somebody's at the company, there's a need potentially for a connection to talent, something like that, to actually, roll their sleeves up and help.

[00:40:10] That's, my opinion, but my two cents there.

[00:40:13] Giovanni Lauricella: As you have observed and also worked with other board members, and these board members mentor, if you will, the executives in these portfolio companies? Lastly here, who's your mentor in your life?

[00:40:30] Alex: That's a great question. If I were to go back, when I joined the family office, super young at that point, but the gentleman who ran that family office here in Houston, his name's Bobby Hatcher, but spent an absolute ton of time with Bobby, but, the entire team there.

[00:40:47] When you think about, a family office, it really is like a close knit group. And you learn things from everybody as you go along. But, I think, Bobby shepherded a lot of, what I've learned over the years and, gave me a lot of exposure and a platform there.

[00:41:03] To, meet a lot of the people that, most people wouldn't meet at that sort of stage in their career and do things that, are very interesting and push you out to go do things, right? Yeah, I think, yeah. And, to this day Bobby's still, still a mentor at the end of the day.

[00:41:19] Yeah, it's always good to be able to share a glass of wine with, the people you call your mentor. But, yeah, I know he's, he taught me some pretty invaluable lessons along the way and about business, investing, people, and, even just, how to manage your own sort of like life and career and think through things.

[00:41:35] Giovanni Lauricella: This is The MedTech Startup Podcast, and we just got inside the head, the heart, and the guts of this MedTech investor, which is Alex Forshey, partner at... Revival, Healthcare Capital. Thank you so much for your time. I really appreciate it. Funny, thank you. Brought it in here. Enjoyed it. Thanks guys. Appreciate it. Appreciate it.

[00:41:55] ​

[00:41:55] Giovanni Lauricella: That was great. I'll give you final cheers here. Cheers,

[00:42:03] Good. Good.

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