I realized at a young age that I had an interest in investing. My first related memory was in high school when I won the stock market challenge. It was a very intellectually challenging experience that inspired me to start following stocks. In college, I started getting the Wall Street Journal and would track stocks in a little notebook. If only I had the money to invest back then!
I ultimately chose to pursue a career in medicine, but continued to increase my experience and knowledge about investing. I am proud to say that I have traded in almost every type of investment including blue chips, Exchange Traded Funds (ETFs), penny stocks, bonds, and options. By fellowship, I had acquired an impressive mix of stocks that included Apple and Google (as an IPO!). Even though my account was growing, I became disenfranchised by the stock market. Watching the numbers go up and down was entertaining, but the information was skewed. To be honest, I just didn’t feel like I was truly being informed on what was really happening, so I started looking at other ways to invest.
Thinking back, it all started when my brother-in-law began working for a digital storage start-up company. I was fascinating and impressed the small team’s ability to build a product, develop a company around that product and then eventually sell the company. I decided I would look into this whole “start-up” scene. As an established physician executive, leaving my current position to start a new company was not in my cards, but I knew I wanted to be involved in some way.
My first foray into private equity investing was through a site called Angel.co. Through this site, I learned a great deal about the private equity space including:
- What Series A, Series B and Series C offerings are
- What Angel investors are
- What Venture Capitalists are
- What an Accredited Investor is and how to verify it
- What companies I could invest in
I found my first two investment opportunities on this site: a company called Sound Focus and a 10-company accelerator fund called Techstars Austin 2013. I made a blind nominal investment – one that I was very comfortable losing for the sake of education. I have had my first failed investment – Sound Focus closed its doors in 2016 and filed for bankruptcy; however, the Techstars Austin 2013 fund is still going strong. This was my first toe in the water with private equity, but I was hooked.
I’m not sure if it was the realization that the percentage gain from the stock market was limited or the complexity of options was not worth the time and attention for limited gains, but I decided it was time to hire an investment advisor. With my advisor I was able to consolidate my accounts, and together, we focused on investing in private equity companies.
Currently, I have a limited number of stocks in the stock market and I am heavily invested in the private equity market. I also serve as a Physician Advisor to Red Crow, a company focused on niche crowdfunding/sourcing in the healthcare industry. As a part of their team, I review new companies to determine the viability of long term investments and make suggestions for their long term success.
At times, I have found it challenging to get the information I needed to make good decisions regarding my investments, but I attribute my success as a Doctor-preneur to a few things:
- Getting to know all of the CEOs of the companies that I am invested in has opened the lines of communication allowing me to stay well-informed and in the loop.
- My experience in medical school, post graduate training, committee membership and as a Hospital Chief Medical Officer has prepared me to be an advisor for medical start-up companies.
- Hiring a trusted investment advisor.
My advice for other physicians interested in this space:
- If you are a young physician…
- Take a small amount of money from your paycheck and put it in a stock account, and don’t be afraid to explore different stocks. Just keep it there and let it grow.
- Read the book “Options as a Strategic Investment” by Lawrence McMillan.
- Put as much money in your retirement as possible (especially if you have a matching program). Eventually, you can use this in private equity when you are accredited.
- For physicians who are new to private equity investing…
- Do your homework – Validate the science, talk to the founder/CEO, and talk to the people doing the work.
- Only invest what you are comfortable losing.
- Reduce your chances of losing by diversifying (by definition, these are high risk – high reward investments).
- Use some of your retirement investments. If you have 20 years before you retire, taking risk now gives you plenty of time to recover if it doesn’t work out.
- Join the AMA’s Physician Innovation Network!
I was introduced to the American Medical Association’s Physician Innovation Network as I became more involved with private equity companies. I was so impressed that I contacted the team. It has been a pleasure working with this team and I look forward to expanding on my experience in digital health investing and advising in future blogs.