Jean Nehme On Raising $90 Million Before Achieving One Of The Largest Acquisitions in Healthcare Tech

Jean Nehme is the cofounder and CEO of Digital Surgery which is a pioneer in surgical artificial intelligence (AI), data and analytics, and digital education and training. The company raised over $90 million from investors like Balderton Capital, 8VC, Upscale, Blueprint Health, Episode 1, Redline Capital, and Ballpark Ventures. The company ultimately got acquired by Medtronic.

In this episode you will learn:

• Mastering the art of startup fundraising
• Why they finally choose to accept an offer for their company
• Ditching suits and ties for the NYC startup scene
• How to get in touch with Jean Nehme
• The future of health-tech

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About Jean Nehme:

Jean Nehme is the co-founder and CEO of Digital Surgery. Jean co-founded Digital Surgery whilst training in Plastic Surgery in London with Dr Andre Chow.

Dr Nehme has multiple awards for his research in innovation and application of surgical technology and simulation. He was named by Debrett’s as one of the most influential 500 people in the UK. Digital Surgery is a health tech company shaping the future of surgery through the convergence of surgical expertise and technology.

At this time when the healthcare industry is facing multiple challenges globally, Dr Nehme strongly believes the solutions lie in leveraging on technological advancements to bring safe, accessible surgical care for all.

Connect with Jean Nehme:

• Linkedin
• Crunchbase
• Twitter

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FULL TRANSCRIPTION OF THE INTERVIEW:

Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. I’m very excited about the guest that we have today. I think that we’re going to be learning quite a lot about the healthcare tech sector, and how to build it, how to scale it, how to finance it, and how to exit it. So, the full cycle. Without further ado, I’d like to welcome our guest today, Jean Nehme, welcome to the show today.

Jean Nehme: Thank you very much for having me, Alejandro.

Alejandro: You grew up in London, but I know that you see healthcare being the future and the next stage of our era, so why did you want to become a doctor in the first place?

Jean Nehme: You know what? I always wanted to doctor ever since I was a kid. I know everyone will tell you that story, but with me, I was interested in the way that the body worked, and the way that things inside could go wrong, and interested in how we can use, whether it was pills or some form of technology to fix what happened on the inside. I remember as a kid being deeply fascinated with healthcare and with medicine, but also deeply fascinated with my PlayStation and my Nintendo, and everything else I used to play as a kid. 

Alejandro: Was there like for you, Jean, a specific point in time where you developed this interest that you are pointing to?

Jean Nehme: I don’t remember a specific point and time, but I remember one thing to read about how the body worked. How does everything get put together in us, and how does it work in a synchronized way that allows us to do the basic things that we want to do like walk down the road and get ourselves a coffee. There are so many intricate views, so much biology working together to be able to allow us to do some basic things—things that we take for granted until they go wrong.

Alejandro: Yes. Then you made the decision of going at it, and you ended up at Imperial College. A lot of accomplished individuals are coming out of there, so I’m sure that gave you some perspective too.

Jean Nehme: Yeah. I ended up doing my medical training, and then ended up in St. Mary’s Imperial as a junior doctor. The interesting thing about medicine is, you learn the science, you learn biology, you learn pathology. But day one, when you’re asked to figure out what’s going on with somebody and actually be a doctor, you realize there’s this huge step between the two. I’ll tell you a funny story. Day one, as a medical doctor, I was actually petrified of blood. Believe it or not, I qualified and trained as a doctor and was petrified of blood. It’s crazy. Right? Every time I learned how to take blood, I would do it on a mannequin, or I’d do in an imaginary arm. I passed my exams with flying colors, but I was petrified of blood. Day one, as a junior doctor, I got asked by my Senior to go and take blood from somebody, and I’m completely scared. I’m like, “Really?” So, I’m crossing this boundary from theoretical medicine, biology, systems, pathology, and how things worked to actually having to do some real medical work. She sends me to this patient who was just admitted, and this patient was a patient who had multiple issues. Because they were an injector of recreational drugs, they also had no veins, so really hard to find a place to take blood from. Also, the patient suffered from having hepatitis and HIV. So, it was a great first patient to pick for me to go and take blood from. I ended up trying to take blood from this person, and I put a needle in, got blood out, and I was very proud of myself—literally, the first time. Got in, got out, I was incredibly proud of myself. I got over my fear of blood straightaway. Then what I did, as I went to put the—what you should never do—as you go to put the needle into the tube to send the blood off, I stabbed myself. 

Alejandro: Oh, my God.

Jean Nehme: Right. Tell me about it. I ended up stabbing myself, and at-risk at getting some blood-borne diseases, I ended up in the emergency department myself on day one as a doctor and having to take medications to stop myself from getting any blood-borne conditions. 

Alejandro: Oh, my God. Yeah. You could have gotten contagious with anything.

Jean Nehme: There you go. My mother called me and said, “How is your first day as a doctor?” I was like, “Fantastic.” [Laughter]

Alejandro: Wow. What a first day. So then, I want to ask you, at what point do you see the possibilities of merging medicine with technology, the magic cloud that could come out of that?

Jean Nehme: Medicine is a science, and science is inherently a place where technology is, is cool to progress. In emerging medicine and technology isn’t something that I did. It’s something that has been happening for many, many years, whether it’s the discovery of antibiotics or the discovery of how we should be using antiseptic. Medicine, as a science, foundationally, you only get progress through investing and through technology. I guess the twist that we brought to this was trying to think about digital-based technology, so thinking about how can you integrate the use of mobile and data, which were typically used in different industries? How can you integrate the use of these kinds of technologies into medicine? The interesting thing about healthcare is what the world is seeing right now with COVID is, there’s inherently a lot of problems that delivering medicine at scale brings. The big issue is, how do you deliver consistent, repeatable care to everybody in a way that it scales, in a way that makes sure that patients who are getting treatment in New York get the best treatment possible in a way that’s equivalent and equal to patients who are being treated in Wyoming. The possibilities are endless because the challenges and problems of trying to do the healthcare is real and is there. Just opening up your eyes, you realize that maybe there are things we can do better.

Alejandro: At what point do you come to the realization that you’ve got to do something and that you’ve got to launch your own thing? That you’ve got to go at it?

Jean Nehme: As you said, part-time, I was studying a Masters again. Imperial was the place, and I was doing some research on the application of technology and simulation. I started having a lot of thoughts around what could I do with technology, and how could I get involved in technology in a way that brings innovation to the frontlines of healthcare colleagues of mine? During that time and after I finished that Master’s, I started applying myself in this space. It’s hard because in medicine, like in many things in life, you’ve got a clear path. It’s almost like your path is incredibly predictable. You know what you’re going to be doing the next year. You know what you’re going to be doing in five years. It’s laid out for you. You’ve got tick boxes that you’ve got to tick, and if you achieve each one of these positions and these statuses, and you climb this ladder, which leads you to becoming this consultant. Then you’ve got your own practice and your private practice, and it’s very clear. It was very hard to try and do something different, I guess.

Alejandro: Got it. So what happened next?

Jean Nehme: What happened next was, I convinced a much more intelligent doctor that I know, who is my senior at the time, Andre, to join forces with me. I told him that “Here’s this application that I’ve been involved in building, and what do you think?” I showed it to him when he was doing his Ph.D. in stem cell research. He was the guy who overlooked me and oversaw my development as a junior doctor because he was senior to me. Then we were like, “What should we do?” I said, “We should try to build a company out of this. I think it’s really important. Let’s try and get some research grants.” We went around trying to get research grants. We got laughed out of many rooms. Then we tried to raise some investment capital because we’d read things like Y Combinator and TechCrunch and all these things happening in the U.S. We used to go to pitches with investors, and we’d have a pitch deck, which was like 300 slides. Our business model was a slide, which had fireworks on it. When the fireworks would disappear, we’d basically say, “We’re going to give the product away from free.” All these investors would look at us going, “You guys are not [12:23].” We got told no many, many times. Every time when we got told no, what I did consciously with Andre was try and figure out what we were doing wrong and try and improve. We built this because of improving and improving and improving. It was quite hard because it’s very challenging being an academic, stepping out from this academic world, this world of business, and venture and realizing that you don’t know anything. You’re not prepared for this kind of world of challenge. Whereas in academia and in medicine, we were doing our exams, getting straight A’s, and doing great. Whereas, in the world, it was like failure, failure, failure. It was very challenging for us, but we kept on going. We kept on going, and we couldn’t get anything.

Alejandro: What do you think changed, Jean, from getting through all these noes and people not being enrolled to jump in, to all of a sudden to the tipping point where you guys turned the corner?

Jean Nehme: I can tell you the tipping point in two words: New York. New York City—three words. We couldn’t raise any money in the UK, and no matter how hard we tried, no one would give us anything. In the end, I found this accelerator program in New York called Blueprint Health. I wanted to apply to it, so I applied to it, and I was like, “Shall I tell Andre?” I was like, “No, I won’t tell Andre. I’ll just do the application, do the interviews, and if I get through, then I’ll tell him that he has to move to New York with me for three months. [Laughter] So, I did the application. They interview me, and they’re like, “Is your co-founder happy to come.” “Yeah, he’s definitely happy.” They say, “Where is he right now.” I’m like, “He’s operating. Don’t worry about him. He’s in.” One day they called me, “Hey, Jean. Congratulations. You’re coming to New York. One of the co-founders in this program has to fly in [14:52], but want to accept you. We want to fly you over. You’re in.” So, I was like, “Wow. This is amazing.” “Yeah, we need to meet you and your co-founder, Andre.” Then I called Andre. I was like, “Hey, Dude.” “Hey, man. What’s up.” I’m like, “Just so you know. I applied to this accelerator program in New York, and we’re in, but we’ve got to move to New York for three months.” I won’t say what he said, but you can imagine. It was pretty harsh, and then he hung up. 

Alejandro: How did you get him to pick up the phone again?

Jean Nehme: Well, he called me back five minutes later, and he was like, “So, Dude, I’m sorry. I didn’t mean to swear. What do you mean we’ll have to move to New York?” I was like, “This is the thing.” Then he figured it out, and he was like, “Wow. I’m going to take all my annual leave.” At the time, Andre and I never mentally made the decision that we had to leave medicine to build this. We just thought we could build a crazy, huge, billion-dollar company by not leaving medicine and by being doctors. But everybody expected us to leave. They expected us to have real skin in the game. We were both like we’d take all our holidays and find a way. We took all our holidays and found a way, and we ended up in New York doing this accelerator program. Day one, we walk into this huge loft, super cool, graffiti everywhere, health tech. You know the style, the Y Combinator sleek loft style.

Alejandro: Yeah.

Jean Nehme: And there we are with our shirts, our ties, our suits, and all these people around us with trainers, and sneakers, and tee-shirts. They’re like, “Who are you guys?” “Well, sorry to bother you guys. We’re here to become entrepreneurs.” “Okay.” Then, I remember we all had to introduce ourselves. We had all these people, hipsters, “Yo! I’m like Josh. I’m building this company and it’s going to change like the world.” Then Andre and I got up on stage. “Hi, guys. We’re sorry to bother you here. We’re just two doctors really trying hard to build this surgery tool. We think it’s really, really special. We’re going to make it amazing, and we’re trying really hard, but we don’t know if it’s completely there yet. We’ve got a lot of work. It’s quite average right now, but we’ve got a few thousand dollars.” The guys who run it grabbed Andre and me afterward and said, “Hey, guys. Two things. 1) “Can you stop apologizing for being around? You can lose the Britishness. Stop apologizing, and just stand up and say that you’re awesome, and you are doctors, and you are entrepreneurs.” We were, “Oh, really?” “Yeah, and also lose the shirts and the ties.” 

Alejandro: That’s awesome.

Jean Nehme: That was our introduction to New York.

Alejandro: Got it. You were saying that for you guys, this was a turning point. Obviously, you talked to us about the before. What was the after? What happened after this?

Jean Nehme: What we realized at this point and time was, we had to build a business. Before, we were purely academically thinking. Everything we approached was, how do you validate? What’s the hypothesis? All of that is correct in terms of how to test and build things, but what we learned in the U.S. was you have to get on the phone. You have to make sales. You have to make calls. You have to get people excited. Sometimes, when you have nothing apart from your passion and your desire to make something better and fix the problem, then you have to articulate that. It really changed our thinking. We went from thinking that maybe we could build something that was interesting and academically viable to really believing that “We can get on the phone, and we can build a business.” I remember this call with a professor of neurosurgery, who was one of our first customers. He called us, and he was like, “I want to build a [19:19] with you guys.” I was like, “Okay, great.” Then, he was like, “How much does one cost?” In my head, I was like, “Cost? What do you mean cost?” Then I realized that he wants to pay. I was like, “One second and let me check with our finance department.” Our finance department was Andre. I put him on mute. “Hey, Andre. How much does it cost to build one of these?” Andre was like, “You know, $50,000.” So, I said, “$50,000.” He said, “Okay. Great. I’ll send you a check.” 

Alejandro: Wow.

Jean Nehme: That was the first sale we ever made in New York. That’s the point when we realized that we were building something that was valuable. People were prepared to pay to be a part of it, and we had people who were using it, and there was a problem that we were solving that people were prepared to really engage with us and pay us to help fix.

Alejandro: How was that process, because I know that there was an interesting story there with your first customer that ended up being the acquirer, Medtronic?

Jean Nehme: We ended up talking to Covidien back then. Medtronic acquired Covidien, but we ended up talking to a group out in Europe. The thing about small companies is, even though they’re doing something amazing, sometimes they’re really worried because they’re small, and they worry about looking small in front of big companies. I remember we wanted to build a procedure that would help support surgical training for a specific device that was made by Covidien. What we did was, we ended up getting a meeting. The team came in, but we had no office. We had nothing. So, we rented an office for three hours. We got ourselves dressed up in corporate. I remember spending time watching on YouTube, back then, and how to present to corporate groups. We presented to them, and it was great because we got the opportunity to work with that group. But what was really scary at the time was, how does a company that was a couple of people do a deal and become a vendor to a company that was 90,000 people? I think that’s something that a lot of us will have to face as we build companies and people will have to face as they build companies. How do you build credibility in the marketplace? Back then, it came down to us telling and convincing them to trust us, and it worked. It paid off.

Alejandro: Very cool. For you guys, it was a transition, as well, on what you were offering. You went from a mobile app into something that was used inside the operating rooms. What was that transition like?

Jean Nehme: When we built the technology, we always wanted to apply our technology beyond just the outside of the operating room perspective. We knew that we could help surgeons train and prepare outside the operating room. But we always wanted to be in the operating room. That was in all of our early pitch decks. Our thinking was that eventually, our technology would be in Google Glass, so we bought a Google Glass. Then we thought it would be in Hololens, so we bought a Hololens. But the entire time, we were testing and optimizing for what we thought would be valuable in the operating room. It was a continuous process of what’s the problem? How do we test different technologies, and how do we just say, “Okay, we’re not doing this again”? I guess we learned how to fail fast and test other things, which was really exciting, but that transition was a key transition for us. We were always doing support to train surgeons, which was a huge opportunity in itself, but as former surgeons, Andre and myself, we both wanted to find a way to be there with the surgeon and with the surgical team helping to deliver surgical care. That’s what drove us from the passion perspective.

Alejandro: I love it, and I know that for this, you guys raised a bit of money, between equity and 93 million. I want to ask you, what were the expectations or how it changed from jumping from a Seed round to a Series C round? What were some of the things that you encountered along the way?

Jean Nehme: Great question. We didn’t really know how to raise money. We used to build models. We used to have ideas, and we used to discuss the market and see if people were prepared to fund us and back us. Fundamentally, the way that we approached it was, we’d always figure out what we need. We’d always have a good understanding of what we needed from a cash perspective to achieve the next couple of milestones. We’d always set milestones that were milestones we knew we could hit. Then we would calculate back to what we needed. When we went out, almost every time to tell investors about the story, for us it was always that psychology of going out and telling people what we believed in and what we were passionate about, and why we were building what we were building, and the problem. It was hard because not everybody who is in a venture capital office sits there and thinks about surgery as a problem. Not everybody understands the surgical market and the medical device market. There were a lot of things that we had to put into different versions of our deck to really educate the market. Sometimes, we’d get asked questions like, “I thought when you are at medical school, you learn how to be a surgeon at medical school.” We’re like, “No.” I think the process was a process of going out to the market and learning from the questions that people asked us, and then making our narrative better, but always being very clear about what we needed and being consistent about what we needed and why we needed it. That was the reason I think investors backed up. All of our investors backed us because we were adamant on the problem that we were trying to solve. We were experts in understanding the problem from the inside. We were using the technology as a tool and a mechanism to fix the problem. That was really it.

Alejandro: Obviously, those investors were happy with the outcome. For many of them, the best exit that they’ve ever had, and one of the largest exits in Europe. Jean, why did you guys decide to sell the business? Why did you guys go with the acquisition? It seems that things were heading in the right direction.

Jean Nehme: Yeah. Things were in a good place. We didn’t wake up one day and say we wanted to sell. Sometimes, as you are building, you’re always trying to figure out how you can do more faster, and also, how can you do more faster with enabling and supporting your team in the best way, but also having that fiduciary responsibility to investors? That means you have to always be open in how you approach conversations. We were very fortunate. We’ve had people come in and try to buy the business before. There’s a story when we turned down a pretty big opportunity because it didn’t align with where we wanted to take the business. I’m sure my investors would tell you that was one of the crazier things that we did. In fact, it was one of the craziest things that we did. But we did it because we didn’t believe that the coming together of our company with one of the largest companies was going to make sense. What we didn’t want to do was create a marriage and have a feeling of leading it to a divorce in a couple of weeks. For us, sometimes, you meet the right people who you believe in, who you are prepared to say, “You know what? Together we can do more, and thank you for believing in us.” That’s why we ended up where we are. We’re very, very grateful for the opportunity to work with such an incredible medical technology company. I say that with all my heart because I’ve met everybody, and this was the best fit for us. It wasn’t a decision to sell. It was much more of a decision to work with an incredible company with a great leader and great leadership to be able to deliver more for surgery, for patients faster and in a way where our team would continue to wake up every day and be incredibly excited about the work they’re doing.

Alejandro: Obviously, this is with the company, Medtronic, that was your first customer. I’m sure that also the conversation was quite natural into doing that transaction.

Jean Nehme: In the [30:09] so large that they didn’t even know they were the first customer. We didn’t really remember because it was Covidien back then. It’s ironic that way, but in reality, sometimes things just happen for the right reasons, and we feel incredibly lucky to be able to continue to do the work that we’re doing in a company that understands and needs that work to be delivered in a way that we can do so. The coming together of these two forces is going to be very powerful for the world of surgery.

Alejandro: Very cool. Why do you think, Jean, that the next big thing is going to be healthcare?

Jean Nehme: Look. Healthcare, for me, was always the big thing, so I’m biased. 

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Alejandro: Yeah.

Jean Nehme: When I wake up every day, and I watch the news, and scientists and doctors are now there, and nurses and social care works and people who deliver healthcare are there at the front page talking about what they do. I realize that the world has recalibrated to understand that there are some incredibly amazing people, who for a long time have not had that kind of limelight, and not had that kind of exposure, now being recognized of all the value that they deliver without ever getting the thanks and the appreciation. As I look at how the world is right now, and I’m sure you do as well, we all realize that we’re sitting at home waiting for a vaccine or a better medical treatment for a virus that’s come out of nowhere. We all realize that three weeks ago, we were incredibly scared because we didn’t know if hospital systems had the capacity to deliver the care that we may need. We’re all incredibly scared because there weren’t enough ventilators, something that we may have taken for granted. Now, as I look forward, I think there’s being more and more focus by all of us on how we live, and what we eat, and how we sleep, and how much exercise we do. We’re a generation that is really, really focused on trying to be healthier both physically and mentally. On top of that, technology providers are getting more and more excited about—there are ways to reach your consumers and your users in a way that can help benefit them. So, more than just allowing them to post a photo of something that they like, but actually a way to give them value to them in a way that’s much more aligned with them feeling better. I think that this realization by everybody is great, and hopefully, we get through what we need to get through and come out on the other side, laying the foundation for healthcare as a much more immediate thought as opposed to an afterthought.

Alejandro: Absolutely. I know that in your case, Jean, you’ve been devouring book after book. I wanted to ask you here, what’s the best book you’ve read in the last couple of weeks?

Jean Nehme: I’m reading a great book right now. It’s called Lifespan, by David Sinclair. It was sent to me by a great venture capitalist, someone who I really admire and an investor in us, Michael J Lonsdale, who was one of our investors from ATC, and it’s focus is aging and trying to understand aging as a process on how we could better solve aging, whether or not we can stop it or reverse it. We’ll see one day. We’re all aging, and if we can stop it, it would be interesting.

Alejandro: Absolutely. Talking about aging, you’ve definitely aged quite a bit since you started the business.

Jean Nehme: Thank you very much. 

Alejandro: [Laughter] When you first started, digital surgery—come on. You started this in 2013. Obviously, you’ve had an amazing journey here. Tons of lessons learned. If you had the chance, Jean, to go back in time and have a chat with your younger self, with that younger Jean that was thinking about starting a business, what would be that one piece of business advice that you would give to yourself knowing what you know now and why?

Jean Nehme: This is a really good question. I look at this in two ways. I haven’t prepared this answer, but the first way is if I look back at my younger self, I would probably tell myself to just enjoy the journey more, and even in the difficult times and the up times, spend more time enjoying it as opposed to worrying about what’s to come in the future. Then, I would ask my younger self to remind my older self—so, the other way around—of why it’s important to make mistakes. We did a lot of crazy things back then. Two doctors who had no idea about how to build a business, leave medicine, and leave a very amazing career pathway to build a business, thinking they’re going to build a huge business without any real facts or any proven track record or anything. We did pretty crazy things back then. I’d remind everybody’s younger self to remind your current self that being young and “foolish” is actually really interesting, and it gets you into interesting places and interesting opportunities. It will be a dialog between my older and my younger self.

Alejandro: I love it! Jean, for the people that are listening, what is the best way for them to reach out and say hi?

Jean Nehme: I’m accessible on LinkedIn and Twitter. If anybody feels like they’d love to share an idea or a dilemma, I’m always somebody who will respond to emails. Some of the most interesting people that we’ve ended up working with have been through cold outreach and cold emails. Getting to know people is always interesting and fun. People can feel free to reach out, and I’m always happy to help.

Alejandro: Amazing. Thank you so much, Jean, for being on the DealMakers show today.

Jean Nehme: Thank you for having me, and thank you for the great questions, Alejandro. Stay well.

 

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