In our final Bootcamp session organized by Seoul VC Connect, guests Thomas Shin, Andy Choi, Dr. Jeffrey Roh led an open discussion forum and shared their experiences working with startups. They offered their perspectives on challenges growth-stage startups face when looking to commercialize internationally and navigating regulatory hurdles.
Operated by Seoul Metropolitan Government and G3 Partners, Seoul VC Connect supports Seoul-based startups in their international fundraising goals.
Thomas Shin is a senior partner based in Bain & Company’s Seoul office and serves as the leader of the firm’s Organization practice in Korea.
Andy Choi is the CEO and Co-Founder of Amplify Surgical and Co-Founder, Partner and member of the Board of Directors at IntuitiveX.
Dr. Jeffrey Roh is the Director of Minimally Invasive Spine Surgery at Swedish Neuroscience Institute and he also serves as Chairman of Swedish Hospital’s Integrated Spine Program.
Tom Shin: When I learned about Amplify Surgical and its business model from Andy, which was primarily focused in the U.S., I was curious to see if Korean startups needed an integrated view and help with their commercialization efforts. So Andy and I visited various Korean pharmaceuticals and VCs and explained Amplify Surgical’s business model. We found that companies and investors were highly interested. One of the pharmaceutical companies even invested in the company model after our meeting.
Another thing I found out since then is that South Korea ranks 4th globally in terms of patent filing and 6th in terms of IP protection filing. When I first started making my way into the world of medical devices and diagnostic tools, I was flabbergasted to discover just how many great products exist in South Korea. And these IPs and ideas reside not only in Korean startups but also institutions like KAIST, POSTEC and other sectors in Korean academia.
A problem I see with most Korean startups however is that they don’t have a clear commercialization plan in order. A startup is extremely lucky if it can introduce its product to a partner company or investor, get it approved and have a device company buy and sell the product. Most startups don’t have that luxury, or the luxury of getting full support from a closed-ended fund. For example, Bain & Company has a Bain Capital Fund.
When you plan to venture into the U.S, you need to understand not just the product but consider questions like: How does the IP landscape look in the U.S.? Are you well protected? Do you need to acquire more IPs to avoid legal issues in the future? Where will you set up your shop? Which clinic is the right fit for your business? Who do you know in that clinic that can help you get started? How do you get FDA approval?
These are only a few of the many areas you need to have a deep understanding of in order to ensure your commercialization plan is in order.
I’ve seen most Korean startups approach this process in a very haphazard and stand-alone manner. Instead of integrating all the steps under one roof, they seek out a law firm to file their IPs, a specialist to get support with FDA approval etc. This makes the whole process inefficient.
Dr. Roh: The market in South Korea and the U.S. belong to two completely different ecosystems. The IP landscape and the regulatory landscape are both very different in the two countries. The modes of reimbursement and who the payers are also vastly distinct.
You need to have a deep understanding of the markets in each country as you cannot apply the same business model in both cases.
Another point to remember is that you can never overestimate the importance of having partners and people on the ground to help you grow incrementally and then eventually scale.
Andy and I have seen many South Korean companies come to the U.S. with the assumption that they will reap the same success here as they did back home. And they’re basically about to get a very rude awakening.
This is also why having access to core or relevant partners and people in your target market is advantageous. They become your one-stop shopping point in terms of support with legal, IP, financing, strategy, marketing, regulatory actions all under one roof.
Andy Choi: When I met Tom in South Korea and told him about Amplify Surgical, I was visiting the country to meet one of the founding members of Amplify. Around the same time four famous Korean spine surgeons learned about IntuitiveX and reached out to me and Dr. Roh. They had great IPs, methods and technology but they found the Korean space to be small and inactive at the time, so they wanted to jump the process and enter the U.S. market directly. They came to us because they were looking for help to actualize their commercialization ideas.
I’ve seen many South Korean companies starting small in South Korea and then slowly expanding in other parts of Asia before coming to the U.S. I’d like to tell startups that they don’t necessarily have to go this route and coming straight to the U.S. often makes a lot more sense.
With the case of the four surgeons, Dr. Roh and I loved their IPs and credentials, and we knew their field very well. We quickly set up a company or a skeletal structure around their idea. Now their idea alone was not enough. This is a mistake most early-stage startups make despite it being a cliché at this point. Startups think that the idea behind the business is most important because people would certainly want a product that solves their problems. And in this way, they put the business plan on the back burner. Same was the case with these surgeons who were not in that mindset. So Dr. Roh and I ventured out and found an IP that was available to purchase through our network and together with the IP provided by the surgeons, set up a company around it.
Next, we raised money from surgeons who know the field, including Tom’s brother-in-law who connected us. And we didn’t want to raise money from general investors, we wanted to raise smart money, i.e., raise money from investors who understand the space. This is so they are invested in the business not just with their money but also with their expert insight. It also increases the possibility of them becoming promoters, marketers, and eventual users of the business solution.
These steps are so important in actualizing business commercialization plans. You don’t want to bypass or skip ahead of these steps. It all starts with IP and again, I cannot stress enough its value within devices. Within devices, it’s a heavily litigated industry. I have an engineering background, but I can’t emphasize enough the importance of finding the right IP partner. Anyone with an IP law degree can write you an application but strategy is crucial. And that is informed by real experience in the relevant space.
For this venture with the four surgeons, we were able to find the right IP partner and international law firm in Perkins Coie. We went ahead and purchased more IPs based on our strategy from a defensive standpoint.
As our next step, we went ahead and partnered with an engineering and testing company to finish out the testing and development aspects of this device we had. We followed this process with another partnership, this time with the right FDA regulatory consultants that helped us with our FDA approval process. These consultants help you work efficiently as they inform you which tests to focus on instead of spending more money and time by following the textbook method.
Of course, there are many more steps to consider, but one other major barrier for startups, even for us, after getting FDA approval is commercialization. It’s a complicated process in the U.S. In hospitals, while surgeons would be the ones who’d be using your product, the agency buying the product are the hospitals. So, the decision makers are not the payers here. And the approval process for every single hospital in the U.S. is different, making it extremely complicated and laborious.
What does make the process relatively easier is if you’re applying to a group purchasing organization (GPO). Not every hospital is individualized. These days you can find hospitals grouped together to form such GPO networks. In short, to make your way here as well, you need to focus on making the right partner relationships.
Thomas Shin is an expert in the global Advanced Manufacturing & Services, Chemicals, Energy & Natural Resources and Infrastructure, Construction & Building Products practices. He is also a global steering committee member of Bain’s Results Delivery® Group. He has more than 25 years of industry and consulting experience, both in the United States and Korea. Thomas holds an MBA from University of Chicago and graduated magna cum laude from Columbia University with a bachelor’s degree in economics.
Dr. Jeffrey Roh has over fifteen years of experience as an inventor, angel investor, and serial entrepreneur and holds multiple patents through the USPTO. He is a Co-Founder of IntuitiveX, a Seattle-based life science incubator. He currently serves as a consultant on Stryker corporation’s Surgical Design and Innovation team and was instrumental in the development of their most commercially successful minimally invasive spine system of all time, ES2, as well as their marquee lateral access platform, ARIA. He completed his orthopedic surgery residency at Case Western Reserve University and his spine surgery fellowship at the Hospital for Special Surgery in NYC. He is a graduate of the Michael G. Foster School of Business MBA program at the University of Washington and received a Master of Science in Technology Management at Columbia University in NYC.
Andy Choi has over 20 years of experience in product development and commercialization with expertise in the medical device industry. He has held executive positions ranging from engineering to marketing and sales in start-up settings to Fortune 500 companies. Prior to co-founding Amplify Surgical, he was the Chief Business Development Officer at CTL and the VP of R&D at Ellipse Technologies and VertiFlex. Mr. Choi earned his B.S. in Mechanical Engineering from U.C. Berkeley and received his MBA from Rutgers University. He also completed executive education program from the Wharton School of the University of Pennsylvania
Check out our past blogs covering more Seoul VC Connect Bootcamp sessions below: