I have the pleasure of meeting or speaking with many digital health, health IT, med-tech, and life sciences startups every week. And, as a #HIMSS16 Social Media Ambassador, I’m looking forward to meeting many more at HX360 during HIMSS16. Since I’m a serial entrepreneur and angel investor myself I know how hard it is these days to get to product/market fit while working with top-notch investors who understand how to help scale a business.

The path from an idea to product/market fit, profitability, and long-term success for any startup is what I refer to as the “Venture Development Lifecycle” (VDLC). VDLC is the path from an idea to product/market fit and profitability. As you go from one phase to another in the VDLC and are seeking investors to join you on the journey you’ll have one key task at each phase: show how you’ve already reduced risk in the previous phases and which risks remain in future phases.

The VDLC has risks throughout the process but some of the highest risks come when a venture is moving from one capital raise phase (e.g. seed or angel) to another (e.g. VC, growth equity, or PE). Experienced investors already know that de-risking startups as they move from seed to angel to VC to later stage capital is necessary. Unfortunately, investors don’t always work together in a strategically integrated approach throughout the VDLC, putting earlier stage capital at more risk than is necessary.

Traditionally it’s the entrepreneur that has had the job of understanding each investors’ risk tolerance and de-risking approach. However, many entrepreneurs don’t know really how to evaluate their product/market fit risk, capital risk, execution risk, and the myriad other problems they’re likely to face. Entrepreneurs shouldn’t be left to integrate the various investors on their own; instead, investors should form strategic partnerships with other investors where they formally form a vertically integrated supply chain throughout the VDLC.

Since some of the highest risks for startups come when a venture is moving from one capital raise phase (e.g. seed or angel) to another (e.g. VC, growth equity, or PE), entrepreneurs need to figure out how you’re going to explain the risks in your business and de-risk your innovations.

Try and answer these questions for the various digital health investment phases:

• Seed: how high is the innovation risk? Can you show that the idea works elsewhere?
• Angel: have the requirements and innovation risks been ironed out enough so that a product’s technical risks are all that remain before landing a customer?
• Super angel: Have the technical risks been ironed out so that pilots and initial customers are showing success?
• Series A institutional: Have the product/market fit risks been ironed out so that it’s clear that scalable sales are the next barrier?
• Series B and further: Have the initial sales risks been removed so that further scale and support are now the next barrier?

As you go through the VDLC you’ll see it’s mostly a matter of understanding your risks and ironing out the key ones at each stage. You should seek out investors at each stage that clearly understand the de-risk’ing process and could potentially work together as either a syndicate or a strategically integrated value chain. When you interview investors, see how many of them have worked together in the past in either a vertical integrated manner or even as a loosely affiliated approach. The more you lay out your process, the more you understand your risks and help investors understand how you’re de-risked, the easier time you’ll have in the capital raise process.

If you’re attending HX360 at HIMSS16 try and discover how angels and earlier stage capital can better collaborate with payer investors and VCs through more diverse and sophisticated syndications. When early and late stage capital get more involved in advisory roles with their investments throughout the VDLC, de-risking innovations becomes easier and more successful innovations will get to market faster.