Listen to this article
Hoyoung Ban was never able to share the joy of graduation with his father, who died after suffering a stroke while he was completing his undergraduate studies at the Korea Advanced Institute of Science and Technology.
Not long after this, two of Ban’s uncles suffered strokes. They survived, but failed to finish rehabilitation therapy, largely because of the high cost, and did not recover full use of their hands.
These experiences gave Ban a personal interest in the research into stroke rehabilitation algorithms and robotics conducted by his friend Young Choi for a doctorate from the University of Southern California. As part of this work, Choi had developed a prototype device to help stroke victims regain use of their hands, but the hardware proved too expensive and bulky to commercialise.
Ban had launched companies before, including an online TV business targeting Koreans in Los Angeles, and saw an opportunity to put his entrepreneurial skills to the test again. He was about to begin an MBA at the University of Virginia’s Darden School of Business and reasoned that this would bring him into contact with experts who would be able to help him write a business plan.
Marrying his start-up experience with Choi’s technical expertise and the support of Darden’s entrepreneurship tutors and alumni, Ban saw an opportunity to find a technological solution to the problem of post-stroke paralysis rehabilitation.
Ban and Choi were joined by fellow Korean-born Darden MBA student Scott Kim as co-founders of Neofect. By this point they had a plan: to combine a patented glove-like device with online games to provide fun and accessible physiotherapy. The actions of the game would be tailored to help patients regain and improve movement and strength.
“We develop solutions for patients who are typically old, sick, depressed and unmotivated,” Ban says. “It is a tough job convincing them that things can improve. Keeping them motivated through gamification elements and an easy user interface is, therefore, an essential part of our development.”
In the early stages of Neofect’s evolution, Darden’s teaching staff and former students helped the founders to focus the strategic direction of their new venture as well as advising them about raising finance.
By the time Ban and Kim graduated in 2011, the business was well under way. “Understanding of [the] financial market and the venture capital investment process helped me think what VCs [would] expect from the founders of the company,” Ban says.
“Talks from alumni taught me several lessons about the challenges when starting a company and how to overcome them. Those business insights became a foundation for the successful growth of Neofect.”
The business was launched with $30,000 of seed funding from friends and family. This was later boosted by $120,000 following a successful application made in 2010 for a research and development grant from the South Korean government.
The biggest challenge for such a new market has been to keep up with regulation by an understandably conservative medical profession.
“Digital healthcare is a new area and doctors and regulators are always cautious about trying new methods, so it takes a long time to get things started,” Ban says. “Going through clinical trials took us a year and writing a paper about those trials took us another year. Fortunately, the results were excellent and the paper will be published soon.”
Ban says his running of Neofect has benefited from lessons learnt during his first attempt at a start-up in the interactive television market, which by his own confession “didn’t work out well”. A key mistake was to outsource development of hardware, he admits, which prevented him from changing the core product as soon as he wanted. “Active communication and constant feedback is the key when developing [a] product but that part was not going smoothly,” he says.
To avoid a repeat of this, Ban made sure Neofect’s core product was developed entirely in-house by design, hardware and software teams. About 50 people now work at Neofect’s offices in San Francisco and Seongnam, South Korea, including experts in engineering, software development and rehabilitation therapy as part of an R&D team.
In a little more than a year since it launched its first product, the company has sold about 20 units of the Rapael Smart Glove to hospitals in South Korea and China. A further funding round is planned for 2016 to help expand the company’s global presence by increasing the marketing effort, hopefully with the support of VC companies in the US.
Neofect has already started marketing and distribution to build a global business-to-business operation and it is in talks with distributors in the US, Europe, Middle East and Japan.
“As our ultimate vision is to deliver affordable at-home rehab for stroke patients — all the patients who need rehab exercises — we plan to eventually move towards [the] business-to-consumer market,” Ban says. “We plan to gradually expand to the global B2C market within the next year.”
Jargon buster: ‘Leverage’
Like Americans and the British, entrepreneurs and the rest of society are sometimes separated by a common language, with neither understanding what the other is saying. A case in point is the word leverage.
For an employee of an investment bank, for instance, leverage is the ratio of a company’s debt to the value of its equity. For a builder or gardener, it is something you apply with a spade to dig up soil or a crop of potatoes.
For an entrepreneur, leverage has taken on a new meaning, to “take maximum advantage of” whatever you are doing at the moment, as in “I am trying to leverage my use of social media to further my entrepreneurial vision”.
Entrepreneurs like leverage a lot if the number of entrepreneurship books with the L-word in their titles is anything to go by. According to the titles of two recently published entrepreneurship self-help books, you can “leverage the future” or “leverage your laziness”.
Behind the reinterpretation of the word leverage, it seems, is the desire common to all entrepreneurs to find new ways of defining how positive life can be. A lot of start-up teams want to show others how they have been able to “effectively maximise” the resources and opportunities given to them by their fellow investors and friends.
They also want to frequently portray themselves as the casual-yet-professional entrepreneur. Basically, they leverage every occasion to drop the word leverage into their conversations and funding pitches.