Advising Startups

Key concepts they don’t teach you in school #5

Key Concepts They Don't Teach You in School

Transitioning from a traditional healthcare organization to a tech company can be a significant shift. Here are some key concepts that can help you understand and navigate this new environment:

Understanding the Tech World: Advising startups

Advising startups is a great way to get your foot into the tech door whilst leveraging your domain knowledge. Sometimes, it may turn out to be an audition for a more permanent job. Othertimes, there can be an experiential gain whilst providing value to the startup.

One key and very common question is how clinicians can get started advising startups. Believe me, there is no shortage of startups that would love clinical input during the product development, marketing and deployment phases.

You have to be quite careful for 2 key reasons;

1. Do you do it pro-bono or charge a fee?

2. Hedley Byrne-style liability

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Pro-bono vs. paid

In guidance to pro bono vs. paid, I would refer to the J curve above. Generally, a quick coffee with general feedback is fine pro-bono and represents a low risk for both the startup and the clinician. Consider this a tester, a teaser- you get to evaluate the startup, the founder, their ideas and philosophy. If the founder turns out to be some money-grubbing AI tourist with a cavalier attitude to data and security, maybe passing up further engagement would be smart. Likewise, the startup will also be able to evaluate you- can you fit into their team, your knowledge and ability to translate that into their vision.

However, once the complexity and time requirements start to build, you will soon find it increasingly dissatisfying to engage without some form of renumeration.

Generally, remuneration takes the form of outright cash or equity (in its various forms). I have a lot of not very nice things to say about equity because, on the whole, it’s unlikely (but I stress not impossible) to realise any significant return on that front. Usually, advisory shares are prone to being diluted and find themselves at the bottom of the heap in terms of preference. Sure, famously, David Choe received Facebook shares for his mural. But that’s what one out of how many startups?

But cash is also a conundrum; how much to charge, and when and how? There are some consultancy platforms, but I think a good reference point might be locum rates on an estimated hourly basis or task-based motion.

It is also going to be much better to broach the topic upfront- to avoid any potential expectation mismatches. Mind you, this does not need to be a fully fleshed-out agreement of a rate of x/hr from this date onwards. It can be a simple discussion around what you are willing to do pro-bono / when, and what you would negotiate for.

This protects both you (if the startups says they will never, ever, pay, then you know what to expect and can disengage at your choosing) and the startup (what happens if the advisor suddenly asks for 10% of shares!).

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Hedley Byrne-style liability; or That Time You Gave Startup Advice Over Coffee — And Why It Might Matter

So you’re a clinician, and someone in your network—maybe a former classmate, a friend-of-a-friend, or that startup founder you met at a digital health panel—asks for your input on their healthtech idea.

You chat. You offer thoughts. Maybe they ask:

“Would this kind of algorithm need regulatory approval?”

“Do you think this is a medical device?”

“Would the GMC have an issue if a GP used this?”

You answer honestly, but casually. You’re not getting paid. You’re not signing anything. You’re definitely not thinking of this as formal advice. It’s a friendly conversation, right?

Well… maybe.

Here’s the wrinkle: there’s a classic legal case from the '60s called Hedley Byrne v Heller that still applies today—and it says that even casual advice can carry legal weight, if someone relies on it and things go wrong.

Let’s break that down.

The Three Ingredients of Liability (According to Hedley Byrne)

1. You give advice or information in your professional capacity

   You’re a doctor. You’re known as someone who understands the regulatory or clinical world. So when you speak, it sounds credible.

2. It’s reasonable for the other person to rely on what you say

   You weren’t just chatting about football or the weather. You gave a view that, to them, felt like the kind of opinion they’d expect from an expert.

3. They actually rely on it—and suffer a loss

   Maybe they skip regulatory consultation. Maybe they launch without due diligence. Maybe they pitch to investors with confidence based on your comments.

If all three line up? You might owe them a duty of care, even though you never signed a contract or received a penny.

Scary, right? But it’s not about fear—it’s about awareness.

The “Coffee Chat Trap” — Where Good Intentions Get Messy

Clinicians are generous with their time and knowledge. That’s great. But startups often move fast, take shortcuts, and rely on informal advice far more than they should.

So your innocent “That probably wouldn’t count as a diagnostic tool” might become the reason they don’t get CE/UKCA marking—or why they end up breaching data protection regulations.

You didn’t mean to lead them astray. But you could still be liable if a court says they reasonably relied on your word.

So What Should You Do?

Here are a few simple strategies to protect yourself without becoming paranoid:

• Be clear about the limits of your comments

  You can literally say: “This is just my informal opinion—I’d recommend getting formal legal or regulatory advice.”

• Avoid off-the-cuff statements about risk or compliance

  If it’s borderline or unclear, say so. Don’t guess.

• If you’re getting more involved—make it formal

  If they keep asking questions, or if they’re quoting you in pitch decks, it’s time to talk about formalizing your role. That might mean joining an advisory board, signing a consultancy agreement, and getting indemnity insurance.

• Put things in writing—but the right kind of writing

  Oddly enough, vague emails can be worse than silence. If you do write anything, make sure it includes the right caveats.

The Bigger Picture

This isn't just a one-off issue. As more clinicians dive into the startup world, we need to get savvy—not just about innovation, but about our professional footprint in those spaces.

You're not just a friendly face giving feedback. You might be seen as the “clinical authority” on whose word people build products, raise money, or make regulatory decisions.

It’s exciting. It’s impactful. But it’s also risky—unless you know the landscape.

So the next time someone picks your brain at a café about their shiny new health app, remember: a bit of friendly advice can carry more weight than you think.

Stay tuned for the next chapter of Diary of a Physician Defector, where I go through some specific points around how to stay relevant in a rapidly changing industry