How Medical Device Companies Raise Money - Build something people want

Unsuccessful Startups Are All The Same. They Are Uniquely Unsuccessful.

The need. The solution. The market. Can you speak to these in one minute? It can be that easy initially.

You may have heard the buzz surrounding medical device technology. It’s a growing market. Artificial intelligence, gig speed internet, and many other high-tech advancements have opened doors that once seemed very futuristic. And in the race to come up with the next big thing, there is no shortage of medical device startups this year.

But you may still be wondering one thing–who exactly is footing the bill for these endeavors? Usually family, friends, extended family, and extended friends. Then what?

That’s where it gets a little complicated. Funding for medical device companies comes from various sources, and it’s all highly competitive. And that means that medical device companies not only need to have a compelling product to lure investors, but they need to be on the top of their game in every way that it counts when it comes to running the business. Investors aren’t just looking for a promising product; they want to know the company behind the product is worth their time too. Here are some of the most common funding options this year.

Challenges for Medical Device Fundraising

The biggest challenges for medical device companies often come down to beating out the competition. Many investors look at hundreds of potential ideas before choosing just one. That’s a lot of fish in the sea to compete with. And that means that to have a real chance at getting funded, medical device companies need to run a tight ship.

The startup should involve educated and experienced guidance in either leadership positions through a MedTech accelerator or another arrangement. Investors will shy away from committing if the existing management team doesn’t have a strong background in business or the medical field.

Related: Frankenstein Sparked Development of Novel Medical Devices

The device or product also needs to be backed with thorough market viability research and a stellar pitch deck that efficiently communicates the highlights in a brief pitch. Investors aren’t looking for devices created on a hunch; they want a surefire win, so the company that was able to put together the best data is often the one that wins the funding. For startups with limited resources, this will always be an uphill battle. We can help.

Small Business Innovation Research Grants

These grants are part of a federally-funded program to inspire innovation in business and keep American companies competitive globally. The SBIR program has been around since the 1980s, and it is one of the most popular ways for medical device startups to get the money they need. To qualify for an SBIR grant, medical device companies need to meet certain criteria, like (i) Operating a legitimate, for-profit business with appropriate licensing and registration in the US. (ii) US citizens or lawful permanent residents have more than 50% ownership and control of day-to-day operations. (iii) Have less than 500 employees, including all affiliates. (iv) Be actively engaged in research and development for innovation.

Angel Investors

An angel investor can go by different names. Perhaps you’ve heard terms like a private investor, seed investor, or informal investor. These are all different ways of saying the same thing. Angel investors are individuals or a network of pooled individual resources that support startups. They’ve become increasingly popular in the medical device community due to the risk level of technology innovation that makes traditional funding less likely.?

The typical angel investor has verifiable proof of income between $200,000 and $300,000 per year or a net wealth over $1 million. When they invest in medical device companies, their investments are between $30,000 and $2 million. These investors may be drawn to Medtech startups based on personal experience. If they directly suffered from a condition that your device will improve treatment options for or if they know someone who suffered, they’re often motivated by their emotional connection. They prefer to be involved in a hands-on way.?

Global Strategic Solutions provides expert consultative experience to manage your medical device companies risk. Get to know us today.

Venture Capital Funds

The tried-and-true method of financing business startups works just as well in Medtech as anywhere else. Venture capital funds are pooled investments managed by investment firms using money that individual investors place with those firms. There are many rules involved with venture capital funds. Still, the bottom line is that startups who use this approach are generally on the hook to meet a specific return on investment which means it is one of the most labor-intensive funding options that can be risky for the startup.?

MedTech Incubators

Incubators and accelerators are traditionally positioned as a support role for startups. But these organizations have increasingly become viable sources of funding as well. Startups benefit in big ways from working with incubators and accelerators. These organizations often provide access to education and experience that a startup might not otherwise secure independently. When fundraising becomes a natural extension of what these organizations are already providing, it helps the startup gain the necessary experience in soliciting funds from various sources. Eventually, the startup will outgrow the incubator and begin looking elsewhere using the experience they gained here.

Special Purpose Acquisition Companies (SPACs)

SPACs are also known as blank check companies because they are formed without specific products or services. Instead, they have one goal: to acquire a promising company. Or, in other words, it is a company formed to provide capital to the right idea. With the growing popularity of medical device technology, it’s easy to see why SPACs have garnered much attention in recent years. These blank check companies do invite some scrutiny simply because they are organized, but the popular opinion is that SPACs are here to stay.

Related: 3 Medical Device Startups to Look Out For

Bulletproof Your Startup

As mentioned previously, unsuccessful startups are all the same. They are uniquely unsuccessful. However, there are five myths that can jeopardize your growth and ten strategies that you can implement to bulletproof your startup. As you build your strategy, please understand that patents attract funding, increase the value of your company, and double your chance of being successful within ten years.

What's in your strategy? We can help you work to develop a strategy specifically for your medical device. This is a fun activity that we will lead you through to bring into focus a fundable and approvable plan or initial approach.

The Bottom Line on Medical Device Fundraising

There are thousands of great ideas out there that never get funding. It takes a whole lot more than a good idea to get things rolling. In many cases, medical device startups need to operate a viable business and show reasonable proof of claims regarding the return on investment before anyone is going to cough up money to put their product on the market. Whether the funding comes from a venture capital fund, SPAC, grant, or another source, the money always goes to the company with the best chance of success.

Again, "What’s in your strategy?"

Global Strategic Solutions, LLC here in the Silicon Valley area in California can assist you with strategic planning, aligning funding sources, developing your presentation materials, and implementing processes to collect the data necessary for product approval. Do you need patent help? Our business partners can help.

Having a virtuous, respectable, good idea is not enough. Regulators, notified bodies, clinicians, and patients know that staying focused on developing a clinically-sound product based on evidence is fundamental. There are no shortcuts. Ensuring that a product can translate into a viable business is supreme. Eventually, it is that business that investors are putting money into.?

The odds of success are stacked against you. Knowledgeable consultants can give you a competitive advantage. Success lies not just in your belief, but in proving market viability. The better your product story – from development to commercialization – the better your chances in securing capital.?

Don’t become another uniquely unsuccessful startup. With the right team, success is within your grasp. The next product buzz is just maybe your technology!

A Fun Read: Three Reasons Not To Hire A Consultant

Global Strategic Solutions is committed to ensuring safety in the medical device field through diligent risk assessment consultation for medical device companies. Learn more today.

David R Rutledge, Pharm.D., FCCP, FAHA

President & CEO

[email protected], https://globalstrategicsolutions.com/

+1 (630) 846-0350 cell