It may seem impossible to get investors interested in your medtech startup when the trend seems to be that venture capitalists prefer later stage medical device companies, overseas ventures, or Web-based or digital media companies. Not to mention that the current economic climate is not exactly conducive to anyone who is trying to secure money for their projects.
Charlie Chi, PhD, suggests using a capital-efficient business model and to accomplish as much as you can with as little cash as possible. She offers some great tips for medical device startups:
- The Right Team- Getting the right team in place is one of the main pillars of a capital-efficient business model because doing so can save both time and money.
- Time is of the Essence-The goal of any emerging medical device company should be to out-innovate larger competitors, as well as get one’s product to market before other start-up companies can do so.
- Choosing a Sound Regulatory Strategy-Start-up companies need to determine the various regulatory options and develop capital and time efficient business strategies that include both the United States and other countries.
- Growing Carefully Through Strategic Marketing- Start-ups following this model should not ramp up sales and marketing teams or launch their products nationally too far in advance of revenues and market validation. In contrast, it will be more important for them to focus on local or regional markets initially to validate their products.
- Outsourcing Non-Critical Business Functions- Emerging medical device companies should focus on their core technology, such as research, design and innovation, and outsource non-critical business functions, such as payroll, accounting, HR, and IT.
- Compensation for Sales Team-For start-ups operating with limited cash and resources, hiring and supporting a permanent sales team is extremely expensive; paying commissions is much more cost-effective.
If all else fails, take heart in the fact that not all venture capitalists are only interested in late stage development companies. Mike Carusi, general partner at California venture capital company Advanced Technology Ventures, is a firm believer that you can strike gold by investing in early stage companies. He goes so far as to say, “Many of these late-stage deals are crap,” to an audience gathered at the Medtech Investing Conference in Minneapolis. His confidence stems from the fact that Advanced Technology Ventures’ philosophy of investing in younger companies helped it see pay day in two major deals. He believes that investors focused on late-stage companies are missing out on these types of deals. ”The reason they are late-stage companies is because no one was interested in them.” Take that, all you naysayers out there…