A medical startup requires a compelling medical device business plan to get skeptical investors into confidence. This plan shows that the device under development will achieve or even exceed the maximum expected ROI. Investors have their own interests and the startup must show that their interests are met. Fundraising for medical innovation is a multi-stage process. Each stage comes with a unique set of challenges. Following five tips will help a startup looking for funds.
Build The Business Case
A great idea is not enough to secure funding. A startup needs a medical device business plan to attract potential investors. Start with building a compelling business case. Conduct thorough market research and prove the concept with a prototype.
Ask the following questions to define basic, core information:
- Why is innovation necessary?
- Does it address a proven clinical need?
- Is there any competing device already in the market?
- What is the market size for the technology?
- Who will purchase the devices?
- Who will be the end-user?
It takes a proven concept to garner potential investors’ attention. The medical device company must build a prototype to communicate the vision of the device. The prototype does not have to be in its final, go-to-market state. External stakeholders including investors get an understanding of the long term goals.
Establish A Regulatory Strategy
Establishing a regulatory strategy executive summary is a challenge all medical device startups face. This valuable asset highlights key milestones and deliverables to pitch to potential investors. The goal is to demonstrate the following two key things:
- The company possesses knowledge and experience to secure funds.
- The company understands how to position its device.
This industry changes constantly. These changes have both direct and indirect impacts. Investors want to ensure that the device meets regulatory requirements. Potential regulatory roadblocks always discourage potential investors. A solid regulatory strategy is essential in the medical device business plan.
Leverage Pre-submission Pathway To Market
The majority of 510(k) submissions face FDA rejections for various reasons. This makes startups consider the pre-submission pathway. A startup taking this route must include a line in the budget allowing the necessary time to prepare its submission. Remove hypothetical discussion and guesswork around the timeline to get the device to the market. The pre-submission pathway gains an insight into FDA submission expectations. Many companies go through this process early on in development (even before building a prototype) to establish credibility with potential investors. It is a big value proposition.
Document Design Controls And Risk Management
Start with reviewing the medical device business plan, device technologies and exit strategy for getting acquired or bringing the device to market. Use gathered information to put together valuation. Most investors look for proper risk management files and design control documentation.
Design controls confirm device safety and ensure that it meets the requirements. Risk controls are equally important for medical device safety and efficacy. This helps in securing funds for the device.
Know Investor Types
Investors’ goal is to make money with minimum risks. Following are the three concerns about risks:
- Technical risks – (Does the device work?)
- Business risks – (Does it have a market?)
- People risks – (Does the medical device company have the right people?)
The company must learn about different types of investors. Each investor has its own set of business drivers. There are low-risk investors and high-risk investors.
From medical device startup business plan to exit strategy, working with medical device consulting firms help in creating strategies that work. Medical device consulting firms help medical device startups with commercialization strategy (voice of the customer, market analysis, key opinion leader ID, risk analysis), competitive strategy (competitive analysis, positioning analysis), financial valuation, exit strategy and portfolio analysis.