Source: Global Data Medical Device

In the healthcare sector, there are still many unmet clinical needs for which MedTech solutions can provide significant value to payers, providers and patients. There are significant pools of capital available from a variety of venture capital, venture debt, corporate venture capital, crossover, private equity, sovereign wealth funds, high net worth individuals and family offices.

Any fundraising process hinges upon a company’s story at a given point in time, starting with the origins of the technology and flowing through to a vision for the product or service and its value add within the healthcare system. In telling their unique story, MedTech entrepreneurs should always ensure the clear and concise articulation of the following:

1. Product Market Fit: Novel technologies are interesting but interesting is not sufficient in the current healthcare environment. New products must fulfill an unmet need of physicians, patients or payers. Entrepreneurs should focus on backing up claims with independent market research, physician surveys, patient testimonials, case studies, market models, etc.
2. Use of Proceeds: Fundraising should be driven by the capital required to meet future development, clinical, regulatory or commercial milestones that are deemed critical in driving the business forward. Companies and entrepreneurs should be prepared to present detailed financials with sensitivity analysis illuminating cash runway under different a variety of potential scenarios. Financials should also illuminate the key levers that can be managed by the leadership team if certain goals are delayed or if the company needs to pivot. Delineating personnel, consultant and program costs in addition to CapEx can be an easy way to identify financial levers.
3. Relevance of Risks: As investors progress through diligence, there will be occasions in which entrepreneurs need to focus investors on the key issue at hand. It is irrelevant if a company is going after a $15.0 billion total addressable market or a $15.5 billion total addressable market. What is important is how the company’s product is a better fit for that market, why the company’s commercial strategy will provide a strategic advantage in the market and why the company’s team is poised to capture the market opportunity. Due diligence can become tedious at times, but ensure investors are focused on the elements of the business that move the needle.
4. Team Capabilities: There are many unknowns when launching a new product and at the end of the day, investors must get comfortable with the team they are investing in. They must be comfortable that the team will rapidly experiment, adjust and dynamically change to meet deadlines and achieve milestones. Ensure potential investors spend enough time with key team members to feel comfortable with the leadership team that is driving the business forward.

Although the MedTech fundraising environment has been challenging for several years there is capital available for novel technologies that are shaping and changing the healthcare landscape across a variety of applications. Entrepreneurs are best served to commence their process early and to be prepared to speak with a wide variety of investor types throughout the process. Additionally, product market fit, use of proceeds, relevance of risks and team capabilities should be highlighted consistently throughout the process and infused throughout the management presentation. Investors are always looking for interesting opportunities and it is up to entrepreneurs and leadership teams to illuminate the possibilities for any new MedTech product.

Please contact samantha@locustwalk.com to learn more about our medical technology practice and our transaction advisory capabilities focused on assisting entrepreneurs in sell-side, buy-side, private placements and strategic advisory engagements.