5 Tips for Entrepreneurs to Raise VC Investment for Medical Device Startups
As a medical device startup entrepreneur, you might think that a great product or technology is the key to secure venture capitalist investment. However, you are far from reality. Developing a high-quality medical equipment or sharing a brilliant idea certainly helps in capturing the attention of VC investors, but this doesn’t ensure your funding as there are many startups in the market with good medical devices. So, you need to be one step ahead of your competitors. Make investors feel connected to your idea and show them how far-fetched will be the applications of your device to grab the investment.
Prior to pitching for funds from potential venture capitalist groups, the entrepreneurs running medical device startups will need to do loads of homework and meticulous planning to get the investment. The current market is in favor of entrepreneurs running medical device startups as the investment returns have been great so far. Therefore, venture capitalist firms are ready to invest in medical device startups and healthcare startups with great potential, extraordinary products, and innovative ideas.
This article will explore the factors medical device startups must consider to raise VC investments for their businesses.
5 Factors to Consider Before Raising VC Investment for a Medical Device Startup
Create a Comprehensive Business Plan
Start your preparations by creating a complete and comprehensive business plan detailing on how you plan to grow your startup. A well-drafted business plan must describe what the startup plans to do and how will they execute their strategy. A business plan fulfills a two-fold objective: first, to create a business vision for the document; second, to capture the attention of potential venture capitalist firms interested in investing. The section below enlists all the sections that a great business plan must cover.
- Executive Summary: In this section, emphasize on the business strategy and highlight the reasons you think will be pillars of your success. Alongside, briefly describe the products and services the startup will offer to its clients and why the market will need the product. It is also recommended to present a synopsis of the financial strategy that the medical device startup plans to undertake after receiving investment.
- Device on Offering: In this section detail the technology of the medical device and describe how it will be channelized into the market.
- Marketing of the Device: This section will describe the current and future market scopes of the devices and services offered by the startup. It will also detail the marketing strategy of the device, including a sales forecast.
- Regulatory and Clinical Approvals: Detail your company strategy regarding FDA approvals and how you plan on gaining it.
- Operations and Manufacturing: Describe where and how the product will be manufactured, packaged, and stored. Include a section detailing on how you plan to comply with the FDA rules for Good Manufacturing Practices (GMP).
- Financial Strategy: Include a concise projection of the startup’s five-year plan, cash flow statement, and balance sheet in the financial strategy while making the business plan.
- Risks: A good business plan always discloses all possible obstacles and risks the company may face. While at a glance this may look like a bad decision, as an entrepreneur you must keep in mind that the VC investors are not afraid of risks. If that were the case they would not have shown interest in investing in medical device startups.
Know the Potential VC Investors:
Top venture capitalists entertain and hear pitches from more than a dozen of medical device startups each week. So it is crucial for you to stand out from the crowd and grab the attention of investors while presenting the pitch. To achieve this goal it is important to conduct a background research about the goals and objectives of the VC investor and how similar it is to the objectives of your startup. Once these factors have been analyzed, you can pitch accordingly to connect with the investors and show them that you are passionate about making the best of this opportunity.
Understand the Expenses:
Before making the pitch, startup founders must understand the expenses they will incur and exactly where to invest their time and money once the funds come in. Medical device startups can present accurate and precise investment projections once the possible financial challenges and constraints have been analyzed.
Connect with Experienced Peers:
Connect with the peers who have experience in VC investment pitches and talk to them about the nitty-gritty and nuances of the trade. Experienced startup professionals already working with VC firms can give you in-depth insight and perspective into how to raise VC investment. While building such fruitful relationships can be a challenge, it would be worth the experience and knowledge gained through such opportunities.
Develop the Pitch Carefully:
In layman terms, a pitch is a concise summary of your business plan. While a comprehensive business plan is usually 20 to 50 pages long, investors will only give it a thorough read if the startup gets selected for further talks. There are two factors a startup entrepreneur must consider while preparing an investment pitch.
- Always provide updated financial documents, including operational expenses, revenue projections, cash flow, which will present a precise picture of the potential
and health of a startup.
- Create a pitch consisting of five informative slides which will summarize all the goals and objectives of the business that has been communicated in detail in the business plan.
The Bottom line:
For a rising medical device startup, VC
investment is necessary and can be achieved with careful planning and meticulous preparation. VC firms not only bring in funds from top-notch reliable investors but also bring the startup into the limelight. Thus, getting VC investment for a startup boosts and catapults the business into the path of success.
References:
https://www.rocketspace.com/tech-startups/how-to-prep-for-raising-vc-5-tips-for-startups
http://www.denovovc.com/articles/medical_startup_tips.pdf
