When investing in medical device startups, investors evaluate many factors to assess the potential for success, mitigate risks, and maximize their return. Here are three key criteria and how you can improve your odds.
1. Team Quality
Team quality is arguably the most critical factor investors evaluate. Investors are betting that YOU can execute on the plan and generate a return.
Investors look for:
Domain Expertise: Team members with knowledge/experience in medical device development and commercialization.
Complementary Skills: A diverse team with complementary skill sets, such as engineering, clinical expertise, regulatory affairs, and business development.
Track Record: A proven track record of success in previous ventures or roles, demonstrating their ability to execute and achieve goals.
Leadership: Strong leadership qualities, including vision, strategic thinking, and the ability to inspire and motivate the team.
Top Tip: While not a requirement, having a co-founder can be advantageous, especially if they complement your skills like one technical and one business co-founder.
2. Market Size
A large and growing market indicates a significant opportunity for the startup to achieve substantial revenue and profitability.
Investors consider:
Market Size: The total addressable market (TAM) and the specific market segment the startup targets.
Market Growth: The projected growth rate of the market over the next few years.
Market Trends: Emerging trends and factors that could impact demand.
Competitive Landscape: The number and strength of competitors in the market.
Barriers to Entry: The challenges and obstacles that new entrants may face in entering the market.
Top Tip: Not all markets are created equally. Some are large and underserved because of barriers like poor reimbursement or lack of providers. Make sure you understand why your opportunity exists.
3. Technology
Of course, technology matters. Unique, innovative, protected technology can provide a significant competitive advantage.
Investors evaluate:
Novelty: The technology's degree of innovation and differentiation compared to existing solutions.
Intellectual Property: The strength and breadth of the startup's intellectual property protection, such as patents and trademarks.
Technical Feasibility: The technology's ability to be developed, manufactured, and commercialized.
Clinical Validation: The evidence supporting the technology's safety, efficacy, and clinical utility.
Scalability: The potential for the technology to be scaled up to meet increasing demand.
Top Tip: Technology is third for a reason. While it is fundamental, most investors, when given the choice, would take a top team with an okay technology over an okay team with a top technology. Investors need to believe that YOU can execute.
Startups are hard. We get it. Avio was born in the startup trenches. Founded by a medtech innovator, for medtech innovators, we understand the unique challenges you face. Let us leverage our firsthand experience to accelerate your journey to market.
It will never be easy or stressless, but it can be easier and less stressful.
P.S. - the Avio team interviewed over 100 medtech investors on why they say no. Want a copy of the report? Reach out!
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