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Writer's pictureSteve Bell

Common reasons MedTech Startups struggle and fail

90% of startups fail and over 75% of medtech startups fail. That's a sad yet not surprising number.

There are several reasons that this happens - and fortunately most of them can be avoided if you just get the right help and information.



Common mistakes medtech startups make
Common mistakes medtech startups make


Wrong idea

This is a fundamental issue with any product in any sector. And the "arriving at the wrong idea" can stem from many reasons: It can be that a tech team has a cool tech and then they look for ways to apply that to clinical practice (which is backwards) - it's a solution looking for a problem. But a high degree of Universities do it this way.

It can come from a misunderstanding of "need vs want" and therefore the clinician gives you their perceived want and that is actually not the right solution.

It can be that the idea has been done a hundred times and failed a hundred times.

But fundamentally you need to get to the "Right" idea that is solving a genuine problem in healthcare. There are way too many ideas that are "nice to have" not "essential to have."

If the idea is just wrong then the fundamentals of the business are just wrong.


Small idea

Even the right idea can end up being a small idea. And I'm not saying that small idea don't have value - it's just that small ideas generally are very hard to make into a sustainable business. They never reach a critical mass to sustain the infrastructure needed to get a product on the market, and keep a product on the market. I strongly suggest that the more successful ideas can reach a $100 Million sales value per year in the outer years. (I won't go into profitable now but that is another criteria that must be assessed.)

Go for the big ideas.


Not fundable idea

If it's a wrong idea, small idea, an idea you can't somehow protect, an idea that infringes someone else's IP, an Idea that requires vast vast expressive clinical trials that outweigh the return in sales etc etc - then the big issue you will get is finding people to fund the idea all the way to the end.

The first part of the MedTech startup journey can be relatively inexpensive to knock up a few conceptual prototypes or mock ups. But in a highly regulated industry, the costs mount quickly. So from day one you need to be able to get funded. Yes, some friends, family and fools can drop some seed cash in. And maybe even a few angels will come in at the early stage. But to get this idea to market you will need big money (for a big idea) and if the idea is just not fundable - it's as good as dead.


Unable to get funded 

This is subtly different than a not fundable idea. The idea may be great - and profitable - and doable - and exciting and all that. But you and your team just cannot get funding. This again can be for many reasons - but one of them is that you just suck at asking for money. You don't know how to pitch in a professional way that is compelling. You may have no credibility - you're a novice. You don't speak the right start up language to convey confidence. Often you ask the wrong people for money, or you pitch to the wrong level funds at the wrong time - "Too early" - "Too late". Fund raising is an art combined with a science.

Want to learn how to pitch better then check this course out: https://www.howtostartupinmedtech.com/pitch-perfect


Focus on R&D

A lot of people have the misconception that start ups are all about cool ideas being generated through groundbreaking R&D. Well yes - but that is a tiny fraction of a start up. R&D in itself is not a business - and investors invest in businesses - not research projects. When a startup is all consumed by R&D it fails to set down the fundamentals of an actual business. The business is the wrapper for the R&D, and the core business must be sound. 

Too often funding presentations are like R&D review decks - and all the effort of the company is in the tech. That consumes all the resources - time and money - and you end up with a great demonstrator - that is just disconnected from the reality of a profitable, real world business.

The fundamentals start with the business need - and then set the sandbox for the development - and then R&D needs to be a service inside that business wrapper that develops a product to defined specifications that match the user needs and the business needs. 

You can't build a widget that costs 10K if it can only be sold for 1K -- the tail can't wag the dog.


Cost plus mentality 

Healthcare is quite unique in the way to is funded and value is assessed. There is not an unlimited money tree that is just waiting to buy fancy new tech. One of the biggest failings of startups in medtech is not setting the financial parameters well enough before R&D is unleashed. It starts with who will pay and how much will they pay. And then works backwards to the what feature set can you afford in the product - and build the product and still be at 70% plus margins.

Instead I see it all the time - creep in scope - creep in costs. The team (without boundaries... so quite rightly) sets off to the make the BEST product they can. Irrespective of the cost it will incur to make. They get an amazing prototype and then work out what it is costing to build. Then someone throws that over the fence to marketing and says "You'll need to make 70% margin, so the price you need to sell at will need to be X."

Wrong, and a disaster in the making. It must be the other way around - start with the willingness and ability to pay and work backwards - and then trim the product to hit a cost of manufacturing target. And don't allow creep - no matter how cool this new small added feature would be. 

If that is impossible - then sorry you don't have a viable business. 


Not listening to feedback

This one infuriates me more than anything else. The founders are so "Steve Jobs" convinced that they know best - that they start to ignore expert feedback, and end user feedback. The team gets into an internal think loop that just filters out any negative feedback. Sometimes it can be heard - but converted into "Well I hear the feedback but it's good enough for today and we'll fix it in the next version."

If these conversations are happening - the product is at great risk of being a failure at best - a dangerous product at worst. 

There needs to be a constant feedback loop from end users, end purchasers and anyone in your internal team that will interact with the product (e.g. sell it.)

R&D should not be the judge on feedback - they should be the implementors of the feedback. I know that is very hard to get your head around for some people... but R&D can be part of the input loop to feedback - but they cannot be the team that decides what feedback they take and don't take. That needs to be in professional hands such as strategic marketeers and based on data not sentiment.

I have personally seen a great product and company destroyed because the R&D team was unleashed with inordinate power and decision making ability. Individuals that were not qualified to make decisions on "what is good enough clinically" made these decisions and the product was woefully wrong on so many levels.

If your users tell you your product is ugly - listen! Hear! Improve!

Startups with products built in their own "echo chamber" usually fail.


Not understanding commercialisation

Next to last on today's list is something dear to my heart. Often (and depending where the idea comes from) the teams with the idea or founding the company have little to no commercialisation experience.

University researchers - just won't have been exposed to what it takes to commercialise a modern medical device. They will have no clue to the vast costs, resources, time and the industry professionals needed to do this in a meaningful way. 

Often clinician inventors feel "Well I've interacted with sales reps, I've bought products, I've been exposed to how things are commercialised... I've been to their trade stand..."

No - that is the front end and the tip of the iceberg. Commercialising products is a massive science - with multi factors that end users very rarely get to see. That is why the big strategics are masters of the commercialisation - because they have that well oiled engine to put products into that commercialisation factory. The end users see little of the magic behind the curtain.

Many startups fail because they don't understand what real commercialisation is, when it needs to start (very early), what factors make it successful, and the vast amount of funding and resources it needs. It's the lion's share of the entire funding of any company.

Learn about commercialisation and get experts in.


Wrong team leadership

I'll leave this until last.

One of the major reasons I see startups fail is that the founders remain as the leadership team. This is often a fatal flaw. Many founders are not medtech startup leaders - and that takes a very special skill set. A huge part of the leadership team's job is to raise money - build the right teams and set a strategy for successful and profitable commercialisation. There is no room for the ego. There is no room for narcissists. 

Everyone points to Steve Jobs as a "great leader" and "Visionary" - well try and run that character playbook in 2024 and see how far it gets you. 

You need a balanced and experienced medtech leadership team. You can have a few rare components that don't know medtech - but in a super sectorial - regulated - complex business you better have people that understand what this field is about. You need seasoned professionals.

Too many times I've seen non medtech professionals scramble to try and even understand the basics of the business - never mind inspire confidence in team and perform true leadership. It becomes the blind leading the blind. 

The best founders are those that set the initial spark - then hire in competency and move out of the way, and let professionals run with that amazing idea.


If you want to know more about how to overcome these problems - I have built a deep online course to walk you through all aspects of this. You can't know everything... so this course will help the novice and even the experienced founder. It will certainly help first time surgeon founders, and researchers wanting to build a business. You may not like all the advice in the course - because I've been brutally honest. BUT if you want to improve you chances of success - if you're just starting the venture, or deep into commercialisation of the product - this course will help you:

www.howtostartupinmedtech.com - visit now and book mark for later.




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