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The struggles for raising money into a MedTech Startup

Updated: Apr 24

Investing into certain sectors like medtech is cyclical - it always has been.

Unfortunately since 2021 it has been on a bit of a dip. That often though comes with an upswing in M&A (Mergers and acquisitions) activity - as we are now starting to see with Karl Storz bidding $75 Million for Asensus and the mind blowing acquisitions by Johnson & Johnson of Abiomed and now Shockwave Medical - for $13 Billion. With a B.

So this screams two important things for start ups - and let me start with the upside. It may take a decade or so but there can be staggering exits for successful startups - there is the appetite for strategics to buy to grow. So it is absolutely worth doing that startup.

Now let me get to the problem start ups are facing at the moment, a problem you must overcome to get to that exit. You need to raise money into the company - and at the minute that is quite tough.

This graph is very indicative of the phase of the investing cycle we are in at the minute:

PE/VC investments in MedTech
PE/VC investments in MedTech

If you are in Europe - and trying to raise money from European funds - it’s always been hard but its become even harder right now!

Let me discuss a few of the current issues startups need to overcome to be successful at raising funds:

First - you need a good idea - a big idea - a credible team - and some knowledge in how to startup a medical device company.

Lack any of these elements and you will struggle to raise money.

But let’s assume you have a great idea - and it’s big and meaningful - you’ve assembled a good team - and you’ve been on my course on How to Startup in Medtech (hint hint).

You are going to have to now convince the people with money to part with that money:

You need to decide - who are you going to ask for money at this stage. Friends, Family, fools, Angel investors, family offices, VCs, PEs, money management funds, grants, accelerators etc etc.

You are going to need to decide how much you  are going to ask for and why that much.

You will need to decide how much of your company you will give up for that investment.

And then you are going to need the hardest part - to know HOW to ask for that money.

In my 32 years of doing this - and having personally raised over $1.5 Billion - I see that this is where most start ups (new and experienced) fail. And that can happen at all stages from pre-seed to series D and beyond - so don't get complacent.

The ask for the money is often refereed to as “The Pitch” - which is usually a pitch deck - and a presentation - and a demo. That is the start of asking for the money.

It may be preceded with a “1 pager” to get interest to get the appointment to pitch. But most professional investors will say “Send me the pitch deck.”

This is where many fall down:

They don’t use industry standard decks.

They don’t use coherent and standard slide formats

The decks are huge and sprawling R&D reviews.

The decks are ugly.

Before you even have the chance to present to an investor you have confused them - or tuned them off. You need to know how to a bulled a deck that will grab their attention.

The next big issue, I see, is that novice teams - often surgeons - clinician inventors - engineer founders etc etc have little experience in how to actually do a pitch presentation.

I’ve seen everything from R&D walkthroughs as if it is part of a weekly sprint. To medical congress abstracts that talk science - science - science.

I’ve seen introverts that hardly raise their voice - and extrovert narcissists that do a presentation about “me me me !”

Most end in failure - and then those companies can’t understand why they can’t raise money.

Others try to reach just three funds - get a “no” so give up. (Hint you may need cover 100 plus pitches to land a single investor!)

Others go to the wrong funds because they don’t do any homework on what those funds invest into - what fund cycle they are on - and what their portfolio looks like. And they certainly don't do enough research into who will be on the call.

I can’t help you fix some of these things in one go... but I can help in two ways now:

Firstly - I do recommend that if you’re in anyway struggling with your medtech startup - you don’t really know where to start - don’t fully understand how it work - then get on my “How to start up in Medtech” course for a fully comprehensive insight into how to do it the right way. Even if you are running a start up - if you're struggling - stop struggling and start learning:

Check out the courses by clicking here

But if you just need help with raising money - then one part I might be able to help you with is the front end of the “The Pitch.”

It’s an art. It’s not for everyone - but certain techniques can be learned.

If you’re struggling to raise money - this short course can help you>>

It will at least get you to an industry standard deck that should normally get you a pitch meeting.

If you follow the rules then you should be able to do a fully functioning pitch, and even stand a chance of landing some money.

It will at least make you competitive in the pitching process.

If you are struggling to raise money - this will help you


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