This is my new stock answer whenever a medical device hopeful needs capital.
Fill out this form. If you can't answer the questions on this form, your prospective investors ("smart money," if you will) don't have enough information.
I can't take credit for the form. That came from Mark Kraus who, until recently, was life sciences chairman for a Seattle-based keiretsu.
For investor presentations, Mark expects graphs, pictures, timelines, prototype examples, and simple tables to complement the application.
"The presentation needs to tell a story that captures the essence of the company and why this is a great investment opportunity," he said, adding, "If company executives can't provide the above, they probably aren't ready."
How to Give a Medical Device Pitch
Watch the video below for some sound advice we received a few 10x Medical Device Conferences ago. Full transcript here.
Seasoned VC Jeffrey Kraws summed it up nicely:
"Assume I already know this:
- I already know you’re going after a large medical market with unmet medical needs.
- I already know you think you have the best medical doctor out there on Planet Earth and he’s the world’s expert in this area.
- I also know your management team has gazillions of years of experience and are the best at everything they do and have a proven track record and have done this.
- I also know you have strong IP.
- I also know you’re going to do this at a cheaper cost than anybody else.
- Faster, better, and oh my God, do you know that company A and company B got sold for this much? Their stuff is crap. Our stuff is the real deal. We got all that."
"I hear that everyday all day long," Jeff punctuated.
His overarching points: Anticipate his questions. Answer succinctly. Say "I don't know, I'll get back to you," when you don't know. Then get back to him.
Tis the Season 🎄
Christmas and New Year's fall on Tuesdays this year but I still plan to write you, on schedule. To set expectations,
- Christmas Day: Little copy, mostly videos of interest. Perfect for your "me time."
- New Year's Day: Paula Rutledge will share her insights about the 2019 job market.
You know I sing barbershop, right? Here's one of my favorite quartets with a little Christmas ditty. Enjoy. 😊
Give the Gift of Knowledge! 🎁
These members have questions. Do you have the answers? Visit our community discussion board and catch up on what you missed.
- Mahamad in India has an urgent BREXIT question about EC representation.
- James in the UK is having a great conversation with Rob Packard about electronic documentation.
- Maggie in Sweden is getting ready for the switch to MDR.
Thank you for being part of our Medical Devices Group community!
If you're looking for work, check out the newly posted jobs here!
Make it a great week.
Medical Devices Group Leader
P.S. Tell your friends in cardiovascular: Michael Dale, President at Abbott Structural Health will open our 10x Medical Device Conference on May 15. He'll immediately be followed by Mahesh Mulumudi, Chief of Medicine at Providence Regional Medical Center. Mahesh will tell us "What You Need to Understand Before You Sell That Device to My Cardiologists." I'm loving this agenda! See the full agenda.
Hey Joe, How's it goin'? Listen, me and the guys are gettin' together and makin' this thing. It's gonna be big. So if you know any big shots from one of your schools or businesses or anybody with a lot of money, tell them about us, okay? I'm tellin' you, you can get in on the ground floor of this thing and it's gonna be big. Call me, all right? We'll get a slice.This is no way to raise money, people. The message came from someone I hardly know who asked to connect with me here on LinkedIn. I did; he's in the industry, and we have 200 connections in common. I won't be sending him any leads. In fact, I'd delete it out of hand if it weren't so outrageous that it compelled me to stop what I was doing to write this piece. Giving him the benefit of the doubt, here's what he's saying.
Joe, you're a person of influence so I thought I'd write you. Please learn about my company, our strategy, our management, our intellectual property, our capitalization, and our likelihood of ever launching a product that will convince our target markets to switch their behaviors in favor of the behaviors that would enrich us.I suppose the next logical step would be:
I assume you know a lot of people with money. Please use your reputation and influence with them for my benefit? You might say, "Hello. It's been a while since we last spoke. Since you trust me, I'd like to tell you about someone I met. I did a deep dive into his company and while I've never spoken with him directly nor am I personally taking an equity stake, I think you should invest your money with him, or at least hear what he has to say. I wouldn't waste your time if I didn't believe in this. Good luck! And let me know what you end up doing!Sadly, that was the good scenario. The less generous interpretation is:
I'm looking for money and it would be great if you forwarded this message to anyone who might possibly invest in us.In that last one, my cash-poor friend didn't even stop long enough to consider how fast-and-loose he was playing with my reputation.
Moral of the storyDon't do that. Instead, consider what Mark Kraus, a member of the world's largest angel investor network, advised members of the Medical Devices Group back in 2015. He says: "When I am approached about a company, I generally ask for two pieces of information: • A one or two page summary of their business; and, • A short slide deck that the company uses in a 7- to 10-minute pitch for fundraising. The 1-2 page summary should include the following, each with a concise, single paragraph and/or bullet points. It's important to be concise – it's not a full business plan! Company Contact Info – name, address, url, key management, board, advisors, contact info for CEO Company Overview – elevator pitch summary of the company Market Problem – what problem / opportunity is the company trying to address? Solution – What product / service is the company developing to address that market problem? Market – Short description of overall market segment (overall size, revenue, segmentation and competition) Regulatory – What is the regulatory status or plans for the company’s product / service? Intellectual Property – Describe any patents granted, patents applied for, licenses, university/other commercialization agreements Business Model – How will your company make money? How will investors make money (exit, IPO, partnership, etc.)? Deal Terms – Prior funding summary, pre-money valuation, deal terms for current raise The slide deck needs to address the above points as well, albeit in a presentation format. Graphs, pictures, timelines, prototype examples, simple tables are often used. Generally a little more detail on financial than the above one pager allows, but important to keep it high level and not a detailed, complex spreadsheet. Overall, the presentation needs to tell a story that captures the essence of the company and why this is a great investment opportunity." Mark said if company executives can't provide the above, they probably aren't ready for his money.
For further reading, all these Medical Devices Group discussions:• Creative Funding in a Difficult Medical Device Environment http://medgroup.biz/creative-funding • How much money do you need to raise? http://bit.ly/how-much-raise • Why can't I get my start-up funded? http://bit.ly/why-not-funded • What 3 things must a startup do to get funding? http://bit.ly/get-medtech-funding • Is a prototype enough? http://bit.ly/ptotype • Medical Device Funding’s Dead Zone http://medgroup.biz/dead-zone • Got a $10-million idea? Who cares! http://bit.ly/10-mil-who-cares About the author: Joe Hage leads the world’s largest Medical Devices Group (350,000+ members), the industry’s only spam-free, curated forum for intelligent conversations with medical device thought leaders. Mr. Hage’s medical device marketing services help companies engage qualified prospects and his 10x Medical Device Conference unites Medical Devices Group members in an fun and educational forum each year.
In my experience, one unintended consequence is an undercapitalized startup, starved for cash and struggling to achieve milestones with inadequate resources. I own stock in one enterprise that has projected accomplishing its next important big step in six months for the last seven years. With the passage of time, the danger of another new market entrant eating their lunch grows. They could well save on their fare but miss the boat.
Other founders have told me that they loathe raising money, hustling to convince angel investors and or VCs to get attention to make a pitch, and facing serial rejections – even from people who stared at their mobile devices during the presentation. Worse yet, some potential investors do not respond definitively one way or the other. They seemed to endlessly discuss the idea with their partners, or ask for more information, or wait for another investor to move first. No wonder that so many entrepreneurs find the process highly frustrating, even when they are confident that they will eventually succeed at raising the next round.
The balance of risks is a difficult question. Whether it is more dangerous to raise money and risk control and share of the pie, or to shun new money and perhaps slow growth or even invite getting blind-sided by new competitors. Equity-stingy founders may fail to ask the question openly, or exert a genuine effort to answer it honestly, or to revisit the question at appropriate intervals. That kind of mistake could prove fatal.
University offices of technology transfer do their best to license out their technologies. If they can't find a licensee, they are not in the business of marketing the product, or even paying maintenance fees. They do need to justify their existence by generating a net positive cash flow to subsidize the costs of the institution and research.
So, off go some patents to the evil patent trolls. However, let it be known that those accused of infringement could have licensed the technology from the University, or ... the Troll.
Public universities and even the US Navy have sold hundreds of patents to America's most notorious troll
Public universities and even the US Navy have sold hundreds of patents to America's most notorious troll
Reimbursement Seen as ‘One of the Biggest if not the Biggest Barrier’ to Medical Device Market...
Bill Hawkins, the MDIC chairman and a former Medtronic CEO, said that regulations are not the biggest impediment faced by device makers.