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Some incubator exits have made great headlines.
St. Jude Medical bought CardioMEMS. Stryker bought Concentric. Both were incubator graduates.
I suspect these two are outliers. How do most participants fare?
Your answers will be good background for the group. I’m visiting incubator Innovyz (http://medgroup.biz/innovyz) next week in Adelaide, Australia as a mentor for eight participating companies. I’m eager to see what I’ll find.
Innovyz Program Director Greg Eaton came on board 12 months ago, when the government and ANZ bank were the principal funders. Participants stayed for only three months. Greg changed all that: The program is now nine months and is primarily funded by industry.
I asked Greg, “Is that because you’re so confident you’ll make all the money back?”
“Absolutely,” he answered.
“What is the typical success rate for a medical device commercialization company?”
Greg a few colleagues and estimates the typical med device success rate is less than 60 percent. Sometimes they just fail; other times they exit too early. He believes Innovyz will see success rates of 80 percent.
“Why,” I asked.
“Because over our five-year, 45-company history, 39 are viable enterprises today. They’ve raised a combined $26 million. Half have been acquired.”
Our four-pronged formula is simple:
For the group, what is your understanding and experience with medical device incubators?
For whom are these programs ideal? For whom doesn’t the time and resource commitment make sense?
A SECOND OPINION
I asked my friend Allan Daisley, Program Director for ZeroTo510 Medical Device Accelerator (http://medgroup.biz/zeroto510k) about incubation successes. He said,
“Regardless of industry, most startups fail and 90% of all new products fail. Yes, the ones that succeed are outliers.
The device industry poses unique challenges that make failure more likely – like having to survive the pre-market period where lack of FDA approval/clearance means that the product is not making money, but the burn rate continues.
I think incubators and accelerators do have a role to play. The ones that are successful have found a way to effectively and significantly raise their clients’ chances for success.
With all the complexities of the medical device industry, that’s no small feat, and requires a LOT of resources. In my experience running the ZeroTo510 accelerator for the past 3 years, I’ve found that the biggest determinant of success is the team, and its ability to execute.”
Do you agree with Allan?
FREE WEBINAR FOR GROUP MEMBERS
Come September 24, 2015, all medical device manufacturers of Implants, life-sustaining, and life-supporting devices marketed in the U.S. need to submit unique device identifiers to the FDA.
It’s complex, so please accept this free help from my friends at Reed Tech who have submitted thousands of device records to the FDA. They’ve agreed to do our fifth free webinar on the topic on June 9 at 11:00 a.m., New York time.
Register at http://medgroup.biz/UDI-5
Make it a great week.
Sharing and Commitment are two words that I actively use – because they are key components to the Team Building process.
“mentoring and adult supervision” will only get you so far.
You may like to collect Sjaak Deckers’ opinion about this, who lead the business accelerator of the Philips Research Innovations Programme for Healthcare. Several spinoffs came out of that programme, Sjaak becoming CEO and co-founder of Sapiens Steering Stimulation BV with Hubert Martens and myself. Sapiens was acquired by Medtronic last August, http://newsroom.medtronic.com/phoenix.zhtml?c=251324&p=irol-newsArticle&id=1960861
I believe Sjaak will be able to provide good analyses about that Philips Medtech programme.
1. A rolodex of good mentors (not all are created equal)
1. Tight association with investors (seed, series A being the critical ones. There are many who will invest growth capital after you’ve got customers and revenue, but few who will come in before)
1. A good ecosystem that provides deal flow and supports its entrepreneurs (academia with good technology output, industry with enough health care companies/providers to make good customer discovery and mentorship possible)
1. A state/city that makes a friendly climate for startups. Sure helps make things easier
6. Finally, if you can put a good Entrepreneur in residence program together, it will make a serious difference in your number of successes. Most entrepreneurs can’t make that jump from product building to company building without some ‘adult supervision’
InField Medical successfully brokered a technology to a large critical care medical device company here in the states (I am prohibited from mentioning who), but can tell you they are in the critical care monitoring market.
Our rule of thumb? Laser focus on technologies and markets we know, we know when to say yes to a technology but more importantly, we are not afraid to say no to a technology, and we do that a lot more.
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