MedTech funding in the US

The US MedTech startup ecosystem is growing rapidly, attracting significant investments from venture capitalists, angel investors, and crowdfunding campaigns. This article explores the latest trends in MedTech funding and looks at how much money each sector is receiving. Keep reading to better understand the Medtech landscape in the United States.

The uphill path: funding options and opportunities

At first glance, the fundraising process may appear simple. However, many variables such as a company's focus area and the current market can complicate this seemingly straightforward process. Before thinking about funding, medical device and pharma companies have to ready themselves to meet with investors. From research and development to commercialization, there are many steps to understand.

Startups must be ready to explain the need behind their medical solution. Likewise, they must address how the company plans to reach its proposed goals. Potential investors must be given a good reason to care about the project.

Important questions to answer include:

  • What is the importance of the Pharma or MedTech platform?
  • Are there any proven clinical needs for the solution?
  • Who is the target end user?
  • Who will purchase the medical technology?
  • What is the market size?
  • Are there similar solutions in the current market?

It is essential to have the data to back up every figure outlined in a presentation to investors. Your pitch should contain information about your target market and how you expect your solution to be adopted by it. Moreover, the necessary funding for every step of the process should be provided with exact figures.

By developing a dynamic network of investment companies and health professionals, entrepreneurs can facilitate the creation of new healthcare solutions. The biggest advantages an investment platform offers over other funding vehicles such as tax credits or crowdfunding are reliability and predictability.

While tax credits are reimbursed, this happens after the fact. Companies looking towards managing their finances with the help of tax credits still need to spend the money beforehand. Therefore, this type of funding is inaccessible to organizations with a limited budget. On the other hand, the results of crowdfunding are unmanageable. Opening your idea to the general public is a double-edged sword. While it can be extremely successful, it can also put the reputation and public perception of a brand at risk.

A MedTech sector startup looking to attain get funding will have to look at the following alternatives:

How much does it cost to develop a medical device?

Venture capital funding

A MedTech or digital healthcare company with access to venture capital (VC) funding can rapidly develop and grow. However, accessing VC funding is not an easy ordeal. Pharma and MedTech companies have to work diligently to show their potential to investors and then stick to their promises, agreements, and timetables. Additionally, VC funds have their financial return on investment (ROI) and Internal rate of return (IRR) in mind. Oftentimes, startups must contend with an expected 20x ROI and up to 40% IRR.

Accelerators and incubators

An acceleration program can drive the rapid development of a young company. Besides getting the money required to get operations on track, accelerator programs have the advantage of providing entrepreneurs with invaluable knowledge and skills.

An accelerator program is the perfect choice for entrepreneurs who have a clear understanding of the clinical benefits they can create but don't have the money to make it happen. Through an acceleration program, a company can access reasonably-priced labs and offices. Additionally, they can connect with like-minded colleagues and industry experts.

Grant opportunities

Grant funding can drastically improve the financial capabilities of a pharma or MedTech company. Many companies pursue grants instead of VC funding. This solution can be especially valuable to companies with ideas that can solve major health challenges, technological roadblocks, or critical conditions.

SBIR programs fund startups as well as small businesses. They cover building and development costs. Under the guidance of an accomplished accelerator, a fledgling company will have an easier time acquiring grant funding.

MedTech-enabled paradigm shift in health care

MedTech brings a wide array of innovative solutions to the table and is therefore changing the way doctors and patients approach treatment. The entire healthcare sector is shifting from analog to digital solutions, creating innumerable opportunities for investors and MedTech entrepreneurs alike.

The covid-19 pandemic forced medical companies to re-evaluate the methods of healthcare dispensation. In turn, this led the pharma industry to welcome MedTech with open arms. An ever-increasing number of healthcare professionals, including family doctors, specialists, and mental health professionals can now be contacted via virtual platforms that don't even require patients to leave the house.

Before this shift, healthcare institutions such as hospitals and clinics had to contend with a series of inefficiencies and costs related to hospitals being constantly swarmed with people with conditions of varying risk. In contrast, remote engagement helps keep patients with mild issues at home and leaves more resources for those who need critical care. Additionally, real-time patient monitoring made possible by MedTech allows patients to go home much earlier from treatment. While patients can enjoy a more agreeable recovery, for hospitals this means fewer occupied beds and less stressed staff.

Attention to public and private markets

The founders of pharmaceutical and health care equipment companies should always keep an eye on both public and private markets. In the pharmaceutical industry, market trends play a huge role in the success of products. Successful companies thrive by anticipating how their products will fare in different markets. Global markets have begun to recognize the importance of MedTech in the improvement of health care services and many promising MedTech prospects are available.

Non-dilutive funding

Dilutive funding is any kind of funding that requires a person to give away some form of equity or ownership of their company. In contrast, non-dilutive funding doesn't require you to give any equity to access funding. Non-dilutive funding is particularly beneficial to small companies trying to get their feet wet in the world of R&D. Money from this type of health care fund can help an organization fund clinical trials, product development, regulatory approval operations, and much more.

How to start a business in MedTech

Opportunities from strategic investors

The larger tech world always keeps an eye on the MedTech industry. Tech industry market leaders such as Google, Apple, and Amazon have shown a vast interest in obtaining healthcare-related technologies they can market to customers. For instance, Apple watches are designed to support individuals with their heart health, physical activity, medication intake, and more. Google also acquired Fitbit recently, gaining access to cutting-edge technology to produce physical fitness monitors, activity trackers, and wire-less enabled wearable devices.

Funding and protecting your intellectual property

Your intellectual property (IP) is one of the most valuable things your organization possesses. It is crucial for the fulfillment of both short-term and long-term goals. It is extremely important for early-stage healthcare equipment companies to protect their IP.

A solid IP protection strategy will make institutional investors more confident to fund your company. Moreover, IP protections shelter a company from unfavorable agreements that could hinder the development of its business.

Mitigating risk and maximizing opportunities

Any company, regardless of the size of its operations, can be negatively impacted by bad decisions. However, organizations in the early stages of development are at a much higher risk of being harmed by making bad choices. For example, selling licensing and distribution rights can cause a MedTech innovator to deal with a very convoluted product launch.

Commercializing medical technologies requires comprehensive planning, paying close attention to markets, and sturdy R&D workflows. In the same vein, a decent understanding of fund distribution methods and established IP protections are crucial for early-stage e-health solutions. Through an accelerator program, startups can be advised on how to deal with the financial aspects of developing health IT products.

Accelerator program for entrepreneurs

The TechSlice MedTech Accelerator program is for entrepreneurs and innovators ready to create impactful solutions in the world of modern healthcare. Entrepreneurs can work closely with dedicated veteran specialists to turn their ideas into successfully launched products.

The main focus of the accelerator program is on software platforms and product integration. Nonetheless, companies can also expect guidance and assistance on market research, UX, marketing, branding, strategy, hardware, and product launch. This expansive approach allows companies to grow and develop without having to compromise their goals. Through the accelerator program, a startup can reach greater scalability and market integration.

Apply now!