Introduction 🔗
We’re often asked for support with fund-raising. This page contains links, resources, and anecdotes we’ve collected from our clients and from other groups in the medtech space (especially the Medtech Money Podcast). It is focused primarily on startups based in the United States.
There are many generic fund-raising articles online, however, the medtech space is unique and, in particular, the SaMD sub-space is also unique. We wanted to collect useful resources for SaMD projects specifically.
We work with many early-stage medtech startups. Sometimes we’re providing regulatory assessments, other times we’re helping develop proof-of-concept software. We also help companies with FDA regulatory strategy and submissions.
Thank you in particular for valuable advice and comments from Ryan Shelton, who has experience raising $18.2M in investment as the Founding CEO of PhotoniCare. His suggestions were integrated throughout this article.
Best Practices 🔗
- Early on, network fanatically, especially with people in your field.
- Plan your hiring and spending well enough so you can avoid requiring another raise prior to key milestones (e.g., completing a clinical study or FDA clearance).
- Follow a consistent process to track follow ups. Consider using a tool like Foundersuite (or Notion if you’re on a budget).
- Always ask angel investors where their funds come from and beware of VCs masquerading as angels (see this 2019 Y-Combinator article).
- Use Carta to manage your cap table.
Basics 🔗
What are the types of funding sources available? 🔗
| Type | Notes |
|---|---|
| Angel Investor | A (usually) wealthy individuals who invests in startups. Often they are amateurs. Often only invest in areas they understand. Occasionally there are full-time “super angels”. |
| Angel Groups | A group of angel investors that typically meet in person to evaluate startups. Some act like a fund, have a procedure for evaluating startups, and invest together. Others are just a source of deals and the angels invest individually. Some are a hybrid. |
| Family Offices | A privately held company that handles investments for a wealthy family. |
| Venture Capital (VC) Firms | Provide larger investments for startups with high growth potential. Offer strategic guidance and extensive networks. |
| Strategic Investors | Established companies in the medical device or healthcare industry. Provide funding and potential partnership or acquisition opportunities. |
| Non-Dilutive Funding | Grants, government contracts, or research funding that doesn't require giving up equity. Examples include SBIR/STTR grants. |
| Crowd Funding | Raising small amounts from a large number of people, typically via online platforms. Less common for SaMD but can be used for early prototypes or market validation. |
| Private Equity | Tend to make controlling investments in later-stage, lower risks firms. |
What are some good investment conferences to attend? 🔗
Conferences can be a great way to meet investors in person.
Here are several investment-related conferences our clients have used:
What are good medtech incubators? 🔗
Here is a list of incubators and accelerators.
| Name | Notes |
|---|---|
| Medtech Innovator | The largest program. Several of our clients are in Medtech Incubator. Doesn't take equity. Open to early- to mid-stage medical device, diagnostic or digital health companies. Highly recommended. |
| TMC Innovation | Texas Medical Center accelerator. Houston based. No equity taken. Focuses on digital health and medical device startups. Finalists selected for no-strings-attached bootcamp, after which a subset are accepted. |
| Cedars-Sinai Accelerator | Offers $100,000 investment and mentorship. Focuses on healthcare technology and digital health solutions. |
| JLABS | Johnson & Johnson Innovation incubator. Provides lab space and resources for life science startups. |
| BARDA DRIVe | Government-backed accelerator network with multiple divisions. |
| MATTER | Chicago-based healthcare incubator. Provides coworking space, mentorship, and networking opportunities. |
| StartX Med | No need to give up equity. Med devices, Biotech, and Digital Health and Diagnostics. (For Stanford Students, Profs., and Alumni.) |
| I-Core | Only available for NIH-funded grantees. |
| CTIP | A pediatric medical device accelerator established in 2011 and funded by the U.S. FDA. It promotes the commercialization and clinical use of pediatric medical device technology. Provides small grants to companies. |
What are good general resources to learn about fund raising? 🔗
The Y Combinator guide to seed fundraising is a great place to start. Keep in mind that some advice doesn’t apply to medtech. For example, they say to start getting customers before you get seed investment. When building a medical device software, you can’t legally sell until you’ve received FDA approval.
The Carta Cap Table 101 Course is useful for understanding the basics of several important topics:
- Equity and cap tables
- Preferred vs common shares
- Convertible notes and SAFEs
- Stock options, vesting, etc.
What are good medtech-specific fundraising resources? 🔗
The Medtech Money Podcast has over 128 episodes from Jun 2021 - October 2024. There is a wealth of useful, medtech-specific fund-raising information in these episodes. The downside is it’s often mixed in with a lot of less useful background material. I’m usually listening while I do house chores. Other times, I’ll turn on the captions and will skim ahead. This can work great if I’m doing more focused research.
What marketing collateral do I need for fund-raising? 🔗
| Asset | Purpose | Length |
|---|---|---|
| Logo | Visually represents your company brand | N/a |
| Tagline | Distills company identity into a single line | 1 line |
| Elevator Pitch | Explains offering in a short format that can be delivered within a minute | 1 paragraph |
| Tear Sheet | Highlights key information in a fact sheet | 1 page |
| Executive Summary | Briefly conveys opportunity in clear and concise manner | 1 – 2 pages |
| Slide Deck | Provides more detail on offering by expanding on all major points in executive summary with graphs and charts | 10–12 slides |
(I took this table from Life Science Nation).
Early Stage Fund-Raising 🔗
How should one find early-stage investment? 🔗
Early stage fund-raising is especially challenging for Medtech startups, since the path to market is longer than in less regulated fields.
Here are some tips for early-stage fund raising
- Apply to as much non-dilutive funding as possible
- Network fanatically, especially with people in your field. This approach often connects you with successful entrepreneurs or industry experts who might become your first angel investors. Don't approach them seeking investment; instead, genuinely seek feedback and advice at the earliest stage. This effort serves a dual purpose: you gain valuable early guidance, and if you effectively convey your story and passion, that advice may transform into seed round funding.
- Apply to pitch contests. Be selective with pitch contests. Their primary benefits are helping you refine your storytelling (practice for real funding pitches), potentially securing small amounts of cash, and making connections with audience members or judges who might contribute to your networking efforts mentioned above.
- Reach out to angel investors. Could outreach can work, but warm introductions are 10 times better.
Non-Dilutive Funding 🔗
What is non-dilutive funding? 🔗
Non-dilutive funding refers to financial support that does not require the company to give up equity or ownership in exchange for the funds. This type of funding is particularly attractive to early-stage companies as it allows them to grow and develop their technology without diluting the ownership stakes of existing shareholders.
What types of non-dilutive funding are available? 🔗
SBIR grants are the most common type of non-dilutive funding.
Funding comes in two phases. As of October 2024, Phase I awards are up to $314,000 and a Phase II awards up to $2,095,000.
The National Institute of Health (NIH) is the largest source of SBIR/STTR funding for medtech startups, followed by the National Science Foundation (NSF).
SBIR grants are a lot of work to write. Expect 200 - 500 hours of effort. Also, there’s at least a 6 month gap between submission and funding. More often this is 9-12 months.
How does Innolitics help startups win SBIR grants? 🔗
We have helped at least three of our clients win SBIR grants and two of them are phase II grants.
We can help provide budget estimates and letters of support. We can also review technical claims. We don’t typically help write the grants.
