Burrell (Bo) Clawson Every startup is a "money-grubbing enterprise" in the beginning. That is just what is REQUIRED: lots of money for years and years of work, before dollar one of sales or development costs are returned, let alone profits retained for investors.

Take on the view as if you are the investor, need to put in $20 million, wait for 5 years to get to market and then another x years to get profitable, etc. Theranos blood testing machine is an example.

If it were my product, I would want a darn good M&A-marketing guy who can document & explain the eventual market and profit to be earned over time and the eventual filing and issuance of a dozen or more patents to protect the system.

That person is going to be the one to get the best deal possible with a company who can fund the company properly.

The alternate is getting a couple million, then devloping, running out of money, raising more funds, etc. and taking far longer to get to market and maybe losing the company along the way as new investors take over.

Burrell (Bo) Clawson As an aside, large public medical device companies I am aware of will not look at a potential investment or acquisition of a project until you have at least one significant utility patent ISSUED that shows a breakthrough over existing products.

Most significant & worthwhile products wind up with a dozen or more patents. You need all the firepower you can get to be able to deter the people who will want do what you do in a slightly different way to get around your patent and possibly lower the cost.

Then there are defensive patents filed for no other reason than to tie up obvious workarounds that you probably won't use yourself.

Recently, the patent rules have changed. It is now the first to file a patent that has the chance to get issuance and not like it used to be where the first to document an invention could be first in line at the patent office.

Paul M. Stein Kaushik, listen to Bo. Lots of Fortune 500 companies say they are "deeply interested", but, if the last four or five years say anything, they won't bite unless you have already done what Bo said...and probably already have CE mark...and nice sales. Even then, you may need to totally go on your own.

You had better be sure your device is either totally unique or wholly better than anything on the market now because only then will you achieve anything. Me-too or slightly better than? Move on to the next idea. Trying to carve out a sliver of simple market share is for masochists. Don't give up trying to make your mark in the World, however.

A good question to kick off the new year, Kaushik.

I'd direct you to three links as thought-starters.

• "Got a $10-million idea? Who cares!" at http://bit.ly/10-million-who-cares (and the list of related articles)

• "The First Three Questions" at http://medgroup.biz/First3

• "For Medical Device Startups Who Need Help" at http://medgroup.biz/startup-help

And I see you're in Los Angeles. Consider the 10x event to be held in San Diego in May at http://medgroup.biz/About-10x.

Good luck!

1. Try making help to your new company with your main job position since they are both within medical, if there is no conflict of interests.
2. Fill out essential parts of two series of applications - one for medical device and another for home appliance (or other feasible field). Go asking professions or even the administration office how they will classify it. Usually, strive new company for viability and then expansion. Make sure your prior other-field device does NOT block your later medical device from the regulatory viewpoints.
3. It's said that Taiwan manufacturers provides cost-efficient and good quality components/products. (I agree. I am a Taiwanese.) Keep in mind the confidential disclosure agreement procedures. We need Charity in our society however we have to be viable first.
4. Congrats for these giants keeping eyes on you, indeed not a easy job. Investors sometimes invest their partners' money so they have responsibilities to be success. Show them how you can confirm that and then they can invest.
5. Is it possible to deliver simplified version with only essential functions first? May significantly reduce the procedures or cross-disciplinary collaborations. Plan a story that deeply touches audiences' hearts. Put less efforts on deep technology explains for first listeners.
6. Make sure you can move 10x quick and draw 5x cross-disciplinary collaborations if you go crowd funding. This stage releases your awesome idea at 1st minute and speeds up your competitors. You need other "un-spreadable" competitiveness.

Hope these help.

Stella S. Your first and foremost next step. Go to a reliable and trustworthy CPA. Stay away from Vulture capitalists VC's. Get the CPA to help you create a Private Placement Memorandum. Get yourself an attorney well versed in SEC and business regulations. Establish your US C Corporation in Delaware because of great tax benefits for your clients. In the meantime take a course
(online is ok) at MIT, Harvard, Yale or Stanford to have the professors help you with Business Plan, Implementation and
Marketing Strategies, Channels of Distribution, etc. In the meantime also contact ACCREDITED Angel Investors (IMPORTANT) and make sure they invest in your particular field. Good luck!

Joe Camaratta I agree with Bo comments regarding your intellectual property (especially given your employment with a medical device manufacturer). This is your most important asset and you need a clear statement of what you own.

Look for non-dilutive sources of funding such as government grants and foundations. Also, consider working with a business incubator. There are many different types (and they usually seek an equity position in return for their support) and they can help develop the necessary business documents and introduce your to potential investors.

Also make sure that you have a solid Directors and Officers (D&O) insurance policy in place, especially as you consider inviting in investors. That D&O policy is critical in protecting your personal assets in case of a lawsuit down the line.

Dennis King Kaushik, do not underestimate obtaining regulatory approval for your product. Many emerging companies treat this as a checkbox and it is much more complicated. Get a good regulatory consultant/employee in place and talk to FDA about what studies you will need for approval and any manufacturing issues very soon. Once you know your regulatory and manufacturing paths, you can plan for how much funding you will need to reach the goal line.

Katherine Kirsch Kaushik-

I would also look at your business model of the "buy one get one free" model. We are looking to commercialize in Sub-Saharan Africa with our blood autotransfusion device and many people have tried to push us into the "BOGO" model. That model does work to get you some money at the beginning, but it feels like your intent is more on the poorest families.

If you are searching for conscious money that is actually interested in both the impact and a sustainable enterprise, many groups (angels, grants, etc) look more favorably/give you more flexibility if you focus on the bottom of the pyramid markets

Here are a few sources that we've been seeking/that have proved "less sharky":

-check out grant opportunities from USAID (such as Grand Challenges : Saving Lives at Birth). Money that doesn't impact your equity but does involve significant time.

-There are many, many competitions and fellowships that can offer some capital, i.e. Echoing Green (due Jan 5th), connections to universities like John Hopkins, UCLA, Berkeley (has a significant med device group for global health).

-Crowdfunding can be effective, but is only a short term fix.

I would also be careful who you talk to as far as bigger medical device companies, what are their missions? They usually have significant margins that they have to make for investors that can jeopardize longterm vision such as getting your device to those who need it most. However, many companies are moving into Africa and India's rural populations and are becoming very interested in these spaces that are growing exponentially.

Feel free to message me if you have any questions, we have a similar sounding product in our pipeline.

Paul M. Stein Katherine, interesting perspective. One issue I would like to point out regarding teaming up with public institutions, at least here in the U.S., is that because they are non-profit (501c3 I think), most of their intellectual property departments will demand royalties or equity up front for the use of their "services", in addition to agreeing to pay a fair price for those services, before any work can begin. Been there, seen that. The pros and cons of this fact need to be carefully assessed.

Katherine Kirsch Paul-

Some public institutions offer grants to for-profits (like us) and do not require a licensing agreement. Look up some of USAID's DIV or Grand Challenges programs.

Again, these are for missions focused on the world's poorest populations and are extremely competitive. A "BOGO" model probably won't fly.

Ee Bin Liew hi

ask youself - why do you need an investor? so what if a fortune 500 company takes an interest in you, what's in it for you? have you initially figured out how much money do you actually need? "a lot" is not a tangible figure. if you can fund it yourself or by a bunch of trusted business partners then just go with that and don't complicate matters any further

next, spend time to do a comprehensive SWOT analysis, then mitigate risks.

if you really need to find funding, then you may refer to this post
https://www.linkedin.com/groupItem?view=&gid=78665&type=member&item=5933235004942344192&trk=groups_search_item_list-0-b-ttl&goback=%2Egmp_78665%2Egmr_78665%2Egna_78665

hope it helps and good luck

Paul M. Stein While Joe is correct in pointing out the advantages of non-dilutive sources of money, the negatives often outweigh them. Your device must fit very closely with what they are looking for in the first place, the competition is exceedingly intense, and the time frame is very long before any money comes along. See www.sbir.gov.

Now, as Ee points out, can you actually do things totally on your own? Many people think they need to rush things to market, i.e. ASAP, and, therefore, need to spend tons of money very fast to achieve this. Bootstrapping is where you just go slowly internally and take your time according to your own expendable monetary resources. Use college engineering interns in the summer for free and team up with pals in your own company, or past companies, with their own expertise in your own spare time to move things progressively along.

However, in your case, infant mortality prevention is now an area where many competitors are seeking crowdfunding or have already gotten it (Owlet) and are out of the gate long before you are even approaching the starting line. Unless your device is so totally unique, speed may be of the essence, so non-dilutive sources and bootstrapping aren't on the table.

Stella S. Oh, by the way, I would not manufacture in China if I were you. I have 9-11 sources of Academic, Industry, Government sources of data that in 2013, $1, 4 Trillion was lost to counterfeit, 80% of it from China. This figure is forecasted to rise to $1, 78 Trillion in 2015. 2014 figures support this and the 80% from China is also rising.

Stella S. See if these people can help:
* email: pbreedlove@sidmartinbio.org

web: http://www.sidmartinbio.org
* John Ricci, Bay Area Startup Network (California) 510-516 1001

* Joe Benjamin, youngstartupventures@youngstartup.net

AFTER you speak to an accountant and a business as well as SEC knowledgeable attorney.
Good luck!

If the Fortune 500 is interested, why not see if they would do a non-dilutive co-dev deal?

Feel free to reach out if you want to chat on the phone.

Dear Kaushik,
There are many, many things on the list of "things to do" in getting your invention where you want it to be. In my opinion, unless you can devote a lot of time in documenting this list, prioritising it and executing it (or delegating to someone you trust to do this) then you have an uphill battle achieving your goals. Getting to market early with an approved product is as important as getting a lot of patents, even more so. The lynch pin is very basic - human capital to get it done and quickly i.e. people x time.
We run a medical devices incubator here in Australia and the first, most critical lesson is found in skills and time gap assessments and the filling of those gaps - mostly by delegation. The list of things to do becomes secondary to everything else because without the time and skills, you get there last - even with the best product/invention and the "best pathway".
One other hint is that stakeholders are often the best investors as they have a vested interest in getting your product to market early - in your case I'd talk to a few medical insurers - the least you will get is a better understanding of who the other key stakeholders are.
Good luck
Greg

I would recommend evaluating the opportunity as a next step if you haven't already done so. An opportunity evaluation (OE) should provide you with a clearer picture on whatever an actual opportunity exists or whether you can conclude that it is not worth pursuing this particular venture. The effort made as part of an OE can be used for subsequent business planning and could include the following:

Industry analysis
Trends
Target market size
Price / COGS /Gross Margin
Distribution
Competition
Validation of the value proposition
Unique selling point
Development Budget
ROI

Also make sure that whatever you do “on the side” does not conflict with work arrangements / agreements you have with your current employer. Make sure that the IP fully belongs to you.

Good luck!

Burrell (Bo) Clawson Andreas noted: "Make sure that the IP fully belongs to you." Get a written agreement w/the CEO-Board of Directors of your employer. Then again, maybe they want to fund the project.

Eleventh point enumerated for Andreas' list: Conservative time estimate to get to market. It is easy to underestimate the actual time required.

I guess I am way behind most of the other respondents. The one thing I am not sure I read in many of the comments was: What does your plan look like?

Prior to looking to develop the pitch, in my opinion you might want to develop a business plan (it can be an extensive one line the various experts would suggest) or it might be better as a shorter, focused bullet point driven plan which covers the elements of a plan. This of course would include market information , competition, IP maybe in your case the path (and cost of ) an FDA approval etc. From there you need to understand the need for funding and the time for which external funding might be needed).
Once you have the plan you can then work on the need for funding (public, private, partnership, etc) the corporate structure, the right skill set of employees, managers partners you will need to add, as well as the experts you need to find to help you (CPA, attorney, regulatory consultant).

The pitch is developed along the way and clearly by the time you start with seeking out experts and funding!


this is generally a longer and more expensive project than you might first think but at the end very rewarding personally and perhaps even monetarily. Good Luck{!

Ginger Cantor Odd I only see a single comment about regulatory pathway. The business plan will indeed definitely need this assessment of your regulatory needs which will vary depending on your market ( meaning US only versus developed or developing countries) and the intended users ( healthcare professionals) versus home use, and claimed indications (short term use versus chronic situations).

Get a good regulatory and design understanding!

Ginger Cantor, RAC
Centaur Consulting
(Regulatory Affairs and Quality Consulting)

desidoright26@yahoo.com

Chris Melton Kaushik, my advice is to connect with an incubator as soon as you can. Not an accelerator like the dozen in Silicon Valley who will give you peanuts and take a giant chunk of equity, but a true incubator. There are non profits out there whose entire mission is to help biotech and digital health startups thrive (Innosphere is one of them), who can address the questions that Joe and others have raised, and who can guide you through the process and connect you to key strategic advisors.

I'm speaking from experience, which is why I moved my startup from its birth place in Palo Alto to Colorado, which has 4 of the top 10 startup cities in the world, including Boulder, CO, which has the highest startup density in the country (http://www.kauffman.org/bdstech). If you're unable to find a resource that encourages your bio-entrepreneurship, or you cannot work with an incubator, then reach out to those who have succeeded at what you're trying to do and ask them to advise you. This is a great group to find such people. Good luck!

Willi Glettig Dear Kaushik
Lots of very valuable advise above particularly from Bo.
To get a product based medtech venture off the ground is full time and hard work! It requires generally more than USD one million to commence. The probability to be in control or being part owner of your venture after three years is very low.

Before one can raise equity capital one has to invest sufficient cash from your savings and through the FFF-path (Family, Friends and Fools) to finance a legal entity (Company, business) and your IPR. Equity investors and government agencies generally want to see that you own a company so that you can exchange shares and other form of securities against equity. This will cost you, depends on country/province up to UDS 120K. As soon as you register a company you will be approached by thousands of people that want to “help you”. 99% are service providers and OPMs (Other People Money) suppliers. They will try to convince you that you need their expertise and that you will not find any investors without their expertise.

You also have to quickly create or transfer “value” that is “unique value” such as unique products. This may but not necessarily will cost you cash.

The next hurdle is IPR. In medtech you have to protect you unique intellectual property since hardly any equity investor will provide you with funds without a valid patent. Almost everyone can afford to invest the necessary USD 2K to 4K to pay the patent launching cost. But from there it will take you 2 and more years until you get your patent. In the meantime you only have costs and no FDA registered product that you could sell to create revenue! If the knowledge content in the patent is of high value you have to protect your IP in various westernized economies and that will cost you USD 100K to 150K. If your patent has commercial potential you can be sure that your patent will be challenged by some managers in a fortune 500 company. The costs in such a case are not predictable. History shows that most can’t afford such defense fight – they give up. There are of course also a few cases that take-on the battle, go bankrupt, and finally win the battle (e.g. Dyson) to start again.

Are you ready and capable to invest USD 200K to USD 1 Mio of your own or FFF money before searching for equity investors? And don’t forget you may never find suitable investors for reasons you can’t explain! This is the reality of true entrepreneurship and hardly understandable for managers. As employee in a medtech company your perspectives is that of a manager, earning a guaranteed salary with very little risks. Maybe you should spend one year or two as freelancer out in the market selling some new products. This will prepare you for an even harder time as entrepreneur!
As suggested above write first a business plan and list and quantify all necessary inputs. Then create a number of business models which shows how to finance the many requirements.
I wish you lots of luck and strength to succeed the many battles in front of you. It is to say if you finally survive the many fights you will stay entrepreneur for live and enjoy every minute of it.
As they say without pain no gain.
Regards
Willi

Ee Bin Liew perhaps this link I chanced upon another thread in the group may be useful to you as a way to gain visibility.
http://www.impactpediatrichealth.com/apply/

and I fully echo the 'on the side' stuff, work arrangements/agreements, and on the IP ownership as mentioned by Andreas. take care.

Robin Breslin There is lots of good advice on here, but I will add one more bit:

Endorsement.

If you can get a endorsement by some important clinical person associated with this clinical area you are working in, then this helps in three ways;
- your investors will feel more confident in your product
- your initial marketing work gets started
- you get early and important real-world use feedback from an expert - invaluable.

Paul M. Stein Kaushik, after five days and 26 comments, we haven't heard from you. LinkedIn etiquette deems that you should have acknowledged something by now.

Everyone has put forward great advice on how to the business up and is necessary to talk to others, be they VCs or Fortune 500s.
Strictly speaking about the pitch, as a way to organize yourself before and after you're ready to write/make/draw your pitch, you may want to read "Art of the Start" by Guy Kawasaki. Good luck.

Matthew Romey I haven't seen anybody mention reimbursement. If you can't get paid for your device, that's a huge red flag for investors and/or strategic partners. Having a well-thought out reimbursement strategy is a sign that you have your finger on the pulse of your market.

Stella S. Attn Romey: what do you mean by "reimbursement"? If you mean ROI (Return on Investment), that is why I advised tgat your first step was to get yourself a CPA (Certified Public Accountant). He will help you with the Unit Costs and 5 year Financial Projections that prospective investors require in addition to a comprehensive Business Plan, Implementation Plan Marketing Plan, Channels of Distribution and much more.

Burrell (Bo) Clawson Stella, Matthew is referring to the healthcare CPT code that a device or procedure is categorized under in order to be allowed payment by insurers. ICD-10 will have about 140,000 codes as I recall.

If you come up with a new device or drug or procedure, you have to petition to get a new CPT code assigned. No code = no payment.

Stella S. Thank you Bo for the clarification because my experience is not in medical devices, just business.

Carl Lincoln Some great advice here already. ITL have written a few articles specifically for Medical Device startups that you might find useful as you progress, both of which were based on discussions in the medical devices group.

1. A discussion on whether to develop in house or outsource (http://www.itl.co.uk/product-development/medical-device-startups-product-development-in-house-or-outsource)

2. A discussion on marketing new medical devices (http://www.itl.co.uk/medical-device-marketing/medical-device-marketing-solutions-vs-additives)

Figure out how to fail fast for low cost. Always consider fast failure as a viable option. May seem like unconventional advice . . .

Another concept I recommend is MVP, or minimally viable product. I believe this is more of a software concept but can easily be applied to a tangible product too. Consider your medical device product development as a series of MVPs. Build a proof of concept prototype (MVP 1), learn something, build another prototype (MVP 2), repeat.

Also, put your product in the hands of actual end users ASAP! Yes, I know you can not deliver a fully functioning product to end users fast. But you can provide prototypes, concepts, models, etc. in front of end users. Always have the end users weigh in on what you are doing to confirm you are on the right track.

Terrific question, by the way. And terrific discussion. You just received tens of thousands of dollars in free advice from all the contributors.

Great comments,powerful ideas-most of them time-tested.Dear Kaushik -move on now.As a Mentor to several start-ups my experience is that the business plan is written keeping PE/VC in mind with projections not matching the skill-sets or the available talent with the start-up.Write a business plan on the PE/VC template (beacuse they like it this way),but keep your resources(skill-sets,talent & team) on the top of your mind.Please do respond.Good luck.