4 min reading time

Richard A Baron, Dave Sheppard, Teresa Gonzalo, and Enzo Villani led our panel at the 10x Medical Device Conference and you can access the full recording at http://medgroup.biz/funds

Among the topics they discussed:

What kind of capital should I raise?
• Talk to angels, friends, and family; after that stage get an advisor who will guide you. Another: Go to VCs when you are pre-revenue and seriously consider debt once you’re post revenue so you don’t dilute your ownership.

Is there such a thing as “bad money?”
• Yes. That’s when you end up with a partner you can’t tolerate. Find money that wants to work with you and that understands what it takes to succeed in medical devices. Better still if they are connected in the industry and can make introductions for you.

How do investors determine how risky an investment is?
• They evaluate the management, engineering and regulatory expertise, size of market and financials, the strength of your IP, your freedom to operate, and reimbursement.

Rick added: Whenever you’re raising capital ask yourself, “How much do I need? Why do I need it? How will I pay it back?” And, “The day you get the check is the day you start the next round.”

Full recording at http://medgroup.biz/funds

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RELATED DISCUSSIONS ON RAISING MONEY

How to Get Money for MedDev Startups

How to Give a Medical Device Pitch

Medical Device Funding’s Dead Zone

Best Time to Sell Your Medical Device Company

How Big is Big Enough?

Links to related discussions

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FREE WEBINARS

Today: Improving Enterprise Value for the MedTech Executive at http://medgroup.biz/value

Next week: Leveraging Big Data to Mitigate Medical Device Risks at http://medgroup.biz/bigdata

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Make it a great week.

Joe Hage
Medical Devices Group Leader

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Julie Omohundro
Principal Consultant at Class Three, LLC
A lot of people seem to be working a particular model, in which all investors and IP holders are essentially seen as equal, when they are not. They have their list of key criteria for evaluating medical device investments, but they either they don’t understand, or can’t or won’t articulate, that their criteria fit a particular that their model is not a good fit for all investors or IP holders or IP. I think this must create a lot of inefficiencies in efforts to connect the two, and also unhappy outcomes due to mismatches.

Julie Omohundro
Principal Consultant at Class Three, LLC
They may be enamored of their big idea, their disruptor, their game-changer, their life-saving technology, but, in the end, not so much that they are prepared to invest the time and effort to be smart, etc. They mostly just want to cash in on their Big Idea, and their main problem seems to be a gross overestimate of its value, in terms of its contribution to the end result, a marketed product. Or at least an IPO. So, even if the product “succeeds,” they often come away feeling used. Which they were, but that’s because that’s what they really wanted, to have some Big Money come along and do the work for them.

Julie Omohundro
Principal Consultant at Class Three, LLC
Jacques, I must say, that was a fun read. So what do you really think?

Your perspective is probably legitimate, but I also think there is a flip side, which others here probably know better than I do. I think there are many IP holders/developers who are a perfect fit for some of the investors you describe.

Julie Omohundro
Principal Consultant at Class Three, LLC
I’ve found that there are different types of investors and that they don’t all use the same criteria to evaluate a medtech investment. Some also don’t focus exclusively on evaluating the riskiness of the investment, but on both ROI and risk, and weigh the one against the other.

What kinds of investors don’t think its risky for a medical device company to have no medical expertise?

Jacques Daniel. Labelle
Science Officer Vectra Blue Omega Medical Technologies / Centre Vectra Bleu / Vectra Blue Center
I WILL BE DIRECT, SORRY FOR THE BIG WORDS.
You may have wonderful ideas and advanced technological solutions, it is always complicated to understand for the commons. Most investors have not a single clue, they may be sympathetic to the idea but will always find a way to show how incredible it may be but will not go for action. Most of them are simply incompetent, have no technological training and long or medium-term views. It is easier to invest in a coffee shop or a soap factory at least they understand if it will flop. Medical technologies are a hard business, you know when you start but you don’t know when you will finish, actually medical technologies is a never ending business, what is relevant today may be out tomorrow! The only ones interested in investing in such business are mostly institutional with grants, governments, etc. Be prepared to get naked in front of them (figuratively). Forget the private investor they are not smart enough to understand. (NEXT )

Jacques Daniel. Labelle
Science Officer Vectra Blue Omega Medical Technologies / Centre Vectra Bleu / Vectra Blue Center
SECOND PART If you come with a new idea you will mostly be sabotage by the majors at one point, don’t expect salvation unless you are proving you are making a difference, then, they will get you and put you on a shelf. I also notice a lot of corruption and fraud in this milieu, you will also find uneducated MD without an once of vision, you will need to show the money to put them on your board, plus the necessary tests, reports, studies, publications, presentations to get some homologation. If you carve a deal with some specialist research center or university they will want to take the bonification by publishing and will treat you at one point like shit (sorry). So be smart, don’t accept bullshit, circumvent the system, stay low, bring your patent to the market slowly, build your support, invest your money, get credit, keep upgrade your technology. Never be a loser! Someone will believe and understand and give you a break.

Dov Kivel
Medical Devices-Non invasive Glucose Measurement and other applications of Bio-Impedance
I am an engineer in Electronics with previous background including applications of BioImpedance. For reasons not detailed here I have practically
inherited of a quantity of projects at their industrialisation phase.
this includes Non invasive measurement of glucose, hospital applications
of heart and lungs monitoring, detection of bubbles in divers blood.
I am working on BD development separately for each project-In first case I am in contact with a VC (personal contact) in the last case divers I am going to crowd
funding.However I lack a systematic approach-what can you propose?thanks