4 min reading time

I heard it again last week: Your medtech initiative is too small for venture capitalists if it’s not at least a $500-million idea.

A four-minute video at http://medgroup.biz/too-small

Thomas Weldon, Chairman and Managing Director of Accuitive Medical Ventures, said, “We have to have an exit of at least $350 million and the average exit in medtech over the last 20 years has been $140 million.”

And continued, “The math has to work. I mean, we take money from widows and orphans, pension funds, sovereign wealth funds… They want a premium because it’s an illiquid investment that usually ends up taking eight to ten years and they want a premium for the risk.

So, if you can’t objectively look at a deal and say there’s a 5x return, then it’s just not gonna happen with venture.”

He also gives advice how to get the attention of a VC like him.

It’s a quick video and I transcribed it for you at http://medgroup.biz/too-small

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Reminds me of a popular discussion we had in 2014: “Got a $10-million idea? Who cares!” at http://medgroup.biz/who-cares

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THE WAIT IS OVER!

See you next week in San Diego for the 10x Medical Device Conference!

10 tickets remain for you stragglers. Then we’re sold out.

See http://medgroup.biz/10x right away!

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Free webinar on Thursday on Compliance Risks for Medical Device Manufacturers

Sign up at http://medgroup.biz/RoHS

The live webinar will be Thursday, April 28 at 12 p.m. New York time. All who register (even if you can’t make the live event) will get the slides, replay, and transcript.

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See you in San Diego!

Joe Hage
Medical Devices Group Leader

P.S. The slides and replay are now available for our free webinar on unique device identification. Available for everyone at http://medgroup.biz/UDI-next-steps

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Hunter C.
Healthcare Investment & Commercialization
It is a fact, however, if a startup owns really good products with wider global view, it absolutely can leverage much more resource for its own development. In the world, some countries are under “excessive fluidity” of their financial systems or markets which could be a huge opportunities for many of US startups especially for earlier stage’s financial support. More and more companies will see this trend which I believe.

Theodore Kucklick
CEO and founder Cannuflow, Inc, Author “The Medical Device R&D Handbook”
One problem in scaling revenues is hospital customer consolidation. Some of these giant systems like HCA won’t even buy products from small companies with physician investors! Have you ever heard of a more stupid, shortsighted, anti-innovation policy? Docs are about the only ones who do seed level investing in MedTech!

John Clark
Global Cancer Technology, Inc-CEO
We feel the pain! We are wanting to raise $10 Million for a second generation medical device. We only hear “to small for VCs-to big for angels”…It.s a bad space…

Dave Saunders
CTO | Surgical Robotics | Startups | Technology Integrated Medical Devices
This is an understandable position for a VC, but it is also why university/hospital IP transfer offices have thousands of inventions which could improve patient care and save hospitals money, but never gain any entrepreneurial sponsorship to bring the technology to market. Smaller med tech companies therefore need to find a strategic partner as early as possible, do you risk the technology and then exit through divestiture or absorption into the strategic partner with the muscle and money to finish taking the product to market.

Leo Liao
HongKong JinBoWen Stationery Manufacturer Co.,ltd – Oversea dept.
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Dan Golka
CMO at Med Tech Directory
This is such a fantastic video in so many ways. The average exit at $140 million is news to me. The fact that Thomas wants 3 times that for an exit shows the quality of a worldwide investment that they are looking for. The most important point was how he looks at an opportunity. Everyone needs to have their house in order at all times. He will not take any cold calls. Contacting a board member first with an executive summary, product and sales potential may get you an introduction. You need to be ready at all times to present yourself, your company and your opportunity in the best light possible.

Richard Sousa
Member of the Board, at BioIncubator
We are in the process of setting lab and manufacturing space at out facility in Mansfield Ma to accommodate an incubator in the life science field….adding medical device entrepreneurs is the next step. You are so right Mr KraMer about there being no place for helping smaller pieces of the puzzle.

Nema Semnani
Sales & Management Training, Keynote Speaker ♦ Sales Process Consultant ♦ Precision Sales Consulting | Sandler Training
Sounds like my graduate work. eh, Joe 😉

Tom KraMer
President & CEO, Speaker
So true. This is why angel investors are so important at the beginning of a small medical device startup. Especially if it is for an obscure pediatric need or something similar. Helping 10,000 patients a year may be a great thing, but it may not ever get the attention of these large VC’s, so other means are necessary if we want to help those patient populations.

Dave Lavinsky
President and Managing Partner at Guiding Metrics, Growthink, & GT Securities
As Tom mentioned, Angel investors are more appropriate for just starting out or for smaller opportunities. VC firms can only manage so many investments, and it takes them just as much time to manage a $1MM investment or a $20MM investment in a firm. So, they need to make larger investments in a portfolio. And they need large returns…and the greatest multiples are paid when a larger company goes public or gets acquired by a larger entity. Nothing against smaller (<$500MM market opportunities); it's just that VCs are generally not the right funding source for them (there are better options like angel investors, strategic investors, partners, debt, etc.).