Last week, I blogged about one of the single biggest causes of Medtech startup failure: young entrepreneurs engaging in mass marketing and sales prematurely – when neither the product nor the company are ready and mature enough to meet the expectations and needs of the clinical user community.
Today, I am going to explore another type of false start: starting up and seeking early-stage investment before before the entrepreneur, his or her team and the technology itself are ready for this real world challenge.
At Centech, I am regularly approached by Medtech start-up entrepreneurs about when and how to approach both angel and VC investors with their business pitch as they seeking pre-seed and seed financing.
Here are my thoughts and tips:
When you have achieved the following start-up milestones:
1. Developed a good understanding of the target market and its segments
2. Through several key opinion leader (KOL) interviews, you’ve identified a niche with a significant unmet need
3. You have a crisp and clear product concept that addresses these unmet needs
4. A compelling proof-of-concept (POC)
5. Well developed intellectual property (IP), regulatory and organizational strategies
6. A clear path to commercialization and exit
When your pitch delivers clear thinking and credible information, including:
1. A compelling business case
2. A targeted niche on the cusp of significant growth with a KOL-validated unmet need
3. A product concept with a clear reasoning as to why it is unique and novel. A clear mechanism-of-action (MOA) would be valuable at this point.
4. A plan to complete a compelling POC, including time and money required if necessary
5. IP and regulatory plans
6. Preliminary commercialization plan
Finally, here’s what not to do:
1. Start with a technology boast and why you are so much better
2. Provide billion dollar target entry markets
3. Show three year P&L forecasts….it’s way too early!
It may seems like a strict and intensive list of steps – that’s because it is! But follow these tips and you are well on your way to success!