Every start-up company is looking for a successful endpoint: Bringing their product to market; or acquisition. In either case, the degree of success is determined by the company's perceived value. Therefore, how can a start-up medical device company, which spends money and doesn't generate revenue, create value? Here are 6 key points to focus on in order to spend your precious start-up dollars wisely to create maximum value:
- Robust, refined prototypes. You want to spend money on building, not on a building. Brick & mortar do NOT add value to your company, but a top quality prototype will. A highly detailed working prototype is the most effective demonstration you can give to a potential investor. And a prototype that can be used for functional testing will provide the proof of concept you need to make a great impression.
- Strong, repeatable evidence of feasibility. Bench modeling and pre-clinical testing are always wise investments. Make sure you are carrying out well-defined studies that produce bullet-proof data. Proving device performance and safety early make a smoother path for clinical trials and regulatory approvals. This is the information you will arm yourself with as you seek more funding or search for an acquirer, who will want to rest assured that the product will do what is intended and will pass regulatory muster.
- Strong IP. Often companies try to make broad IP claims, but those can be easily invalidated. The most valuable product has a well-defined claim in a free space. If that’s not the case for you, try to negotiate with the patent owner. This is often possible if you are seeking to use a patented feature on your product, but your device itself is completely different from the patented product. This is a critical area to devote your resources to, because if your medical device is encumbered, you will not be able to attract investment or sell your company.
- Prove market value. In-depth market analysis is another crucial feature in creating high corporate value. Forecast adoption rates and market penetration. Perform market testing and focus groups with potential users of your device. While you are studying your existing market, look at adjacent markets that, with small adjustments, might also be a fit for your medical device.
- Diverse functionality. Expand the marketplace with other applications for your product. As noted in #4, your device might be useful for other procedures or purposes. Build a different prototype with slightly different features and you may find a completely new opportunity for your device. When done right, marketplace expansion builds in layers of protection for your patent claims.
- Product pipeline. Create a strong patent portfolio by expanding your product portfolio. Start thinking about a 2nd and 3rd generation device with additional features and benefits. Think about what accessory products would help deliver or aid in the use of your primary technology. This will create additional value for your company with both investors and potential acquirers.
As you prioritize your start-up fund spending, consider these 6 worthwhile activities that will pay off in significantly increased corporate value. As you build and expand your vision, be sure to document ideas for future generations of your medical device. This will show that your product has “legs” and that, properly managed, will be around for many years to come.If you’re a start-up with the goal of funding or acquisition, we make sure your medical device development dollars maximize your corporate value. Let’s get your device moving ... 2x Faster than if you tried to build an in-house team. Give us a call at 951.696.3933, connect with us on LinkedIn, or send us an email at info@rev1engineering.com, and let's get your start-up funded or acquired.Eric & Phil