How to Attract Capital and Talent for Your Early-Stage MedTech Firm

10/04/21 | 4 MIN READ

Learn key tips on how to grow and develop your biotech or medtech startup by attracting capital and talent.

Many startups struggle with attracting both talent and capital to their company. Both are essential for a healthy, growing operation, yet they are sometimes very hard to come by. Medtech firms are uniquely challenged by their need for specialized employees in their field, especially if it is a new one. This article will detail the essentials for medtech startups looking to grow, and techniques they can use to attract capital and talent.

🔬Read: Funding Options for BioTech Startups to learn more about different sources of capital.

Fundamentals

Here are some of the first very basic things that investors will want from a company in their pre-seed or seed stages:

  • Executive Summary
  • Investor Presentation
  • Data Room with Company’s Financials

The executive summary summarizes the problem that your company is trying to solve. It attempts to explain why your company is best suited to solve this problem, and why it is better than the competition (or the current norm).

An investor presentation could be as brief as 10 pages. There are many templates available online, like on the Tech Coast Angels or SBDC website.

The data room includes all of your key documents, like the resumes of your key employees, financial information of the company, or current patent applications.

In order to get the ball rolling on your new project, the first people you should reach out to are:

  • Friends and Family
  • Accelerators
  • UHNWIs (Ultra-High-Net-Worth Individuals)
  • Your Alma Mater

Accelerators are great at providing contacts and opportunities for new businesses. There are several accelerators in the Southern California area, and some even specialize in different fields like the medtech industry.

The main thing a new entrepreneur needs is time. This time should be completely devoted to this new endeavour, where contacting investors and growing the business is the number one priority. 

Money Funding Handshake Agreement Stock Photo

Sources of Capital

Here is a list of potential places where a new medtech company can raise capital:

  • NIH, NSF, or DoD grants
  • Pitch Competitions
  • Accelerator Funds
  • Angels and Angel Funds

NIH, NSF, and DoD grants often come in the form of an Small Business Innovative Research (SBIR) grant. These government grants are non-diluted funding, and are a great option for burgeoning companies. Pitch competitions also provide great practice and experience for new companies, as they allow you to present to knowledgeable contacts (even if you don’t win).

🔬Learn: 10 Tips for a Competitive SBIR or STTR Proposal

Many accelerators have a fund for their members. Accelerators might take a stake in your company similar to Angels or Venture Capital firms, while SBIR grants do not.

Playbook

The best way that new companies can improve their presentations is to practice. This can be done through pitch competitions, reaching out to companies individually, or using family and friends.

🔬Read: Investor Engagement Strategy for Life Science Startups

Sometimes a new company might want to only ask for advice as opposed to asking for funding. Executives are usually open to a 30 minute conversation where all they have to do is offer advice, as opposed to committing to a longer presentation where they need to do more personal research on the company. 

New companies should aim to practice their pitch over 100 times in order to gain the best possible chances for funding. 100 may seem like a large number, but honing in on presentations skills takes time. You definitely don’t want your first time presenting to be in front of a lucrative group of investors!

🔬Related: Creating the Perfect Pitch Deck for Your Startup

Attracting Talent Recruiting Interview Waiting Room Stock Photo

Attracting Talent

Attracting talent is one of the most important parts of a new company’s lifecycle. The composition of the executive team is a very important part when investors and governmental agencies decide to invest in your company. They want to make sure that their money is in good hands, with devoted and capable personnel.

If your team only consists of 1-2 people now, the first place to start is to decide what new role you want to fill. Then, new companies should look to engage with advisors (preferably volunteers) on a specific deliverable. For example, a fellow alumni, an industry contact, or a formal advisor designated to your accelerator program. These advisors usually help on a short term basis and then can come onto the project (with equity) after advising for a while.

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Frequently Asked Questions

Q: How long will this process take?

A: The process will always take longer than one expects. Taking into account working with external contractors and potential advisors, creating a full team can take multiple years. The key thing about this process is having 1-2 people devoting 100% of their time to this project.

Q: What talent do I need early on?

A: The key first hires of many companies are a commercialization/sales lead and a clinical lead. Oftentimes the first 1-2 people working will act as the C-suite until the company grows larger and more well-connected.

Q: How can a first time founder make it through the valley of death?

A: The valley of death is a term used for companies that have exhausted governmental grants but are still waiting on a few regulating assurances to take their product to market.

Q: How can startups prepare for venture capital meetings?

A: The most important thing for an initial VC meeting is understanding the economics of the deal. Specifically, investors want to know the revenue plan for your next 1-4 years and overall profitability. Investors also want to hear that your company has a strong executive suite.

Q: How do deals really get to VC’s for consideration?

A: The majority comes from other trusted investors (often past-coinvestors), current portfolios, organizations that the VC trust, LinkedIn, and LPs (limited partners).

Q: How should people without an established network approach fundraising?

A: The first step is to tap into organizations that will allow you to access a wider network. For example, joining an accelerator group. Getting in contact with established groups that how experience in the field is the best way to grow your network fast.


This content comes from a webinar, Capital and Talent: How to Attract Both for Your Early-Stage MedTech Firmfeaturing Kwame Ulmer in partnership with the SBDC @ UCI Beall Applied Innovation, Biocom, and University Lab Partners.

📽️ Watch the full webinar here.

Kwame Ulmer is a Venture Partner at Wavemaker Three-Sixty Health - the leading southern-California based, early-stage venture capital firm (Seed and Series A) focused on the healthcare industry. He serves as the MedTech practice lead and participates in all aspects of fund management (e.g. deal sourcing, diligence, negotiation and advising portfolio company management teams). Kwame brings nearly twenty years of experience evaluating medical technologies in the government and private sector, and serving in senior operating roles at medical device companies.

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