The lack of seed funding in early technology development is a key barrier for many medical device inventors during the early stages of commercialization. This equity gap is something that only a few specialist investors have been able to bridge, but leading universities have found developing relationships with venture capitalists invaluable as a source of advice and expertise. Competition is heavy in this field, here are some tips when approaching a Venture Capitalist (VC) firm.
- Be Open Minded: The most successful entrepreneurs are open-minded and appreciate honest feedback. If you walk in being open to changes and suggestions, you are more likely to get a win or at least a referral to other investors. The worst thing to do is to walk in with an inflated ego and act defensively to feedback.
- Solid Business Plan: So you want $1 million for the development of your medical device? Inventors need to demonstrate what the funds will be specifically used for, the purpose and why. You need to have a strong business and financial plan in place. Venture capitalists will interrogate you with questions, it is important to be prepared to show you are experienced and smart.
- Speed: Your pitch should be direct and to the point. Steve Jobs hardly used any words for his presentation slides; he used his passion to communicate the message. Seeking the interest of a Venture Capitalist is like dating, you need to foster the relationship over time or they will lose interest. Provide them with ‘good news’ updates and be highly responsive. After all, there are plenty of fish in the sea.
- Choose the right Venture Capitalist Firm: Perform detailed research on the firms you are approaching. Each VC firm is different with different investment ranges, specialties and regions. Some may prefer investing in seed capital, some may prefer later stage developments. Some firms may specialise in particular industries such as medical devices. Look at the existing portfolio companies. Approach the lead investor if you can. By researching and being more selective, you can narrow your VC targets to ensure your medical device or technology is a match to their strategy and goals.
- Consider other options: VC funds are one of the hardest to obtain. In parallel, seek other sources of funding such as grants, government funding, banking loans, etc.
At Inner Maven we have assisted many firms in preparing pitches that have led to successful funding. We have also successfully raised millions of dollars in grants and shareholder funds.