Early Customer Validation – Sell first, spend later

I just read Jason Cohen’s recent post on customer validation “Yes, but who said they’d actually BUY the damn thing?” (here).  Given all the startups I’ve seen recently, this post really struck a chord.  If you are starting a company or developing a new product, read Jason’s post and take his advice:  Find 10 customers who will say “If you build this product, I’ll give you $X.”  For medical device products, this is just a start towards early customer validation.

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Stock options – everybody in the pool

My friend and serial CEO Dan McNulty encouraged me to write about stock options.  My experience is that stock options encourage employees to “think like an owner. ”  I have always found that my colleagues are motivated by the potential of their options, and are interested in the drivers of their stock’s valuation.  So it’s an important subject and I appreciate Dan’s suggesting it.

Stock options are a subject that has been extremely well covered on the web, particularly by VentureHacks and Mark Suster of GRP Partners.  So, in this post, I’ll mostly point you to other blog posts.  Read them.  I’ll also try to provide some helpful information specific to medical device companies, and share a couple of thoughts from my experience.

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Your addressable market? Bottom-up!

Over the past few months, I’ve been privileged to meet many talented scientists and physicians who have created wonderful technologies for improving patient care, but who have little experience determining whether their technology could be the foundation for a successful new business.  One recurring challenge is quantifying the addressable market – not a skill that is typically taught in science, engineering or medical school.  Here’s my approach, using a hypothetical example.

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Fresh money

Fresh money is the best money.  Fresh money means that VC’s and PE firms need to make new investments, to put their fresh money to work.

Here’s my list of Life Science VC and Private Equity Fundraising for 2009 and the first half of 2010, culled from news articles over the past 18 months.  Enjoy.

My list is likely not comprehensive, as firms don’t always announce new funds.  I plan to post updates to this list quarterly.  Also, I plan to make a table of 2008 and 2007 vintage funds for an upcoming post.  Leave a comment if I am missing a fund raise in this table, and I’ll update it.

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Medical Device VC Funding: Slide Deck – Part 1

You need a great slide deck to raise funds for a start-up medical device company.  If your presentation would be right at home in a scientific or medical meeting, it’s not the right deck.  A great deck tells the story of how investors in your company will do well (financially) by doing good (improving medical care).  It’s all about the business, and only briefly touches on the technology.

VentureHacks totally nails the deck template for tech companies.  If you haven’t already read http://venturehacks.com/articles/deck, do it now.  Read the comments too.  Even better, read the whole VentureHacks archive, and buy their book at http://venturehacks.com/pitching.  Pay attention to their sage advice: “Put pictures in the slides and text in the notes,” so that your deck can be used as both a presentation and a handout.

Medical device companies are different, so the VentureHacks template isn’t quite right.   Today’s post provides a slide deck template for a company developing a single medical device product to address a single unmet need.  Later posts will describe a slightly different template for “platform” companies, where the company envisions several new products addressing multiple market needs based on a core technology platform.

I’m posting this template and asking for your feedback.  Convince me that you have an improvement, and I’ll update the template.  Let’s get started.

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