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.

Cover.  This is the title slide when the deck is used as a presentation, and the cover page when the deck is used as a handout.

Unmet medical need.  Describe the unmet medical need and quantify the annual number of patients facing this issue.  A fictional example:

• 2 to 4% –  Percent of adults over 65 years with mild to severe aortic stenosis.
• 2 to 3 years – average survival of aortic stenosis patients following onset of symptoms.
• 60 000 open surgeries – gold standard aortic valve replacements performed each year in the EU.
• 30 000 EU patients  – contraindicated for valve surgery, due to high operative risk or technical contraindications.

Mission.  This is the medical device elevator pitch.  A fictional example:

• Provide a catheter-based aortic valve replacement solution for 100 000 patients worldwide contraindicated for surgery.

Addressable Market.  Calculate the total potential revenue for your company if your solution became the standard of care and was used on all truly applicable patients.  A fictional example:

• $15 000 – Planned per-patient price based on the current pricing for surgically implanted valves.
• 100 000 patients – Number of patients worldwide who are candidates for our procedure.
• $1.5B – Annual addressable market.

Solution.  Display your product concept and the core underlying technology.  Show proof-of-concept evidence that your approach works.  Show accomplishments to-date.  Tell this story with pictures and graphs.  Explain how you have taken risk out of the project, and list the major remaining risks. Explain how your solution will fit in to existing practices without signficant training of physicians and support staff, or explain how training is part of the solution.

Competition.  If the market is real, other companies will be working on the same problem.  Explain why your solution is the preferred solution.  Often this works best as a table, showing how each competitor ranks on key delivered benefits.  Update 12/29/10:  Mark Suster nailed this slide in his post How To Talk to Investors About Your Competitors.

Market Validation.  What data have you collected to prove that the four-part customer will buy the bundle-of-benefits that you are building, at the price you will be asking?  At an early stage, this might be survey data of 10 potential customers.  List the customers who were surveyed, present numerical survey results (e.g. 7/10 docs said they were very likely to purchase this device.), and include some key quotations.

Clinical / Regulatory strategy – In the US, is the product a 510(k) or a PMA? Why?  Is a clinical trial needed? If so, estimate the size in patients, time and cost.  Planning to obtain CE Mark and Europe first? Why or why not?

Technical / Pre-clinical / Clinical / Regulatory / Launch Plan.  – Present the planned technical/clinical/launch milestones and timeline in a high-level gantt chart.  This could include first research prototypes used for bench testing to meet key technical specs, second “works-like” prototypes available for animal testing, third “works-like” and safety-tested prototypes used for human testing, completion of human clinicals and submission, market clearance, final product development validation, and market launch plans.

Reimbursement.  Display your mastery of the four-part customer.  How will the physician get paid?  Are you developing an inpatient, outpatient, office-based procedure, or all of the above?  What’s the impact on the hospital or office and how will they get paid?  What percent is medicare vs. private insurers?  What’s the impact on the insurer?  Do you need new physician billing codes, and if so, how will you obtain?  Do you plan to obtain a CMS national coverage decision or will you work with local Medicare contractors?  Will you apply for a new technology code?  What about Europe and Japan?

IP. Where are your patents in the filing process (provisional, utility application, office action, issued)?  How many applications have been submitted and patents issued, and what do they generally protect?  What has been done to understand the right-to-practice?

Proposed market launch plan.  US or EU first, and why?  Direct sale vs. independent reps vs. partner?  If partnering, who are the potentials and what feedback has been received?  Will clinical trainers be needed?  Field Service?  Will you start with a limited market release?  What’s the geographic or other market-segment focus, if any?  What’s the timing of the roll-out?

Scientific Advisory Board.  Names, titles, brief bio. VC’s want to know which smart and influential physicians and scientists are supporting the company.  In your presentation, explain what each advisor is doing to help.

Management Team. Names, titles, brief bio.

Financials.  Boldly project your P&L through the third year of revenue, showing unit sales, market penetration, revenue, gross margin, and net income.  Make sure you have benchmarked the penetration ramps of comparable companies, to ensure the data is realistic.  Show the amount and timing of proposed current/future capital raises.  How much money are you raising in this round and what valuation-raising milestones will you achieve with the money?

Conclusion. End the presentation and invite questions.

In subsequent rounds, the deck gets updated with more accomplishments, better information, and revised financial projections.

This template violates the “maximum of 10 slides” rule, and asks for more information than can possibly fit on each slide.  So, it’s up to you to pare it down to the essentials for your business.  Remember to tell the story of how your investors will do well by doing good.  Demonstrate your mastery of the four-part customer.  How does your current deck compare?  What would you do differently, and why?