According to PWC’s recent quarterly MoneyTree report, no new medical device companies achieved Series A fundings in New England in either Q2 or Q3 2013. Zilch, zip, zero, nothin’, no, nada.
I’ve been tracking first-time venture financing of medical device companies in Nw England since 2005. You’ll find the link to my latest list of these companies at the bottom of this post. I wish I had a better update to offer.
Every once in a great while I read something so well stated that I put down my book/ipad/kindle and just reflect.
So when I recently read a post from Mike Sellers on Quora, I had to share it with you. Mike was responding to the question “As first time entrepreneurs, what part of the process are people often completely blind to?”
Mike wrote beautifully about software companies (read his original post here).
The latest quarterly MoneyTree Report was just released, providing some insight into the state of medical device venture funding in the US. I downloaded and plotted the historical trend data for medical device VC investments in the U.S. from Q1 1995 to Q1 2013. Click on the thumbnails for larger images.
In the eight years of data I’ve collected on New England medical device company venture funding, I’ve never seen it this tough. Only four new companies were funded in 2012 (see my complete list below).
You might be tempted to blame VC belt-tightening or the “Patient Protection and Affordable Care Act.” You’d be wrong. While the macro environment has its challenges, four new NorCal medical device startups were funded in Q4 alone.
Ask most medical device marketers about market segmentation, and you’ll get an earful about physician specialty (and subspecialty), hospital/facility size or type (academic, ASC, for profit, large system, etc), or adopter type (early adopters, followers, and skeptics). Unfortunately, these approaches rarely help companies identify customer groups that are differentially addressable – i.e. best served by different products or services, different price points, and/or different marketing channels and sales techniques.
Medical device firms can do much, much more to understand and better serve their markets. Even back in the 1980’s much more could be done. Let me explain how I approached market segmentation twenty-something years ago.
The glass is half full. I’ve been tracking the fundraising activity of healthcare venture firms for the last few years, and I estimate that there are about 250 VC firms actively investing in healthcare innovation worldwide. In contrast, a list I created ten years ago, at InfraReDx, included about 500 healthcare VC firms. Times are tight in 2013.
One of the best parts of starting a medical device company is the opportunity to build a great team. At Fractyl, I’m happy and proud to say that our team is truly awesome – talented, hardworking, committed, and fun. Putting together a great team is not easy – for every position, we’re always looking for a superstar. Somehow we’ve found them.
One of my best friends runs an engineering group at a major contract research lab, and we occasionally commiserate about the difficulty of hiring great engineers. Of course, number one on our list is technical expertise. Don’t knock on my door if you don’t have the technical chops. While technical competence is hard enough to find, my friend and I are both looking for more than mere technical brilliance. The number two attribute on my list of star medical device engineers is attitude.
In an effort to improve performance, my friend gives each of his engineering hires an article from 1999’s IEEE Spectrum: “How to be a Star Engineer” (or here). It’s a great article that would benefit almost every engineer. The author, Robert Kelley, presents nine strategies that lead to better engineering performance. Attitude is critical.