What Now, Medical Device Entrepreneurs?
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that it generally cost more to get a company going than it had in those early garage shop days. Still, it saved on the wear and tear of the entrepreneurs and their families by removing the day-to-day worries of making the mortgage payments.
Fast forward to today, when money is tight and most venture capital firms are hunkered down waiting for an upturn in the economy so that it once again makes sense to take the risk of investing in new startups. Some firms are reportedly making no investments at all, saving their precious cash to support the companies already in their portfolios. Other firms are making investments, but are being very selective on which companies to fund. For example, they might invest in companies that are near to or in the market or have a short pathway to market, good reimbursement from health insurers, and present little overall risk to the investment.
Clearly, the fresh new startup with a new idea or new technology that requires a rigorous premarket approval application (PMA) to the FDA for novel products, needs to establish new reimbursement standards, and clinical proof that it provides the proclaimed benefit does not meet these stringent benchmarks for funding. Even startups with a short timeline to market or a relatively easy pathway through the FDA are finding venture capital funding difficult, if not impossible. So, what are these entrepreneurs to do?
The shared characteristics of company founders typically include passion for the concept and determination to see it through to success. I believe these characteristics will prevail and guide these entrepreneurs to new pathways to success. Garage shop operations may come back into vogue. Shoestring budgets funded by insightful and inspired angel investors or perhaps even large corporations may be the norm. The overall result may, in fact, be a return to bigger eventual financial returns for entrepreneurs as was seen in the distant past, and the satisfaction of creating something from hard work and perseverance. That’s my hope anyway, and hope is the word to use these days, right?