Funding & Investment

Funding & Investment

‘Corporate bonding’? Finding new partners for medical device investment



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What should startups consider when facing the potential hurdles of securing medical device investment? Christophe Bianchi, CEO and founder of French dermo-innovation company Feeligreen, shares his experiences and some advice on a surprising place to find funds

medical device investment

Big pharmaceutical companies are currently dominating the medical technology market, and many of them are gaining momentum by identifying and investing in innovation outside of their own research and development areas. They are constantly analysing and assessing the market for the latest invention, and this has created a fantastic opportunity for medical technology startups to secure future funding.

Medical device investment opportunities

With increasing scope and investment opportunities within the market, there’s real potential for medical technology startups. However, there are a number of challenges to overcome first. For instance, one of the biggest I was confronted with was our geographical location. Given that Feeligreen is based in the South of France, I first looked for local funds and investors, gradually expanding my search to the whole French territory. But the harsh reality is that French venture-capital seed investors are focused more on digital innovations than medical technology. This trend is encouraged by government initiatives, such as French Tech, a platform for France’s tech startups.

So we decided not to limit ourselves and instead expanded our search internationally. We identified more medical device investment opportunities in North America and the UK – in venture-rich medtech hubs such as Silicon Valley, San Diego, Boston and London’s Tech City. According to UK Trade & Investment (UKTI), the number of UK medtech companies increased by 50 per cent between 2009 and 2012, and now there are more than 3,000 UK-based companies in this sector. UKTI also expects the industry be worth £9.1 billion by 2018 due to the rapid growth of the sector.

Corporate investment over venture capital

The medical technology sector is one in which VCs have become incredibly risk averse, often waiting to see clinical trial data before committing to invest. Consequently, we turned to corporate venture funds to seek the support of industry players with a different approach to funding innovation. Interestingly, corporate pharmaceutical companies are far more likely to invest in the medical technology market, and have a much clearer understanding of the sector and how their investment can benefit their own company.

Despite our geographical location initially being a setback for us in securing investment, large corporate investors didn’t see it as a problem. In fact, it can be a bonus. Due to their strong global presence, many are keen on investing in startups outside their region. This is significant, as many of these corporations are seeking projects that will be able to support and expand their global reach. 

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A win-win situation

It is certainly beneficial to receive investment from large pharmaceutical companies. The companies in this sector are increasingly looking to outsource innovation due to the difficulties in obtaining return on investment, the risks involved and how intensive the whole process can be. As a result, this creates a win-win situation for startups, as they are able to gain access to best-in-class research and development facilities, and corporations are able to gain access to the latest innovations in the medical technology market. Sanofi-Genzyme BioVentures, Pfizer and Novartis have all been known to support innovative projects through their own corporate funds, and have been more recently joined by the likes of Pierre Fabre, Institut Mérieux and Boehringer Ingelheim.

Feeligreen’s funding story

At Feeligreen, we secured our series-A round of €1.2 million funding in October 2014 from a combination of tech-focused VCs and corporate venture funds. As a result, we were able to form partnerships with experts in the industry and global pharmaceutical companies such as Pierre Fabre and Galderma, which helped us to continue our research and development. Including corporate investment in our funding has been ideal for Feeligreen: it facilitates our engagement and relationships with our target clients, who see the technological and strategic support to our project beyond mere financial backing. For a young startup, and especially in the medtech sector, appealing to corporate investors should be part of a broader business development process. These large corporations could be your future clients. It may be too early to negotiate a licensing deal, but if you create enough interest, corporate investment could be the right platform on which to build a long and fruitful business relationship.

Christophe’s top tips for securing medical device investment:

  1. Aim for a mix of financial and corporate funding to gain access to a wider market. However, be wary of getting tied up in a partnership that could be detrimental to your company further down the line.
  2. Try gaining international investment, as it gives your company greater credibility and, of course, global reach.
  3. Maintain regular communication with and update your investors on any changes within the business. This will help greatly you when you are planning your next round of funding.
  4. Seek advice from external individuals experienced in investment, as they will be able to provide you with an objective opinion and a better understanding of how your company is perceived by investors.

The best way to get investors onboard is to show them that the market is ready to pay for your product or service. So put all your efforts into securing your first commercial contract – preferably with known companies representative of your target market – as soon as possible.

About the author

Christophe has a PhD in electronics and an MBA, plus more than twenty years experience in semiconductor and microelectronics start-ups in France and the USA.

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