Medtech startups are struggling to secure funding in the early phases of development. Here’s what large companies, venture capital, and startups can do to combat this troubling trend.
There is too little funding for early-stage technologies in the medical technology industry. Investors aren’t showing up for medtech opportunities, in part because of the time, capital, and uncertainty associated with reaching meaningful milestones, clearing regulatory hurdles, and securing reimbursement. This isn’t news, but a recent report raises an alarm, noting that a shortage of investments in the early phases of a new technology means patients are potentially losing out on lifesaving inventions.
Recognizing this dearth of funding, Deloitte and AdvaMed conducted research with more than 20 leaders in the medtech industry to identify potential solutions. Their report, “Out of the valley of death,” details the findings of this work. The main suggestions to address this gap include more partnerships between startups, venture funds, large medtech companies, and customers; a potential tax incentive; considering novel business plans; and trying to seek out new sources of funding like family offices.
Some of this is already taking place, with notable examples like Abbott’s agreement with diabetes company Bigfoot Biomedical and Johnson & Johnson’s JLABS incubation spaces. But more is needed.
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