Navigating the MedTech Fundraising Environment

For many years, the fundraising environment for MedTech companies has been exceedingly difficult. Venture firms that were historically active in MedTech shifted their investment allocations to other areas of life sciences and capital became constrained. New entrants emerged to fill the void, including European and Asian venture firms, sovereign wealth funds, family offices and high net worth individuals. Investment stage became considerably important in mitigating risk as investors looked to (1) early stage technology development or (2) early commercial companies with demonstration of market adoption.

Early stage technology development and early commercial companies have had access to a broader set of funding options, but companies in the chasm between the two struggled to find the right investors as well as sufficient capital required to meet meaningful milestones.

Although the fundraising environment has been challenging, it is important to note that more than 70 Late Stage and Expansion Growth Capital Venture Financings greater than $25M were completed from January 1, 2016 through June 30, 2017 with an average deal size of $42M. Select transactions:

Completed Year Issuer Deal Type Deal value

(US $ M)

Acquirers/Investors/Surviving Entity/Licensee/Partners
2017 Venus Concept Growth Capital /Expansion 37.49 Undisclosed Investor(s)
2017 Vertos Medical Inc Growth Capital/Expansion 28.00 Aweida Venture Partners, Leerink Revelation Partners, MVM Life Science Partners LLP, Onset Ventures, Pitango Venture Capital
2017 Monteris Medical Inc Growth Capital/Expansion 26.60 BDC Capital Healthcare Fund; Birchview Capital, LP; SightLine Partners; Versant Venture Management, LLC.
2017 Vital Connect, Inc Growth Capital/Expansion 33.00 Baxter Ventures, MVM Life Science Partners LLP
2017 Intrinsic Therapeutics Inc Growth Capital/Expansion 28.00 Delos Capital, LLC; Greenspring Associates, Inc; New Enterprise Associates Inc; Quadrille Capital SAS; Undisclosed Investor(s)
2017 AliveCor Inc Growth Capital/Expansion 30.00 Mayo Clinic, Omron Healthcare Inc, Undisclosed Investor(s)
2017 VertiFlex Inc Growth Capital/Expansion 40.00 Alta Partners; Endeavour Vision SA; H.I.G. BioHealth Partners; New Enterprise Associates Inc; Thomas, McNerney & Partners LLC
2016 Femasys Inc Growth Capital/Expansion 40.00 Salem Partners, LLC; Undisclosed Investor(s)
2016 ReVision Optics Inc Later Stage 32.00 Canaan Partners; Domain Associates LLC; Interwest Partners LLC; Johnson & Johnson Innovation – JJDC Inc; Proquest Investments LP
2016 Relievant MedSystems, Inc Growth Capital/Expansion 36.00 Canaan Partners, Emergent Medical Partners, Morgenthaler Ventures, New Enterprise Associates Inc
2016 CVRx Inc Later Stage 57.70 Action Potential Venture Capital Limited; Gilde Healthcare Partners BV; Johnson & Johnson Innovation – JJDC Inc; New Enterprise Associates Inc; Windham Venture Partners; Ysios Capital Partners
2016 Torax Medical Inc Growth Capital/Expansion 25.00 Accuitive Medical Ventures; Johnson & Johnson Innovation – JJDC Inc; Kaiser Permanente Ventures; Mayo Clinic Ventures; Piper Jaffray Companies; Sanderling Ventures; Thomas, McNerney & Partners LLC
2016 Endotronix Inc Growth Capital/Expansion 32.00 Aperture Venture Partners, LLC; BioVentures Investors LLC; Lumira Capital Investment Management Inc; OSF Ventures; Seroba Life Sciences Ltd; SV Health Investors LLP; Undisclosed Investor(s)
2016 EarLens Corporation Growth Capital/Expansion 34.00 Aisling Capital; Cochlear Ltd; LSV Capital Management, LLC; Medtronic Plc; New Enterprise Associates Inc; Vertex Ventures
2016 Micell Technologies Inc Growth Capital/Expansion 25.77 Undisclosed Investor(s)
2016 EndoStim Inc Growth Capital/Expansion 25.00 Endeavour Vision SA; Gimv NV; Sante Ventures, LLC; Wellington Partners Venture Capital GmbH
2016 Svelte Medical Systems, Inc Growth Capital/Expansion 44.40 CNF Investments LLC, New Science Ventures LLC, Undisclosed Investor(s)
2016 Benvenue Medical, Inc Growth Capital/Expansion 60.00 Capital Royalty Partners L.P.; De Novo Ventures; Domain Associates LLC; Interwest Partners LLC; Technology Partners; Versant Venture Management, LLC


¹ Source: Global Data Medical Device

In the healthcare sector, there are still many unmet clinical needs for which MedTech solutions can provide significant value to payers, providers and patients. There are significant pools of capital available from a variety of venture capital, venture debt, corporate venture capital, crossover, private equity, sovereign wealth funds, high net worth individuals and family offices.

Any fundraising process hinges upon a company’s story at a given point in time, starting with the origins of the technology and flowing through to a vision for the product or service and its value add within the healthcare system. In telling their unique story, MedTech entrepreneurs should always ensure the clear and concise articulation of the following:

  1. Product Market Fit: Novel technologies are interesting but interesting is not sufficient in the current healthcare environment. New products must fulfill an unmet need of physicians, patients or payers. Entrepreneurs should focus on backing up claims with independent market research, physician surveys, patient testimonials, case studies, market models, etc.
  2. Use of Proceeds: Fundraising should be driven by the capital required to meet future development, clinical, regulatory or commercial milestones that are deemed critical in driving the business forward. Companies and entrepreneurs should be prepared to present detailed financials with sensitivity analysis illuminating cash runway under different a variety of potential scenarios. Financials should also illuminate the key levers that can be managed by the leadership team if certain goals are delayed or if the company needs to pivot. Delineating personnel, consultant and program costs in addition to CapEx can be an easy way to identify financial levers.
  3. Relevance of Risks: As investors progress through diligence, there will be occasions in which entrepreneurs need to focus investors on the key issue at hand. It is irrelevant if a company is going after a $15.0 billion total addressable market or a $15.5 billion total addressable market. What is important is how the company’s product is a better fit for that market, why the company’s commercial strategy will provide a strategic advantage in the market and why the company’s team is poised to capture the market opportunity. Due diligence can become tedious at times, but ensure investors are focused on the elements of the business that move the needle.
  4. Team Capabilities: There are many unknowns when launching a new product and at the end of the day, investors must get comfortable with the team they are investing in. They must be comfortable that the team will rapidly experiment, adjust and dynamically change to meet deadlines and achieve milestones. Ensure potential investors spend enough time with key team members to feel comfortable with the leadership team that is driving the business forward.

Although the MedTech fundraising environment has been challenging for several years there is capital available for novel technologies that are shaping and changing the healthcare landscape across a variety of applications. Entrepreneurs are best served to commence their process early and to be prepared to speak with a wide variety of investor types throughout the process. Additionally, product market fit, use of proceeds, relevance of risks and team capabilities should be highlighted consistently throughout the process and infused throughout the management presentation. Investors are always looking for interesting opportunities and it is up to entrepreneurs and leadership teams to illuminate the possibilities for any new MedTech product.

Please contact to learn more about our medical technology practice and our transaction advisory capabilities focused on assisting entrepreneurs in sell-side, buy-side, private placements and strategic advisory engagements.

 Written by Samantha Avila