The number of MedTech companies currently starting out or searching for funding is constantly increasing, with technology becoming more accessible. The MedTech industry grows with the demand for new solutions and technology to provide treatment, support and advice to those struggling with health conditions.
What is MedTech?
MedTech is an abbreviation of MedicalTechnology, meaning that companies within the sector specialise in treating medical conditions. MedTech companies aim to use technology to help diagnose or cure medical conditions which are ongoing or just being discovered.
The aim of these organisations is usually to cure illness alongside improving quality of life, which is facilitated through the use of technology. These companies can create applications to help with wellbeing, tools that help to diagnose or cure illness or medical devices or machinery.
Where Do MedTech Companies Find Funding?
MedTech companies can source funding in the same way as other companies or startups.
This can be done through running funding rounds or crowdfunding campaigns to attract investors. Both angel investors and venture capitalists can invest in MedTech companies, however there should also be funding available from alternative investors or schemes, with some platforms providing funding specifically for the MedTech sector, such as MedTech accelerators.
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How Do Startups Traditionally Source Funding?
Usually, startups or companies looking for additional funding or investments will run funding rounds or crowdfunding campaigns in order to attract investors and generate income.
The first round is the pre-seed round, which is typically where founders of a company invest their savings or personal income to kickstart the business. Next comes the seed funding round, where friends, family and other investors can provide funding.
This is followed by series A to D rounds, depending on how much investment a business is looking to generate and what stage of progression they are at. Many businesses do not run the series D round as by this stage they are established enough and making sufficient profit without the need for additional investment.
Angel investors can invest in all startups, including MedTech. These are individuals with a high net worth who may also be looking to mentor the founders of a startup. Angel investors will provide funding for a company in exchange for an equity stake, meaning that they will become shareholders in the company and expect large returns in profit from their original investment.
Venture capitalists also frequently invest into startup companies. These are private equity firms with individuals in charge of investing the pooled funds of the partners, functioning in the same way as angel investors. This means that they inject capital into a startup in return for equity shares. The key difference is that VCs will have access to any liquidated assets if the company they have invested into goes bankrupt.
Consequently, both types of investor are looking to invest in businesses which they believe have the potential to create a large revenue.
Companies can also generate investments from angel investors and venture capitalists through running crowdfunding campaigns. These campaigns usually take place online, and therefore have the ability to reach many people at once; both investors and customers.
What is a MedTech Accelerator?
A MedTech accelerator is a scheme that MedTech companies can apply to in the hope to source an investment. They provide funding for companies which they believe have the potential to make a real impact or positive change within the health sector.
Providing early stage funding to clinical entrepreneurs, MedTech companies can apply to the schemes in the hope that they can secure not only investment but also some support from professionals with experience. There will be an application process where companies will be required to provide details of their business alongside how they believe they can make a difference through the use of technology.
What Do MedTech Companies Use Funding For?
MedTech companies will use funding in a similar manner to startups not specialising in the health sector. Despite this, MedTech companies will be using the funding for additional means. This can include the purchase of new technology or equipment alongside clinical trials which may need to take place to conduct an analysis.
MedTech companies will also have to conduct large amounts of research in order to ensure that their products are truly beneficial, and have minimal risks associated with them.
Funding can also be for more traditional purposes such as asset purchase, moving out of a startup incubator into new office space or taking on additional employees.
