The future of medical device startups

The panelists from a Tuesday panel of Silicon Valley–based medical device entrepreneurs at BIOMEDevice San Jose conveyed the clear message that the venture funding for medical devices has dried up, but opportunities abound in the medical device space. One of them is Kathy Stecco, the co-founder and chief medical officer of Panthera Medtech, a startup acquired by Avantec Vascular Corp. (Sunnyvale) – that had 20x return without any venture capital backing.

“I am pushing people away from the VC route. The more you can bootstrap and look for alternative funding, the better it tends to be for the long-term growth of your company,” said Stecco.

According to Kathy Stecco, many medical devices could be developed by small teams of self-financed rogue entrepreneurs working with a team of consultants. “If you have a 510(k) device, you can often self-fund your device. Go shopping at Fry’s Electronics, build your prototypes, do your testing on your own—do whatever you can on your own,” she said. “It is doable to get a 510(k) by yourself—especially if you don’t need clinical trials. You can either use your own financing or apply for grants to help with funding.”

Tom Ross, CEO of Pontis Orthopaedics, suggested that medical device startups grow their team based on how far the technology is from commercialization. More established companies might need more full-time support. The route of a startup can change, requiring more consultants than full-timers.

It is beneficial to frequently look for third-party insights from people who are not personally interested in the startup’s growth.  

Brenneman, CEO of Rox Medical, recommended that startups look for funding overseas. “There is a lot of money coming out of China right now,” he says. “It comes with big strings attached, but there’s a lot of funding there. ... There’s also some off-shore money coming from Europe into the U.S. market. If you are going long and have a PMA device, you might consider that.” When considering Chinese money, it is a great idea to get Chinese patents, says Joel Harris, senior director of intellectual property at InCube Labs (San Jose). “It used to be that people didn’t take the Chinese patent system seriously, but it is increasingly important. China is now part of the WTO. Any Chinese partners are going to want to see that patents are filed there,” he said. “Just keep in mind that when you file in various foreign jurisdictions, it can get very expensive.”

Biokyra is a medical device company based out in Brazil that started off as a startup. It develops minimally invasive medical devices, from the idea/need to the pre-series production.