At LSI Europe ‘23, a panel of industry leaders gathered to discuss the present and future of the medtech market. With over 120 years of medtech experience, industry veterans shared their unique perspectives on the shifting landscape, offering valuable insights for entrepreneurs and medical device investors. Here are the key takeaways from their discussion.

The Changing Capital-Raising Environment

Raising capital in the medtech market has become increasingly challenging—a common theme throughout the discussion. Panelists emphasized the critical need for strong execution and adaptability in today’s financial climate.

Assaf Barnea highlighted, "Right now, every $10 million, $20 million is so hard to get. But it’s not necessarily unlike the last 30 years or even the last five. It’s cyclical in nature, and we’ve all been there." This sentiment underscores the need for startups to stay resilient. Todd Usen added, “It was easy to get money five years ago, but then COVID hit, and it was really hard. But the best companies still raised money—and today, the best companies will also raise money.” Despite the difficulties, there is still potential for success if companies can demonstrate solid performance and a clear value proposition.

Importance of Strategic Investors

Engaging with strategic investors can provide significant benefits, although it often comes with added complexities. These investors can bring more than just capital—they offer expertise, market insights, and validation.

Scott Huennekens noted, "Every deal I’ve done as a CEO has had strategic investors—whether it’s GE, J&J, Boston, or Medtronic." 

Timing is crucial when bringing in these investors. Usen advised, "Bringing in strategic investors too early might scare off other potential investors." Thus, while strategic partnerships are valuable, they must be managed carefully to avoid deterring other funding opportunities.

Reinventing Business Models

Flexibility and the willingness to reinvent business models are crucial, especially in digital health. The panel stressed that companies must adapt to market feedback and changing economic conditions to stay viable.

Michel Lussier emphasized, "Be proactive and have the courage to reinvent yourselves. The business models will change due to the economics of the environment." This proactive approach is essential for companies to remain relevant and competitive. Huennekens added, "Failure to not change is the problem. All venture capitalists want is a return on their capital." Adaptability can lead to better alignment with investor expectations and medtech market demands.

Multiple Valleys of Death

Entrepreneurs often face critical challenges at different stages of their company’s development. The "valleys of death" concept requires continuous reassessment and strategic adjustments.

Barnea explained, "There are valleys of death at different stages, and you need to reassess your strategy continuously. It's like a game you must play at any given moment." This means that companies must be vigilant and ready to pivot when necessary. "You need to bring a lot of questions before you can address and validate a true market need," he added. Thorough validation is vital to overcoming these challenges.

Diverse Financing Sources

Utilizing a variety of financing sources can help companies navigate difficult financial periods. This includes exploring non-dilutive funding, subsidies, and strategic partnerships.

Lussier shared, "Take advantage of all available financing sources, including government programs, strategics, and subsidies." This approach can provide much-needed financial support without diluting equity. Usen reinforced this point, "Use all your options and be open to taking advice from different sources." Diverse funding strategies can enhance a company’s financial stability and growth prospects.

Building Companies for Acquisition

While the primary focus should be building strong, standalone companies, successful businesses will naturally attract acquisition interest. This approach ensures that companies are robust and attractive to potential buyers.

Usen stated, "Your main focus should be building the company. Then, if you’re ready to be bought—even if you can’t wait to be bought—don’t focus on selling." This philosophy encourages companies to focus on their core strengths and market position. Barnea stated, "Focus on building the company, not just preparing it for sale." By doing so, companies can create sustainable value that appeals to both customers and potential acquirers. 

Conclusion

The full recording of the panel can be found in LSI’s resource hub at the link below:

• Weathering the Storm: Hard-Won Lessons from Building & Scaling Medtech Ventures Through Challenging Market Conditions

The medtech market presents unique challenges and opportunities—and succeeding requires resilience, adaptability, and strategic thinking. Insights at the LSI Europe ‘23 panel emphasized the importance of understanding the current capital environment, leveraging strategic investors, and building robust companies to navigate the dynamic medtech landscape.