Navigating strategic partnerships and M&As is a critical aspect of growth for startups in the medtech market. Building the right relationships with strategic investors early on can significantly impact the success of future transactions, including funding rounds, acquisitions, and potential exits. This article explores key insights shared by industry leaders during a panel at LSI Europe ‘23, focusing on the timing of strategic investments, the benefits and challenges of working with multiple strategics, and preparing startups for successful investor discussions. 

Engage Early with Strategics

Establishing relationships with strategic investors early in a company's development can be highly beneficial. While you might not seek funding immediately, building these connections can align long-term interests and facilitate smoother future transactions. Nathan Harrington of Philips emphasized this during a medtech conference, stating, "Start as early as possible. I'm not suggesting that you ask for money necessarily as early as possible, but these relationships take place over lots of time."

Strategic Investment Timing

The timing for engaging strategic investors can vary depending on the company's development stage and the type of technology. For instance, if a startup is working on core areas relevant to the strategic, early investment is more likely. Biren Mehta explained, "If a startup is in a core area of ours, we’re more likely to invest earlier. We know the space very well, so if it's a disruptive technology, we want to get ahead of it. Similarly, if it's a 510K product, we’re more likely to invest earlier because companies will often go from a round of investment all the way to FDA approval in one round." This insight highlights the importance of understanding the investor's interests and timing your engagement accordingly.

Benefits and Challenges of Multiple Strategics

Having multiple strategics on the cap table can be a double-edged sword. While it can lead to competitive bidding during an exit, it might also dilute each strategic's commitment and involvement. Mehta pointed out, "If you have two strategics on your cap table, you may have a better chance of running a competitive bidding process. There’s a trade off, though—strategics are also looking at the relationship in an investment, and if they are the only strategic, they might be more likely to support the company more robustly." 

The Right Time to Consider an IPO

For startups considering an IPO, developing the right mindset early and ensuring consistent revenue performance is essential. Predictability of revenue is crucial for a successful public offering. Ken Nelson queried, "Is 30 million the minimum for an IPO? Not necessarily. It's more about the predictability of revenue." Yassaman Salas from Goldman Sachs shared, "For me, the IPO route is a mindset. That mindset begins very early on, meaning you’re building a business to remain independent. There’s no magic number in terms of timing an IPO, but it’s always better to stay private longer." 

Trends in Healthcare Funding

The current medtech market primarily favors later-stage investments. Early-stage investments are still happening but are more challenging to secure. Yassaman Salas noted, "A lot of capital is going to current portfolio companies for more capital rather than new investments. My hope and expectation is that tech and biotech successes will help investors’ emotions and open up more capital for new investments." Nathan Harrington added, "This is the year of the bridge, with insiders hunkering down to get the company through to a better time or a clear value inflection point."

Preparing for Investor Discussions

Startups should tailor their presentations to reflect an understanding of the strategic investor’s portfolio and competitive landscape. Clear, concise pitches that identify unmet needs and present a clear ask are most effective. Biren Mehta advised, "It's worthwhile to do your homework on the strategic you're going to meet with and understand how your solution fits into their portfolio—not just about product gap but also positioning and competitive landscape." Nathan Harrington reinforced this, saying, "Always focus on the unmet need and pain point you're addressing. Make your asks very clear."

Conclusion

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

• Behind the Buyout: Navigating Strategic Partnerships & M&As From Both Sides of the Table

These insights from the medtech conference highlight the importance of engaging with strategic investors, carefully planning for funding and exits, and preparing effectively for investor interactions. As the medtech market evolves, staying informed and strategically agile will be key to success for both medical device startups and strategic investors.

To hear more insights like this, join hundreds of executives at LSI Europe ‘25 at the JW Marriott Grosvenor House London from September 7th to 11th, 2025.