It is commonly believed by the founders of medical device companies, as well as venture investors, that achieving regulatory approval is the key to cashing in. But the assumptions underlying this belief are faulty, as outlined in an eye-opening article by Revital Hirsch.
Besides the reality that entrepreneurs always need more money than they think and that design and development often take longer than expected, Ms. Hirsch reveals that regulatory approval is no longer the “holy grail” of milestones. She writes, “Only 1 in 3 medtech start-up acquisitions are performed while a company is still pre-revenue.”
Her analysis continues with the striking statistic that a plurality (44%) of medtech companies need 6-10 years to go from inception to acquisition, while 32% need more than 10 years. Merely one quarter are acquired within 6 years.
All medical device founders and venture investors should read this article as a much-needed reality check.