This post about medical device startups is way overdue.
Perhaps the most interesting part of leading the world’s largest medical device community is getting member questions. (I publish a fraction of what I get to spare you the repetition and spam.)
I hear from a lot of members in need. They need capital. They need distribution. They need talent. (See “How to help members who need A LOT of help.”)
And often times, what medical device startups REALLY need is this one thing first.
They need to convince those who might help them,
I can be successful and I’m worth your time.
We – your future investors, consultants and advisors, distributors, and employees – need to hear you tell us one or more of the following.
1. “I have a unique selling proposition.”
With money for medical device startups having significantly dried (see MD+DI’s “Venture capital firms active in the medical device field”), smart investors want to fund product startups with a real chance at gaining market share. A “me-too” product offering isn’t going to do that.
The same for distributors. They carry thousands of products. They are not looking for more.
The same even for consultants like me. If I can’t understand your unique reason for being, I suspect we’re not going anywhere fast and we’re not going to have a successful engagement. (See “The First Three Questions.”)
We also want to know if you can pay us… and very few of us are “looking to get paid if/when you have more money.” If you can’t pay us, it’ll be hard to keep our attention for long. We have mouths to feed, you know.
2. “I have a solid business strategy.”
Remember “The Four Ps” from basic marketing: Product, Price, Place, Promotion?
I’m pitched new “products” from physician entrepreneurs all the time. They often have a handle on their “price.” It’s “place” (distribution) and “promotion” (marketing strategy and execution, commonly called the “Go-to-Market Strategy”) where things get hazy.
And that’s just the marketing part. All the other parts of the Go-to-Market Strategy including operations, regulatory, manufacturing, reimbursement, and so much more need to fit together.
Without these, don’t expect the funding or distribution you need.
3. “I can offer your sales team solid training.”
Distribution houses are reluctant to take on conceptual or difficult sales without being sure you are there to train their employees.
Features and benefits, yes, and also the unique selling proposition why your product is better than present solutions. Perhaps an education about how your product solves a new problem the market and future customer need solved, or one brought on by new regulation, such as the Patient Protection and Affordable Care Act here in America.
Again, sales reps have way too many SKUs to carry. You can’t expect they’re going to spend too much time learning about a new product… and what time they DO spend has to be efficiently spent. If your training does not spell everything out for them, don’t be surprised if they are unprepared on a sales call, resulting in poor sales.
With distributors, you are renting a portion of their time. It is all about their time – the time they invest in selling your product.
Distributors want winners right out of the gate. Don’t expect them to throw good money after bad to give you a second try. Misfires are expensive for them and you.
4. “My product will do a high volume and/or have a healthy margin.”
It comes down to profit potential.
How much money can the investor or distributor hope to make? What is the upside earning potential for your employees in the form of bonuses?
It’s worse in the case for distributors. What is the opportunity cost of selling your SKU versus an incumbent’s, especially if there is a private label option offered by the distribution house.
If you can’t demonstrate how much more money we’re going to make by taking an interest in you, don’t expect to hold our interest for long.
What’s in it for me?
Ultimately, the people you need for help want to know what’s in it for them first.
Be prepared to answer them.