036 – What you need to know to get startup funding for your medical product part 1

Ever wanted to get advice from lots of medical device development experts or find out what mistakes they see over and over again?

When seeking startup funding, there’s more work involved than just asking for money. Investors want to be confident that you can drive your product forward and be successful on the market and that comes with knowing the process of getting there, being prepared, and giving them the info they want to see. This is part 1 of 2 in a series that will give a brief overview of what you need to have a grasp of before going out and trying to get a pitch lined up.

Want to know more? Apply for 1 of our 10 beta tester spots in our new program, Invention Idea to Profitable Product here.

  • Belated happy thanksgiving [0:36 ]
  • Why getting your funding is not just about your pitch [1:02]
  • Is your idea or technology what the market needs and wants [4:53]
  • The stages of development [6:57]
  • How to get where you want to go [10:13]
  • Intellectual property [11:12]
  • Engineering, design, and prototyping [12:24]
  • Clinical and regulatory [13:58]
  • Usability and human factors – why your invention ought to be intuitive [15:33]
  • Manufacturing process [18:43]
  • Sales – crafting the sales strategy [19:15]

Next Steps:
Text INVENTION to 44222 to stay updated about upcoming beta launch of program for entrepreneurs and inventors or click here.

Host: Meghan Alonso

Host Company: Imua Services


All Podcasts:
iTunes: bitly.com/Inspire

Full Transcription:

Meghan: E komo mai and aloha! You’re listening to inspired by Imua, where we help you master the waves of medical product development. Each week we interview guest that educate, guide and inspire to give you and your product the skills you need so you can hang ten. If this is your first time listening, Imua is spelled I-M-U-A and it’s a Hawaiian word. It means to advance forward with passion despite rough waves. There are plenty of those in the medical device development but keep listening because we’ve got you covered. Well Aloha guys! I hope you’re having a great thanksgiving if you’re living in the US and if not, I hope you had a great week last week. So Americans get really fat and lazy after they eat a bunch of turkey and sides. Well some them do at least a lot of them go out there and run it off. There’s lots of what they called Turkey Trots around usually a 5k or 10k race to help flush all that out of our systems. So I wanted to touch on the topic I’ve had a lot of people ask me recently how do I get funded? Or how can I get connected with investors? Can you connect me with investors? What do I need from my pitch? I practice it a lot of times. Maybe it’s not just sinking. And what a lot of people don’t realize is that it’s not just something with their pitch or it’s not just about finding the right investor. I wish it was that easy. There would be a lot more medical devices in the market if it was that easy. So there’s a ton of work that goes upfront. To even get someone’s attention, in order to get your foot in the door to get that pitch. And today, we’re gonna walk through what that looks like. If you have an idea for medical product which is actually the perfect lead into my new beta program. And if you’re listening to this episode when it goes live on November 28th, then you have just two days left. So go ahead and do this today before you forget about it, if you’ve been thinking about it or if you find out about it for the first time. I have a new beta program called Invention Idea to Profitable Product. So it goes in a lot more details on what we’re covering in today and walks through that process. And I have ten spots open. I’m taking beta testers for free so we can really work on this program. I can really make a difference in your journey and we can solidify it for the people that go through the program later on. So if you wanna apply, head on over to imua-services.com/iipp that’s Invention Idea to Profitable Product. So there you can just find out a lot of the details and you can see if it’s right for you. Or if you’re out and about in a walk or in a gym, go ahead and text the word INVENTION to 44222. So for the number that you’re texting, just type in 44222 and in the body of the text type INVENTION. That will send you a link where then you can access it later so you don’t forget. So if you’re listening to this after November 30th, I don’t want you to worry. Don’t be bummed besides it’s still gonna be up. You can still visit that. You can still text INVENTION. I’ll have some info there for how you can get on board with the next class that’s going through this when it’s done with beta. So there’ll be some incentive for you to just check it out early. There’ll definitely be a discount offered to those who sign up after this period but before I launch it for real next year. So also in this episode, if you’re listening and you’re kinda interested in the topic, I have two really similar podcast that gonna tie in to this as well. So you can listen to episode 32 and that would give you an option if you have an idea or have few different things that you can do to that idea to really advance it forward then episode 34 where I talked with Pat Flynn and he talked all about idea validation and he wrote a book specifically for that. Now his book is geared towards people more in the online business areas so definitely not medical products or health wellness products. But you can pick up a lot of good insight from that episode and it’s always good to steal from different industries and be advocate of that. So look at what other people are doing outside your industry and ask yourself, ‘Hey what can I learn here? What can I do here? What can I take with this and how can it help my business?’ Alright, so today I’m gonna give you an overview of what you need to know before you even start formulating a pitch. Before you think about hey what investor should I seek out? You need to have a lot of details flashed out so you can understand that. Also before you even start, think about forming a company around your idea or technology this goes back to idea validation, you want to make sure that the idea or technology is what the market needs and wants. Will people wanna buy it? Is it covered by insurance? Is it that much better than the competitor’s product? Or you know it needs to be really disruptive sometimes so fail in the market place that it makes a huge difference than rather hey it’s just a little bit better than what’s already out there. So this is idea validation. This is market research and again a lot of this is covered in episode 34. So go back and listen at that. I’m not gonna dive into that too much. After you’ve done all these and you feel confident in your idea, you can start the process of developing it into a product. So that’s the step in really getting notice to give a pitch. Investors, even if it’s your friends and family. You’re just seeking a little bit of seed money. Maybe you’re wanna do a kick starter fund. No one is gonna take you seriously, no one is going to care, no one is going to buy into your idea unless you can prove that you understand it. That you’ve done the necessary steps that makes them have the confidence in you. And that’s where it’s up to you, you have to do this prep work. You have to lay a solid foundation. You need to fully understand what it takes to get your product on the market so you can work out an estimate of how much it will cost to get there so you can ask for that money. How embarrassing would that be if you went in to do a pitch and they asked you how do you know it’s gonna cost a million dollars? And then you don’t have estimates and didn’t do your homework to prove that. So they’re not gonna take you seriously if you haven’t done this research. They’re not gonna take you seriously if you haven’t laid out your plan and your path to market. So I’ll briefly cover these stages of development and what you’ll go through and then I’ll dive in a little bit to what’s required to go through those stages.

So here’s the stages of development. So the first one, and these are my stages; you might find some research that calls it, calls different things. Like I say ideation, you might hear some people call it conceptualization and you know it’s just really similar. So ideation this is where you first have your idea. So you’re gonna do that research on it, this is very research intensive. You wanna look in the particular niche industry, you wanna look in the landscape, you wanna look on your competitors and just seeing how your product or technology fits in.

Next up is feasibility and definition. Can your idea actually work? Is that possible that it scales? Like if you’re in a lab setting and you got your technology to work there, that’s awesome! But can you do to get it to work five times or ten times? What about a hundred or ten thousand or even a million? So here we’re looking for is it reliable? Is it repeatable? And then if it is, really hone in and define the who, what, when, where, and how of your product. So who will use it? What is it exactly? Where will they be using it? When will they be using it? And how will they be using it?

Next step we have is iteration. So iteration is continuing to refine the product so you have something you think is really repeatable and reliable; it’s functioning like it should several times, not just once. Now you’re probably gonna be in this stage the longest especially if it’s a complex device maybe it has mechanical, firmware, software, or optics. Anything that is integrated together as a system and it’s not just a plastic part that’s a lot simpler. There’s the alpha prototype then you got your beta prototype and then you’re scaling up from there. After that then you come to design completion where we’ll take all the marketing feedback, all the formative usability studies, the human factors and we wanna make sure that those are incorporated then we’re gonna freeze design and then make test fixtures as needed so you can start testing which brings me to verification. That comes after you frozen the design and you basically want to check if your design inputs meet your design outputs or did you do what you said you’re going to do. Is this what the engineering specs called for? Did you actually do that? Validation is making sure that usual needs are being met in a device that you created. So actually looking at those usability studies and then looking at that feedback and seeing, is this really doing what the people wanted and needed so maybe backing that up doing another formative usability study or maybe you do your summative here and just tie things up. A lot of people call it verification and validation. I just kinda broke it down separately cause I think it’s easier that way. And then lastly you have the launch and that’s where you have a sales team or you have distribution channels in place to launch your product on the market and yey you finally get to start making some revenue. So now that you know the process that you’re going through, let’s break it down on how to get there, and again this is the first step that gets you where you want to go in the end. So you want to be funded, so you can start developing your product, so you can be on the market, so you can start changing lives and making revenue why you are doing that. There are several things that will move your product along in those stages so let’s do a little overview of what those are. So I’ve already touched on marketing, marketing early on you’ll focus on idea validation were gonna bootstrap some market research just to be sure this idea is viable. And then later on down the line you’re gonna do more formal market research. You are going to continue to gather inputs and then later on you really wanna identify how you’re gonna reach your audience, what channels you’re gonna do that through and really work together with the sales team to define that well. Intellectual property so you wanna do your own path landscape first and of course you’re gonna engage with the IP attorney but you don’t want to spend that money if there’s something you could found on your own earlier that says, ‘Oh, okay yeah, I have this great idea and so did this person 5 years ago.’ So that’s a very gross error, no not an error but a sign that hey you should move forward let’s get another idea. You can do that on your own versus paying an attorney to do that. So you really wanna do as much as you can on your own budget before hiring someone else’. And then of course later when you do have an attorney they’re gonna do more thorough research they’re gonna do the ice, they’re gonna cross the tees they’re gonna help you work out a strategy. There’s other people that can help you work out a strategy there’s an offensive stance you can take with your intellectual property, there’s a defensive stance you can take; the new one I get into. How is this IP gonna fit in your portfolio, how does this IP fit in to the market place and just the overall business strategies with that. Next stop we have engineering design and prototyping so sometimes you want to show and tell prototype for your investors now maybe not with your friends and family or that first sea drown but definitely when you start getting into venture capital people really do like something tangible. They like to see it and this can be done on a really small budget with 3D printed parts or parts from an SLA machine then you paint them and you make look like a real product but it is actually just a dummy version just painted really nice to look like the finish product. So engineering design and prototyping you will be taking your product design even if it’s just from a napkin and then it’s all of those steps. Everything in between that iteration process they design completion process all the way to the manufacturing floor. There is a big thing designing for manufacturing. You know designing it so that, okay this is the process where the robot fix it up here, then the robot is going to insert this, and it’s gonna drop it over there and this other robot is gonna pouch it. That’s pretty high volume and that’s getting up there but it’s really fun to think about that early and think about what you can do in the process so that you allow for that, so you wanna allow for that success later on. Not have to go back and implement as huge system when you already really busy and you don’t wanna take that time what if you been really nice if could have done it upfront. So clinical and regulatory so if your product is one regulated by the FDA you’ll need to navigate the regulatory process and most likely the clinical trials as well. And we all know that this can take a while. It’s taking really really need to be careful about it. You know there is lawsuits all the time, there is product recalls and one of the best methods to help get your product along is figuring out the proper regulatory strategy early on, that’s gonna shape a lot of your development. You wanna do that, you wanna have a plan in place. I always encourage engagement with the FDA or the other regulatory bodies if you’re working with Canada, If you’re working with Europe, China, India each country has its own system. And if the sooner you can talk to them, the better. A lot of times you can get meetings with them and figure out where your products fits in and what they think about it and the path you need to go down. And they’ll gladly do that, that’s awesome. And that will help you and you don’t think its one way talk to them find out there’s another way and have to start all over again. So here you can have, it kinda also incorporate not only the regulatory plan but the FDA pre submission doing pre clinical trials looking at those results and finding out. Okay wow my product is not it as doesn’t have what I thought I was gonna have so im gonna change this design so it does. All those iterative process results are great. Usability and human factors, so a lot of regulatory bodies require your device to be intuitive and even if it this doesn’t apply to you it should still be really intuitive and even it doesn’t apply to you. It should still be really intuitive so the users know exactly what to do without reading the instructions. Let me ask a question here so have you ever used an app or maybe some software and you get in there and you are just thinking oh my gosh this is such a nightmare. I can’t figure out how to use this. I have no idea what I’m doing. And then you get into the other things, like I am not a Microsoft person, I’m a Gmail and Google person and their products to me at least I know some people love Microsoft some not doing on you Microsoft there is a lot of awesome things about you, actually I just used a word today. But anyway with their email system I do not like Outlook. It’s really difficult for me but with Gmail it’s really intuitive and you know a lot of people say that about apple product too. It’s just you can pick it out, you can figure it out that’s what you want your device to be like. And this is even more important with medical devices, so think about this so someone is in a situation where someone is unconscious and your adrenaline is really high, you need to save this person’s life or they have an allergic reaction and you need to find that Epipen fast to get them what they need. Are you gonna sit there and read the directions first? Well maybe if you couldn’t figure out but no one wants that, you want just to able pick it up and do it. This person’s life depends on it and that’s what you should think about. You should think about people aren’t gonna read this and the regulatory bodies are thinking that they want your device to be so intuitive, that directions are not needed. So think about that when you’re designing the product, make a big push for usability and human factors because it’s a lot more important than you think.

Next stop is quality system and quality assurance so the way you build your product needs to be documented and then also it needs to be documented when it’s manufactured. This gets into more of the more monitoring quality or quality assurance so you’ll need to build what’s called a quality management system or QMS this is gonna keep you on track. So early on when you’re validating your idea and when you’re figuring out hey do I even wanna do this or is it worth it? No you don’t need the QMS then but then when you start designing things, all of those designs go inside of what is called a design history file and you’ll need to prove that to the regulatory board and say hey this is how my product was built, this is why it sound, here is everything that we did because if something goes wrong with your product they’re gonna need to see that.

Lastly, we have manufacturing so there’s a lot of system in place, actually it’s not last, sales is last. So manufacturing there’s a lot of system in place you’ll need in order to scale for manufacturing as well as the assembly process, the protocols for manufacturing, who are your suppliers, how often are you getting material from your vendors, what’s that process look like are they abroad are they here in the US, do you have enough in the inventory. Then also once you get into manufacturing again you’ll need to monitor that manufacturing for quality assurance.

Then the last one which I promise that is last one is sales. What is your sales strategy? What are your tactics that you’re going to take in the strategy that you’re gonna take to penetrate the markets that you wanna be in. Then you wanna start sending those up before you’re done with your product, that way when your products in manufacturing in ready to go, it’s just a natural next step. Hey we have the sales team built up or we have this distribution channels set up. We just need to fulfil and we’re gonna send the products on their way. So that starts early you wanna get involve a lot with marketing. You want to make sure like an engineering with packaging your product that when you’re thinking about shipping the product what type of packaging does it mean to be in, you know are you boxing 40 of them in a bigger box and maybe it’s in bubble wrap if it’s a fragile device or if it has a sort of liquid in it, have you tested that when you going altitude that it’s not gonna burst open. So all of that is so important for sales because if something happens in that order. Sales is not gonna be doing very well, they’re not gonna be able to sell the damaged products. So I know that’s a lot I throw at you and all of the what I listed here the process from ideation all the way through launch and then what we’re doing to get there, everything from marketing all the way down to usability, through quality system to sales. They all work together, there’s different things that you need to be doing at each step in the process. So we’re gonna cover more I know you’re thinking, ok that’s not really how I really get funded. It’s a lot of information so we’re actually going to take 2 episodes to do this. Episode 37, the next episode, be sure to tune in when that goes live. That will be the first week of December. So Tuesday December 6th. So keep a look on that if you’re not already, you can subscribe to the podcast so if you’re on an Iphone, you can click subscribe there if you don’t know how to get a podcast on your phone and subscribe, youtube it actually that’s a reminder because I used to have a video on how to do that. So I will add those videos back up there. So like I said stay tuned to episode 7 we’ll cover more of what you need to do and terms of getting your business organize formulating the business and then what we just learn today. How you’re gonna rope that in with your pitch in order to attract the investors. So I’ll stress again, that’s really important that you need to understand this process and know what you’re going into when you are developing a medical product. This is not easy, it’s actually a lot easier if you wanna develop a consumer product, so if your device can have an application maybe you’ll market it more as a wellness device in your marketing towards consumers. It’s not having any medical claims for regulatory, that’s easier. But anyway, regardless you have to have a plan that’s gonna impress the investors, you have to have an idea of the cause that it’s gonna take to get to market and how much investments you need. You need to know where the tough spots are and how can you be prepared for that. You are gonna need to recruit members of your team. If you don’t understand all of these which that is another story but I’m definitely big believer in a team and one person, it’s gonna be really difficult for one person to get something to market. That will be definitely unicorn if that’s you. And you also need to understand this so you can find the right development partner maybe that IP attorney that you’re gonna work with or that regulatory specialist that you’re gonna work with. You need to understand a little bit about everything and then find those either internal members or development partners, they’re external that work like your team to fill in the gaps. But you know you’re not able gonna do that if you don’t understand all these. So I want you to really focus on that first. Today was a high just a high level overview, we go pretty deep into this as well as walk you through what you need to do for your idea or technology in my beta program Invention Idea to Profitable Product and again you can sign up for free to be one of the ten selected beta testers. Just go to imua-services.com/iipp or you can text the word INVENTION to the number 44222. So I will catch you back on the next episode here on as I said Tuesday, December 6th not the 5th and until then UMUA.

About the Author

Meghan M. Alonso
Meghan M. Alonso, referred to by Shark Tank’s Kevin Harrington as a medical device development expert, is known for her award winning medical device podcast, Inspired by Imua, the chapter she wrote in best selling book “Put a Shark in Your Tank, and her valuable connections in the medical industry. According to the Huffington Post, she helps clients navigate the complicated process of bringing their ideas to the marketplace. She’s a patriotic military wife, pet parent, founder and co-founder of 4 successful companies who thrives on guiding medical device and IVD companies through development and manufacturing. When she isn’t helping others, Meghan is hard at work on her MBA she is pursuing from Auburn University, staying active with her adorable husky Abby, crossfitting, enjoying great restaurants and fine wine with her husband, and soaking up the sun the nearest beach.

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