Making the Jump from Seed to Angel – Q&A with Ted Kucklick

by | Oct 5, 2015 | Education, Funding, Thought Leadership

As part of the Institute’s ongoing educational series for its startups, we recently had the honor of hosting Ted Kucklick, founder, CEO and Chief Technical Officer of Cannuflow, a company that designs, manufactures and markets high-performance and cost-effective medical devices to help healthcare professionals better address chronic arthroscopic surgical problems.

Ted is a medtech veteran, having been involved in the early-stage and development process of numerous devices for companies such as Vidamed, Oratec, Neomend, Somnus, Curon, Starion Instruments, Sleep Solutions and RITA Medical. He is a regular contributor to Medical Design Magazine and a frequently invited speaker and panelist on medical device innovation. He is also author of the best-selling Medical Device R&D Handbook.

Ted shared his thoughts on how to stage your startup to attract angel financing, elements to a good pitch and how to get investors to write the checks.

Q. Are VCs/angel investors still interested in medtech?

A. Raising money in the 1990’s was pretty straightforward – there was a well-functioning small cap IPO market and active VC’s and you could sometimes take a company public with little to no revenue. Today things are different: There are fewer VC’s investing in medical device. The small cap IPO market is not there, but there is funding out there – you need to make sure you look for it every step of the way, or you won’t survive.

Companies such as Uber, Airbnb and Snapchat have made headlines with the millions of dollars they have raised. While medtech companies don’t offer as lucrative and fast returns as technology apps, perhaps that money they make in tech will eventually trickle down to our industry! Money does seem to be flowing to pharma and biotech. Take Avoxant for example: They raised $315 million without clinical data and no patients enrolled in any clinical trials. Why were they able to grab this attention? They had a “hot” product, an Alzheimer’s disease drug.

The reality for the majority of medtech startups who want to “make it big” is to look and be prepared for merger and acquisition opportunities, especially if they don’t have revenue. Standalone companies are also possible, but they must show strong value to their customers.

For a device to get sales traction in the current environment, and for an investor to be interested, the device must have at least some of the following characteristics:

  • If cost is higher, the device must improve patient care at least three fold.
  • The device should be reimbursable.
  • The device offers the same performance of an existing product, but for half the price.
  • The device has 10-fold performance improvement over an existing technology. Then, as Peter Thiel says in Zero to One, you have the makings of a monopoly.

Q. Have angel investors taken over the role of VCs in medtech?

A. Yes, angel investors are doing what VCs used to do and are can be the only “game in town” for some medtech startups. It is not unusual for these young companies to tap a couple of angel investor groups to reach the funds needed to move the startup to the next level. Deals are coming to angels that would have been taken by VC’s in times past.

Angels have become much more organized and sophisticated. There are also now individual high net worth “super angels” and family offices, in addition to the regular organized and solo angel investors.

Outside of angel funding, there are also other ways to raise money, including grants, such as national government grants and Small Business Innovation Research (SBIR) grants. Small amounts of money from different sources can take you a certain distance.

Q. What do angels look for when investing in a startup?

A. They look for similar attributes as VCs might, including:

  • Above market returns in a reasonable time
  • A team with sector knowledge and a clear line of sight for how to achieve an M&A liquidity target or next round of funding
  • Solid technology
  • A strong team that can execute on technology, operations sales and marketing
  • Strong industry relationships
  • The ability of the team to sell the company first, the technology second

Q. How do you find the right angel group?

A. There are many angel groups, and you need to find ones that are likely to invest in your space. Be aware, and prepared, that some groups can charge presentation fees, which can range between $300 and $3,000! Some don’t charge fees, but may expect equity, warrants, or commissions. Make sure these make sense for you. Once you find the appropriate group, you must diligently follow up with the interest list they create for you – or you will be wasting your money. Good angel groups will help you schedule follow up calls.

Examples of angel groups that are applicable to medtech companies, include:

  • Life Sciences Angels
  • Keiretsu Forum
  • Pasadena Angels
  • Mass Medical Angels
  • Golden Seeds
  • More information on angels: Angel Capital Association (

Before you present, it’s worth seeing what others are raising. You can find pretty detailed information for free on and

Q. What are the key steps after you meet with the angel groups?

A. After you present to an angel group, it is essential to recruit a due diligence lead within the angel group. Look for someone who has the credibility and ability to put together the due diligence package that goes out to the member angel investors. This is key. You need to find the appropriate lead person and team who are willing to put in the 50 to 60 hours of work to vet your opportunity.

Keiretsu Forum ( has a comprehensive due diligence handbook you can review.

Here is a rough timeline and approval steps to receive funding:

  • Application (30 to 50 are reviewed a month)
  • Screening and presentation (roughly 10 startups are selected)
  • Approval (final five companies or so)
  • Presentation by startup to the angel members
  • Initial interest list (people who sign up and indicate interest)
  • Follow up (startups need to do this)
  • Due diligence
  • Term sheet
  • Soft circle (those who are still interested after due diligence)
  • Hard close (collect the checks!)

Lastly, realize that you may end up with 20 to 60 angel investors. Shareholder communication and management of shares can become a real chore in this instance. You can use a tool like eShares ( to make your life easier, or hire a lawyer, but that can get expensive.

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