MedTech Incubators: Driving Innovation, Delivering Change

by | Apr 6, 2022 | Alliances, Thought Leadership

At the recent Emerging MedTech Summit in Dana Point, California, medtech investors, strategics and entrepreneurs gathered to hear presentations from top start-ups and keynote and panel sessions from some of the industry’s best-known names.

Fogarty Innovation CEO Andrew Cleeland participated in a panel discussion titled “New MedTech Incubator Models & Early Stage Investing.” Moderated by Lisa Carmel, executive vice president of Strategic Partnerships at Veranex, he was accompanied on the panel by Fiona Mack, Johnson & Johnson’s head of JLABS; Lana Caron, innovation lead for Philips Ventures; and Howard Levin, Deerfield Catalyst CEO. The group discussed current industry trends and their respective company’s incubator models, then offered some sage advice for up-and-coming innovators.

Medtech incubator approaches 

The panelists started by sharing their organizations’ different approaches to advancing medical device innovation. For example, Phillips places a strong emphasis on coaching and believes in investing early on in order to learn where innovators’ products fit within the company. 

JLABS focuses on CEO training and mentorship, while recruiting well-vetted companies in need of physical space. For example, its site in Houston offers a 34,000 square-foot coworking lab space with specialty equipment for medical device prototyping. They also identify internal players who have specific expertise in the field where the entrepreneur is focusing. 

Deerfield Catalyst combines the resources of two affiliated organizations, Coridea and Deerfield, to either advance early-stage startups via its incubator or potentially help later-stage companies secure funding through its investment firm. 

Andrew highlighted Fogarty’s 30,000 square-foot facility, which has the capacity to house 20 companies at once as they learn and grow their solutions. “We’re focusing on developing the next generation of innovators and educating entrepreneurs with the idea of strengthening the entire medtech ecosystem.”

Trends on the rise

A few key trends have emerged over the last five to 10 years as incubator models have evolved to help propel entrepreneurs towards commercialization. Digital devices and the incorporation of artificial intelligence (AI) are now at the forefront, motivating companies to find ways to take advantage of these advances. 

On the funding side, multiple panelists noted that strategics are getting involved earlier in the process than ever before. Johnson & Johnson’s JLABS provides the perfect example. Created 10 years ago as the innovation incubator arm for the corporation, JLABS provides a no-strings-attached network of life science incubators that enable innovators to advance their ideas to deliver healthcare solutions. 

The large number of medtech companies exiting via IPO in 2021 motivated typical mezzanine investors, like Fidelity and T. Rowe Price, to make large investments in later rounds of funding. This prompted VCs, which traditionally were later stage investors, to come in during earlier rounds instead, so capital was easier to raise. However, that IPO market window appears to have temporarily slowed in early 2022, so early-stage companies have had to get more creative as they seek financing.  

What innovators need to know about approaching strategics 

Although there are many different roads to success, some lessons are universal. Here were five that the panelists shared:

  • Clarity is key. Panelists agreed innovators must be clear about their goals when approaching strategics. Whether the aim is to create a new channel, gain insight from key opinion leaders or obtain fundraising assistance, it’s important to communicate what you’re trying to achieve and remember that the proposition must be beneficial to both parties. 
  • Be ready to pivot. Innovators’ ideas must be presented to the right person at the right time, and they should be prepared to hear ‘no’ multiple times. Follow up on the feedback from each conversation, persevere and maximize small “wins” when you get them.
  • Relationship building is part of the game. Innovators must be strategic about every conversation and follow-up opportunity. Whether it’s a casual one-on-one at a conference or a formal presentation, interactions are often noted, catalogued and reviewed regularly with careful attention for future potential. “Do the things you say you’re going to do so they know they can trust you,” said Andrew. “Be deliberate. Maybe your idea isn’t a right fit now, but the organizational landscape is always changing.”
  • Identify your champion. Find the person within the company who can provide feedback on how your solution fits within their larger strategy. These individuals are often well-positioned to pilot projects and create opportunities that help bring your technology to market. 
  • Have a fully baked plan. Innovators must demonstrate they understand the path to commercialization and have a plan to address potential obstacles to attract investors and create partnership opportunities. Startup CEOs must show they’ve thought through potential problems and acknowledge the risks they are working to mitigate. Is there a clinical concern? Reimbursement risk? IP risk? It’s not necessary to have all the answers, but showing you have identified the issues that need to be addressed goes a long way. 

“Matchmaking is our role,” said Andrew. “Ultimately you’re looking at someone you’re going to be partnered with for a long time.” 

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