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This sector has huge potential for Bristol, but it also has significant market challenges, from how to navigate the NHS to the rapidly evolving international digital regulatory landscape.
In this article, we share advice for health tech startups on product development, investment and routes to market from some of our SETsquared Bristol companies and from health tech investor Dr. Jonathan Matlock, Co-founder of Science Angel Syndicate.
When it comes to developing a health tech product, traditional startup methods generally aren’t applicable. Regulatory hurdles and the iterative process make it notoriously difficult for early-stage health tech startups to demonstrate early traction, so it’s important that you understand the clinical pathway early on and build your business model to fit it.
Clinical trials are long-term, high-risk programmes. In order to de-risk the proposition you’ll need to get robust data behind you and undertake non-interventional trials first. Make sure you have early conversations with pharmaceutical companies to find out what the regulators want. Understand what you’re using the clinical trial for and who the intended audience is to get the most from them.
Selling the vision
To raise money in a high-risk high-reward market, you’ll need to persuade investors that you have product fit and market traction. The key is to de-risk the science with data to back it up. Find a way to clearly communicate the vision and benefits to both customers and investors. There’s also value in demonstrating how your core approaches can work in other devices.
You’ll need to demonstrate to investors that you understand your traction milestones and that your team has the capability and skills to deliver the next steps of the business. They’ll be looking for the status of your proposed diagnostic and assessing how risky the next step is.
The reality is that investors are buying into you, your vision and your belief that you’ll find the right people to join your journey.
Finding the right investor for your health tech company is paramount – providing money is not enough! Make sure potential investors have experience in the relevant sector, as well as good networks and experience in commercialising. A lot of companies don’t do due diligence checks on their investors, but this is very important.
It’s notoriously tricky to raise pre-seed funding in the health tech space as you’ll have the least to show and the most risk at this point. Syndicates can be particularly beneficial for pre-seed funding as you’ll be targeting plenty of investors in one activity. Create a comprehensive list of your potential investors early on, split them up into categories, and track your conversations and outcomes to move forward.
Grants also provide credibility and will help unlock investment, especially for companies that are not university spin-outs. It’s attractive for investors to de-risk their money alongside government funding.
Route to market
Your route to the market is not straightforward. When you first start out you probably won’t know who your customers are. Make sure you ask the right problem-related questions and work out what the actual problem is that you are solving, who will buy your product and how it will deliver value for money.
Define who the stakeholders, end customer and intended audience are, and be aware that your end beneficiary is rarely your target. Demonstrate product market fit and the potential scale by getting commercial input from consumers. Build your network early with people who might become advocates for you later.
If you’ve not considered licensing as part of your product roadmap, then you’re probably making a mistake! Build your tech defensively – licensing IP at an early stage in a pre-clinical setting can sometimes lead to an earlier exit opportunity as part of a partnership or co-development with big players.
You may consider looking internationally for collaboration or growth e.g. starting in the UK but scaling into where your biggest market is. The US market is roughly 2/3 of the global market and people there are used to paying for their healthcare, so it can work well for medical consumer products.
Selling to the NHS
The NHS is the biggest red tape brick wall to get into. Understand how your product will work within clinical pathways if it’s the right solution to the problem, and whether it will provide the right outcomes.
You’ll need to find out who in the NHS would buy it and what their buying criteria are. Those with the money aren’t necessarily those who stand to benefit. Talk to them and build out your network in order to develop your value proposition and how it will be deployed.
If you’re building a novel device, you’ll need to build research collaborations with individual NHS trusts to build your market and reach critical mass to create buy-in.
Help and support
Work hard to make connections within the healthcare system and don’t be afraid to reach out and ask for help when you need it. Engaging with organisations like West of England Academic Health Science Network is critical to help understand the healthcare system and to de-risk innovation and early-stage clinical input, as well as to broker relationships with clinicians.
The South West has a thriving community of health tech startups. Engage with them for advice and support. It’s helpful to join an incubator or accelerator like SETsquared Bristol to help provide speed-to-market and business coaching and guidance.
This article is based on SETsquared Bristol’s panel event, ‘Healthtech products – innovation to implementation’ which took place on 10 October 2022 as part of Bristol Technology Festival. With thanks to contributions from panellists: Dr. Jonathan Matlock, Co-founder of Science Angel Syndicate, Dr. Jenny Bailey, CEO of FerryX, Jenny Button, CEO of emm, Dr. Joshua Steer, CEO of Radii Devices, Michael Roberts, CEO of GenomeKey and Paul Forster, SETsquared Bristol Community Manager.
Many thanks also to the West of England Academic Health Science Network and Haseltine Lake Kempnerfor supporting the event and delivering practical advice and surgery sessions on healthtech focussed IP, procurement and regulation.
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