I had the pleasure of attending the Medtech Conference on May 31st in Minneapolis that was put on by Healthegy. This was a one day event and the goal was to bring together startup and early stage companies, large corporations, investors, academia, and of course service providers like myself that cater to the industry.
For me, I have two goals when I attend conferences. The first thing of course is to network and build relationships with companies, investors and other service providers. The second goal is to learn. It is important and interesting for someone like myself who works exclusively with life science companies to hear the challenges, success stories and everything in between.
Of course the biggest challenge for companies in this space will always be money. Silicon Valley Bank who is a leader in this space got things rolling and in some good news with investment trending upwards as shown below.
– Information from Silicon Valley Bank
As for exits, they were more or less flat year over year, with M&A activity far outpacing IPOs. Unfortunately, 2016 and 2017 exits were well below the exit activity in 2014 and 2015 which were almost double. One of the reasons behind this slowdown could be Medtronic making no meaning acquisitions since they acquired Covidien a few years back but I don’t think it would be fair to put the blame solely on them. Coincidentally, SVB’s presentation was followed up by the CFO of Medtronic who indicated they might be on the lookout for acquisitions as we move forward.
Following SVB and Medtronic there was a session with three investors – a VC, a Mutual Fund, and a Hedge Fund. As expected, there were more similarities between the Hedge Fund and the Mutual Fund. For both, they see a much smaller number of deals, both are looking at an IPO as a preferred exit and I would say both need that exit to happen quicker. On the VC side they are getting in earlier, sourcing a lot more deals and are not as concerned if a company does not have a clear exit strategy when they invest.
After these sessions the conference tilted away from the financial side and more towards product and operations. They had a panel with CEO’s who were not the founders. One thing they made clear is that both a CEO for hire and the Founder/CEO model can be successful but also disastrous, neither model is better. The important thing for a Founder/CEO is to be self-aware and be open to input from employees and board members.
Reimbursement was a well-attended session and outside of money this is a huge issue for companies. If you do not have the ability to get reimbursed your company will not succeed regardless of how great the product is. Different strategies were discussed, such as piggybacking off a current code or trying to get your own code. Both present obstacles. One of the obstacles that took me by surprise was the difficulty in getting support for a new code from the various medical societies. Much like in other facets of life, it can be difficult to get people to change their ways and certainly the use and support of med devices is no different.
The conference circled back to where it started and that was on money. They highlighted Penumbra which is a remarkable story as it was not venture funded, something that is super rare for a company their size. This was followed up by a discussion on corporate venture. I was at a BIO event a few weeks prior and there was a session on the same exact topic. My takeaway was that on the Medtech side the corporate investors are a bit more active once they make an investment and are willing to share company resources with the entity they invest in. On the biopharma side access to company resources is much more limited, but something they are trying to do a better job of. Where things get tricky for both Medtech and Biopharma is when there is multiple corporate VCs involved.
My time in Minnesota was time well spent. The folks at Healthegy did a great job on the content and making sure the agenda hit a lot of issues that are important in the industry all the while getting it done in one day.