Investors in medical technology are always prepared to take risks, but only within reason. To ensure you’re able to reach your target customers, you need to have a clearly defined set of objectives and identify any potential impediments that might get in the way.
Before you engage investors, you need to make sure you have everything in order when it comes to the protection of sensitive data and intellectual property. Unless you have security and privacy built into the design of every product you manufacture and every process used, the whole relationship risks being derailed before you even start.
Here are three critical factors to consider before engaging your investors:
#1. Regulatory compliance
When it comes to medical devices, the path to regulatory compliance is often one of the most difficult to navigate. It’s important that you provide supporting evidence of your compliance efforts and that you have achieved all the necessary approvals and certifications.
For example, any medical device that collects patient health information (PHI) must be HIPAA-compliant. Health foods and medicines need FDA approval. Others need to go through the product-based 510(k) process. Some need to meet the demands of a more time-consuming pre-market approval (PMR) process. The list goes on. You need a thoroughly documented process for gaining the necessary approvals, as well as the estimated time spans involved. All this needs to be done before you start marketing your products.
You’ll also need to be transparent about any pre-clinical and clinical studies, even if they have not yet been completed. Again, provide evidence of your efforts and the anticipated scope of any relevant studies. All potential negative and positive outcomes need to be evaluated, and you will need to demonstrate that you have all the necessary agreements with any collaborators or other third parties, such as business associate agreements under HIPAA.
#2. Intellectual property
While it might not be subject to compliance regulations, your intellectual property is everything that you’ve worked so hard to build, so it needs protecting. Most investors expect these factors to be dealt with long before your product can be described as ready to enter the market.
To avoid costly and time-consuming disputes further along the line, be sure to clarify any ownership and licensing rights. Employees should have documented invention assignment obligations covering the entire period of their tenures, and they shouldn’t be subject to any obligations under their previous employment contracts.
Sophisticated investors are interested in minimal risk, so the last thing they’ll be interested in is a lengthy list of operating restrictions and infringement charges. They need to be convinced that your company is able to commercialize its products without unduly increasing risk or infringing any third-party agreements. Ultimately, you need a clearly defined intellectual property strategy that thoroughly understands the patent landscape and boosts credibility in the eyes of investors.
#3. Business governance
Any investor will want assurance that all necessary documentation is in place to support the correct governance and compliance of your organization and its products and services. They will expect ample access to management and support to monitor their investments. Most of these controls will be implemented during the transaction process, but it’s also wise to have a strong corporate governance framework in place before you begin. This will reduce the red tape and onboard new investors faster.
Among the many documents investors will want to review are those laying out the structure of your organization and its compliance initiatives. Others include financial documents and those pertaining to control and ownership. They’ll also want information to support their investment choices, such as an up-to-date review of things like stock ledgers, certificates, warrants, equity compensation plans, and award agreements.
A Couple of Gurus provides IT support to medical device manufacturers seeking to simplify administration and the many technical aspects involved with regulatory compliance, intellectual property, and business governance. Call us today and we’ll make sure you’re fully prepared to meet with investors.