Early Common cause analysis before you start

1. Introduction you should run a thorough assessment that identifies In your project the most common cause of failures of a start up, in most cases it will guide you when you start preparing the materials for investors, who are your right investors etc, it will also guide you through the most important task of defining your customer, product strategy etc. and it might save you some time in convincing investors because they will be using a similar approach (if they are professional investors of course). 2. Examples for Common cause failures in procedures/projects Examples for Common cause failures Portion 2023 Fundraising- Long investment time: The process of transforming a concept into a market-ready, clinically validated, and regulatory-approved medical device takes years. This prolonged timeline requires substantial funding from investors, who won’t witness the first commercial results for several years. Availability of smart capital: There is a scarcity of capital sources that are familiar with the regulatory and technological hurdles of the medical device sector (distinct from biotechnology and pharmaceuticals, which operate within different regulatory frameworks). Thus, it is difficult to find investors equipped with relevant experience who can provide helpful guidance to the innovator. Burn Rate: Most of the time, startups simply run out of money. They fail to raise (enough) funding, or they burn through their cash too quickly in an industry where results take time. Less than half of tech companies that raise funding ever raise a second round, meaning their first round of financing— usually led by angel investors— is all the money they ever get to build their business. 35% Lack of a disruptive technology- Disruptive technology is an innovation that significantly alters the way that consumers, industries, or businesses operate. A disruptive technology sweeps away the systems or habits it replaces because it has attributes that are recognizably superior. 20% Poor distribution strategy- Executing the commercial strategy often means challenging established systems and processes. This stage has lots of friction. Therefore, startups need to prepare beforehand by delving deeper into the complex system of healthcare payments and reimbursements. Inadequate reimbursement strategy- The perception of a product’s value, which determines the level of reimbursement, may differ among doctors, patients, and insurers. Each party has its motivations and incentives. While one party seeks a better treatment or diagnostic procedure, the other party considers the healthcare system’s costs that the new device generates. 17% Intellectual property challenges- It’s estimated that up to a third of R&D resources are wasted on inventions that already exist. Looking at an existing patent landscape can help smaller companies to save time by knowing what is already state of the art. 15% Inadequate team- Many MedTech CEOs hail from scientific, medical, or engineering backgrounds, bringing invaluable expertise to the table. However, this expertise doesn't always translate seamlessly into commercial acumen, and an understanding of marketing and sales, leading to challenges in scaling and sustaining the business. 13% 3. Common cause failures assessment Common cause failure assessment should be presented by stage and thus might contain additional features with no direct relevance to failure mechanisms of Medtech start-ups. 3.1 From idea or academic research to biotech entrepreneurship. • Literature and market analysis to asses: need based on problem definition, existing solutions, science and technology, IP freedom to operate general search. • Technology Readiness Assessment: evaluate the level of proof of concept you have received to date, and your technology’s ‘readiness level’ indicating how much further you need to develop it to reach different funding stages. As well as the scientific and technological development, scalability within technical and scientific constraints should also be considered. • Stake Holder Consultations: Engage with our industry experts for insights on applicability and potential challenges of your technology, in light of the scientific and market risks. to integrate their feedback into your scientific and technical strategy. • Designing proof of concept Experiments or clinical studies': These are designed to test the core hypotheses of your technology. Failure in these experiments could mean a significant pivot or halt in your project. Identifying the outcomes of these as early as possible, with as limited capital as possible is optimal, and crucially sought by early investors. Ensure each experiment is designed with clear objectives and robust methodology to yield conclusive results. It is crucial to allocate resources strategically for these high-stake experiments. Non-dilutive funding (which does not take equity e.g. grants) and early dilutive funding (taking a % of the company in return for capital) is predominantly spent on these experiments’, to begin to de-risk the scientific and technical risks. • Analyzing Outcomes and Mitigating Risks, be prepared to actively pivot your development strategy based on experimental outcomes. post-experiment, reassess and prioritize risks, and develop a roadmap for addressing them, including contingency plans for critical risks. 3.2 Taking the start up forward Understanding Technical Risk Assessment Technical risk assessment involves a systematic evaluation of potential risks that could impact the development, production, and commercialization of biotech products or technologies. This process encompasses a wide range of considerations, from the feasibility of the underlying science to the reliability of manufacturing processes and compliance with regulatory standards. The goal is to preemptively identify challenges that could derail a project, allowing startups to develop strategies to avoid or manage these risks effectively. The Foundation of Scientific Planning For biotech startups, the journey from a groundbreaking idea to a viable product is inherently risky. Technical risk assessments are crucial in this context, serving as the foundation of scientific planning. They enable startups to make informed decisions, prioritize research and development (R&D) efforts, and allocate resources more efficiently. By identifying potential technical hurdles early, startups can adjust their strategies proactively, reducing the likelihood of costly setbacks or failures. Mitigating Risks in Biotech and Medtech Startups Biotech and medtech startups operate in sectors where the cost of failure is high, not only in financial terms but also in terms of patient safety and regulatory compliance. As outlined by University Lab Partners, risk management in these startups involves assessing the viability of technologies, ensuring the quality of laboratory practices, and navigating the complex landscape of health regulations. Technical risk assessments help startups to pinpoint specific areas where their innovations might face challenges, from scalability issues to potential side effects or adverse reactions in clinical settings. Compliance as a Cornerstone Regulatory compliance is a cornerstone of success in the biotech industry. The "Pharma & Biotech Workplace Compliance Toolkit" by Envoy underscores the importance of understanding and adhering to regulatory requirements from the outset. Technical risk assessments play a critical role in this process, helping startups identify the regulatory pathways that their products must navigate. This proactive approach to compliance not only facilitates smoother regulatory approvals but also builds trust with investors, partners, and consumers. Embracing Risk to Grow While risk is often perceived negatively, it is an inherent aspect of innovation in the biotech sector. Faster Capital emphasizes the importance of taking calculated risks to propel startups forward. Technical risk assessments enable startups to distinguish between high-risk endeavors with the potential for high rewards and unnecessary risks that could jeopardize their operations. By embracing risk in a controlled and informed manner, startups can drive breakthroughs and achieve competitive advantages in the market. Components of a Startup Risk Assessment A comprehensive risk assessment for a biotech startup should be multifaceted - from assessing the scientific basis of the startup's technology to evaluating market demands and competitive landscapes. Additionally, startups should consider operational risks, such as supply chain vulnerabilities or potential issues with intellectual property. Each of these areas requires careful analysis to develop a robust risk management strategy. • Team resumes- how attractive is the team resumes in mitigating risk perceived by investors, advisory board, board of directors. Does the founder/Do the founders have the expertise required to develop the technology and run a company? If not, it would be very risky for these founders to attempt to run the startup without significant input from people who do have the requisite expertise. This risk could be significantly limited by hiring experts in the appropriate areas and finding mentors. • Investors- Who are the right investors for each stage and what is the right funding round per stage. • Regulatory- what are the regulatory hurdles (safety, track etc), how large is the regulatory study, how long will it take? Existing or new reimbursement number? • Information security is far-reaching for many companies. Intellectual property, experimental results, written processes, and personally identifiable information about employees are some common types of information for a medtech or biotech company to store. The risk that these could be stolen, misused, or lost is important to consider. • Stakeholders who is going to buy the product, what is the liquidation strategy? • Business plan incorporating all the above. • Commercialization plan.