Launching any new business venture requires a fair amount of strategic planning, especially considering that only 50% of all startups survive beyond 5 years. A medical startup aimed at an industry as regulated as that of health care, however, requires even more. Between navigating various federal regulations as well as the differences in those regulations that might vary state by state, the tactics you’ll need to implement will be a key driver of your startup’s success.
Along with creating an advisory board to help guide you throughout the process of launching your startup, tackling your consumer market and growing your venture at scale, there are several other components that can make or break a medical startup. Fortunately, many of these factors are commonly shared by startups across separate industries and markets.
For starters, having the right team of cofounders and executives is crucial, particularly in the early stages of your startup. Additionally, rather than succumbing to the draw of chasing shiny objects, you and your team will need to ensure that your remain hyper-focused on addressing the underlying problem your startup was founded to solve. This can be done by having a strong and clear understanding of your target market. Lastly, you’ll want to make sure that your startup retains a capable and trustworthy legal professional to produce vital documentation, offer advice and guidance on critical issues, and help protect your business as it grows. Without implementing these tactics, your startup may find itself among the 90% that ultimately fail.
While the nuances of these tactics are bound to vary from startup to startup, the principles of each remain the same. By adhering to these basic principles, you can better position yourself (and your medical startup) for ongoing success and growth into the future.
Find the right cofounders
From my own experience, I can guarantee that any investor you and your team meet with or speak to — especially in your startup’s earlier stages — will want to know more about the people leading your company. Virtually any viable investor or partner your company seeks to join with will tell you that it’s the team is that sets most early stages companies apart from one another. For this reason, it’s crucial that you find the right cofounders with the proper background, experience, and skills to add credibility and trust to your medical startup’s name and brand. The age (i.e., experience) of a startup’s cofounders plays a strong role in its success, with founders between the ages of 40 and 60 roughly 2-3 times more likely to launch a successful startup than their younger counterparts.
The caveat here is that there is no single or easy way to select your team of cofounders. With this in mind, the best way forward I have found to accomplish this is by finding those people who have skill sets complementary to your own. For instance, if you are more entrepreneurial and lack medical expertise, your other cofounders (e.g., the CTO and COO) will need to have several years — or, better yet, decades — of experience in a professional medical career. In finding the right cofounders with the right skill sets to compliment others on your leadership team, your medical startup will have a leg up over potential competitors.
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Remain focused on one problem
Your startup’s mission shouldn’t be ambiguous; rather, it should be a clear statement of the problem your startup is addressing in the medical field and how it is working to solve it. You and your team should remain focused on tackling that single problem instead of trying to solve too many at once. Attempting this can rapidly burn through your runway and prevent your startup from gaining traction, two factors that account for over 40% of startups eventually failing.
It’s very easy to go down the road of opportunity, especially as new innovations, technologies and competitors reach your market, but this is a quick way to get distracted from your startup’s underlying mission. As you add more issues to your plate that your startup might be able to address, you will inevitably become less effective in addressing and solving each one as you spread your focus too thin. Instead of trying to diversify your startup’s initiatives, focus on one problem that your startup is able to tackle and build a single incredible solution for that one area.
Understand the market
There are several factors that any startup founder should consider when launching their venture, including their people (team), product (solution) and target market (customers). Of these, the consumer market tends to be the most important aspect of a startup’s inevitable success or failure, with some 42% of all startups failing due to a lack of market need. Another 10% fail due to mistiming a product with their market, and another 8% fail simply due to having a poor product. You may have an unbeatable team and a strong product or solution to provide it, but without a clear understanding of your startup’s target market size — along with their pain points, wants, and needs — your startup will never be able to generate enough traction to remain relevant and profitable.
To truly understand your market, you first need to ensure that it is not only large enough to make your venture profitable in the long-run, but that enough consumers in that market are struggling with the same problem your startup aims to solve. Just because a problem exists within that market doesn’t necessarily mean that the majority of your potential customers are facing the same challenges. If you are solutioning for “fringe” cases in your target market, you’ll never be able to create enough traction to build a business behind them. Regardless of how brilliant your team or solution is, if there simply aren’t enough customers with the problem your startup aims to solve for them, your venture will never be able to get air under its wings.
Get a good lawyer
This last tactic is probably one of my most overused statements in launching and running a business, but especially for ones operating in industries as heavily regulated as medical and healthcare. Finding and hiring a lawyer with whom you can establish mutual respect and trust, and who has the proper knowledge and experience, is vital to the longevity of your startup, as nearly 20% of all startups fail due to legal or regulatory challenges. Not only will they be a reliable source of producing quality business advice and documentation for your startup, but also be one of the first barriers of protection in the unfortunate event that your startup comes under legal fire.
When creating and launching a medical startup, there will inevitably be times when you and your team encounter sensitive legal measures and regulations that require careful, meticulous navigation. Having a trustworthy and credible lawyer you can lean on during these times will prove invaluable to your startup. In this way, consider your lawyer another kind of insurance policy for your startup. Without them, navigating the intricate nuances of the medical industry could take far longer and cost much more in the long run. The sooner you find and retain one, the better protected your startup will be.
It bears repeating that there is no one set of tactics that can guarantee success at scale for new medical startups. The silver lining, in this regard, is that many of the tactics used by the most successful startups across industries can be transmuted to those in medical, as well. By creating a strong team of experienced professionals with complementary skills, remaining focused on the underlying problem your startup aims to solve, generating a clear outlook of your target market, and finding a strong lawyer to support you, your medical startup will be well on its way toward traction and growth.