Perspectives on The State of Medtech Funding: Insights from Industry Leaders Terri Burke and Shyam Parekh

Less than 24 hours had passed between the industrial jolt to the medtech and life science innovation ecosystem from the SVB news and my as-planned “state of medtech funding” interview with Epidarex Capital’s Terri Burke and Parekh Advisory Services Founder Shyam Parekh.

Thankfully, it appears a full-on crisis has been averted. While not intended at all as an analysis of what that event means for the medtech innovation ecosystem, it certainly does color the following Q&A with Terri and Shyam on the state of medtech funding, especially for early stage companies captured on March 10, 2023, we are proud to share below.

How would you describe the state of medtech funding, especially for early stage companies?

Terri Burke, Venture Partner, Epidarex Captal (Photo courtesy: Epidarex)


Prior to the last 24 hours, medtech funding is in a pull back. Concepts are still getting funded, including some big rounds for late stage, pivotal clinical trials. But much of the funding for technologies with merit are of smaller sizes, seed and A rounds.

A sizable gap exists between what I would describe as late A and C or D rounds. That gap puts strain on technologies in cash intensive R&D stages trying to advance into pivotal clinical trials or 510(k) submissions. Some VCs are considering inside rounds to bridge portfolio companies through the next 18 months to avoid going out into the marketplace for a technology’s next round.

[A potential] SVB demise will likely put a pause on investing as both venture funds and portfolio companies take stock on exposure. This will almost certainly overhang the space while everyone digests its implications.


Building on that, from the strategic buy side, my observations are consistent with Terri’s. The current lay of the land is such that patients, providers and payers have learned to expect more from the medtech industry in general. For a majority of mainstream MedTech, simple ‘widget sales’ is not sufficient. New technologies from startups or earlier stage companies need to think hard about “solutions.”  The Go-To-Market plan needs a solid, robust roadmap to achieve ‘level 1’ evidence and a well-defined burden of proof requirements as evidence from a set of case studies will be unlikely  to encourage someone to buy.

From the buyers’ side, emphasis continues to move further downstream as more risks need to be retired; e.g. engineering v&v (verified and validated product development) are the table stakes for most investment considerations. It helps enormously, if the sellers can articulate a clear roadmap as to what needs to get done to complete pivotal clinical trials along with robust reimbursement strategy including how to achieve new codes if needed.

Has the high emphasis on fully de-risked technologies by investors eased, increased or stayed about the same?


It is probably increasing some. Strategic buyers can afford to be more cautious. They won’t likely pick up a technology early on clinical promise because not only are they reevaluating their risk situation specifically and holistically, but also they don’t need to move quickly. This is where longer-term funding, revenue sharing and creative development partnerships – Orchestra Biomed and Revival Healthcare are good examples – these more differentiated models will be interesting to watch in the short to mid-term.


This is the current status, as Terri described it well. We all in the industry need to think through business model innovation; e.g. Go-To-Market models, how aggregating multiple inputs can improve the offering, “a total solution” as buyers of the solution want to reduce their own cost burden. This approach would help with the pathway to commercial success. The ‘lone wolf’ strategy (our offering alone) is not likely to be a winning one for medtech startups for the foreseeable future.

What should readers infer from the SVB “news?”


A fascinating case study is unfolding right in front of our eyes. If equity investors are expected to take business risks in banks, they should understand the risks or strengths. Should depositors be doing that as well? Absent significant, systemic financial regulatory action, it appears the answer is yes.

Should startups have or require more than one business bank account? The answer in hindsight appears to be yes as well.

What seems particularly remarkable is that the incredible reputation of that bank, one of a true ‘trusted partner,’ still didn’t keep depositors from quickly withdrawing, or attempting to withdraw, their deposits en masse.


It’s too early to say just 24 hours later, particularly given SVB’s benchmark examples on so many deals across the spectrum. They fill such an important void that something different will emerge.

What do the spate of “tech layoffs” in light of interest rates and return to pre-pandemic life mean for medtech? Is the opportunity to add from a deeper talent pool significant?

If a company is flush with cash in their funding cycle, yes. If the company is in cash preservation mode, I think that is uncertain to doubtful. Bigger medtech companies will be more opportunistic in this regard.

Startup companies, especially CEOs and management teams with boards of directors, should be looking closely at cash burn, inflection points, milestones and pressure testing budgets. Hiring needs to focus sharply on critical talent profiles most capable of efficiently achieving the next critical milestone, and ensuring operations ‘map’ to that outcome.

Companies in those heavy R&D phases, the phases that suffer from the funding gap we discussed above, should already have the requisite talent and third party support on-board. The most pressing question for them to answer is, how do we expedite critical milestone achievement or at least minimize the potential for that achievement to take 20, 30 percent or longer than forecast to achieve; a common occurrence with outcomes no one enjoys.

Shyam Parekh


The way I’ve seen it, execution roadmaps and system architecture become critical. When engaging vendors for verification and validation testing, for example, young medtech companies need to test and retest the roadmap and milestones and match them against the funding necessary for those activities so that the capital is deployed the right way with the right vendors for the right set of activities.

As we know, talent and effective team structure are, undoubtedly, critical inputs for any development program. The nuance I can underscore is capital efficiency. This comes from clearly understanding what due diligence we have done and what needs to get done so that financial stakeholders will have the the confidence that it’s been done correctly. Companies have a well defined stage gate approach to manage R&D projects. As companies tighten the belt and re-evaluate checks and balances along the development milestones and activities and allocate resources as we all want to limit  the number of “$10,000 days.” All of these reevaluations will bring more efficiency and give young companies and the boards of directors, more confidence to forge ahead.

How far down the development and commercialization pathway should earlier stage companies be prepared to depend on other funding sources like NIH grants?


As far down that pathway as they can while achieving as many meaningful milestones in the path to pivotal trials or satisfaction of activities that lead to a regulatory submission as possible.


In general young companies need to be scrappy, but at the same time they need to be thoughtful about the investment of time and energy compared to how much money they’re chasing with those investments. NIH grants can be very long cycles before funding decisions are made and those funds become accessible, assuming the application was successful. Just how much time, and at what cost, will those activities really take? Will it take two or three people to successfully unlock a $50,000 NIH grant?

If a young company’s CEO is a researcher or physician adept at writing grant applications, those might be a good use of his or her time because they can do so with high efficiency. A company without that resource, or a CEO whose strength is operations, team building or raising venture capital would have to pay for that resource or risk the cost of the time required for grant writing, which could outweigh its net benefit.

Where are some other funding resources earlier stage companies should be exploring beyond what we’ve discussed?


To build on that, I have seen the Office of Naval Research issue RFPs on specific medtech problem statements along with the Department of Defense, the national labs, including even the FDA give funding for some specific innovations that may treat rare diseases or technologies that can help FDA panels better evaluate cell therapies.  There are other government programs that award funding to its Prime Contractors where industry can come in as a subcontractor and leverage its expertise by securing a portion of the total grant. This an example of some other ways funding streams can come about for some earlier stage medtech companies.


There are a significant number of tech transfer offices that have funding support available for technologies and startups that emanate out of institutes of higher education.  There are also some funding opportunities available from pitch competitions like Medtech Innovator, incubators like Ignite in Houston, and with organizations rooted in pediatric innovation like NCC-PDI.

The team at Southeast Life Sciences thanks Shyam and Terri for their insights. Stay tuned for a follow on considering the following:

  • If you’re a young company working on THIS … watch out.
  • If you’re a young company working on THIS … consider a pivot.
  • If you’re a young company working on THIS … keep going or go faster.