The medical industry is experiencing a drought. While they are struggling to adapt to an expensive healthcare system, they are also experiencing less success obtaining necessary startup funding.
Investments in the medical equipment and device industry have continued to decrease since 2007 according to information presented by the National Venture Capital Association and PricewaterhouseCoopers.
This has resulted in many medical industries, including those sectors responsible for making medical devices, to get more creative when obtaining financing. Many hard money lenders are offering medical industry funding. As a result, entrepreneurs are taking on more debt, as the only resources that will lend are wealthy U.S. individuals.
Entrepreneurs and their financial supporters are ultimately searching for buy-out deals earlier than they would have in the past. Some companies are striking deals with larger, more financially established companies, often exchanging unusual alternatives, such as future acquisition rights and board seats.
These types of deals offer reliable financing and more industry expertise, but can hinder companies that find potential success. It also makes successful start-ups an acquisition target and companies are unable to find multiple bidders, which in the past helped increase purchase prices.
Before this turn around, the medical sector was as lucrative as the biotechnology drug and Internet sectors. After the 2008 financial crisis, the U.S. economy saw a dramatic decline in medical procedures, which caused a strict regulatory health insurance approval process.
Unfortunately for medical startups that have brilliant new technology, such as minimally invasive mitral heart valves and new prosthetic hips, raising money for these companies is becoming nearly impossible without the assistance of medical industry lending.
Startup medical companies that are able to survive early with minimal financing are generally able to hold out and negotiate better deals, but that does not mean they do not experience their share of rejections.
The biotech industry used to heavily rely on hard money lenders or corporate backers, but this has now spread to the medical industry, specifically medical-device manufacturing.
Thankfully, the medical industry can rely on medical industry lending experts to help pave the way for special financing. This allows the world to explore medical advances that potentially have the ability to save lives or lead to other life-saving medical devices.