De-risking medical device startups with a systematic approach to innovation

A fever wouldn’t raise alarm bells, but soon enough, a patient’s lungs — once rhythmic and reliable — stiffen, and every breath becomes a battle, the air feeling thin, distant and unreachable.That’s what a cytokine storm feels like.

During the first waves of the COVID-19 pandemic, ventilators to keep patients alive through these storms were in short supply as cases skyrocketed. An innovative medical device project — the locally manufactured Spiro Wave ventilator — was approved in just one month and played a critical role in addressing the shortage and saving lives.

Innovations like the Spiro Wave are incredibly difficult to achieve. They often require significant capital and come with substantial risk. But by following a systematic approach to de-risk medical device innovation, startups can unlock rapid growth and save lives.

Aligning with the market and FDA from the start

Ideas may be born in the lab, but they succeed only when they align with market needs and regulatory pathways like the FDA or international equivalents. Too often, we see an overemphasis on research without attention to these crucial first steps.

This alignment has never been more important. In the first half of 2024, there was a 9.9% year-over-year decrease in 510(k) approvals, reflecting increased scrutiny, particularly as a record number of applications incorporating new AI technologies seek regulatory clearance.

Adding to the challenge, a rise in medical device recalls and cuts to FDA staff under the current administration are likely to cause further delays. This means longer wait times without revenue, compressed timelines to address FDA concerns, and far less margin for error.

Following an FDA V Model approach of prioritizing early development and design inputs, followed by rigorous verification and validation is essential to staying on track.

Fast, iterative proof-of-concept (POC) validation before major investment

Except for software-based Class II devices, the journey from idea to FDA approval and commercialization is extraordinarily costly before revenue starts coming in, ranging from $1 million to $3 million for Class I and ballooning to $5 million to $10 million for Class II connected medtech devices. Device complexity and regulatory classification are the two biggest cost drivers.

However, POC validation is a much more affordable and strategic early step. It helps identify and correct design issues before they become expensive problems, often saving millions down the line. More importantly, it provides concrete evidence of feasibility, making it easier to attract investors and secure the funding necessary to move forward while reducing risk.

Production as an afterthought is costly and time-consuming

Even after overcoming the hurdles of design and approval, scaling to production presents its own high-stakes challenges. These include costly materials with complex sourcing requirements, specialized tooling and equipment, sterilization processes, and a skilled labor force to manufacture the devices.

A small tweak? Tens of thousands of dollars. A full redesign? Potentially millions. Getting production right from the beginning is crucial, including securing ISO certification to meet FDA standards.

These costs are why startups cannot leave production planning until the last minute. The most successful medical device startups tend to partner with specialized manufacturers who provide ISO compliance and address production challenges early, reducing risk and accelerating time to market.

Co-investment opens doors, spreads risk, and builds resilience

Expecting one or two investors to put up tens of millions for just a 10-20% chance of profitability is unrealistic. In a sector with a typical ROI timeline of 7–10 years, startups need a diversified approach.

Engaging multiple stakeholders not only spreads financial risk but also brings valuable expertise in design, production, and commercialization. Those stakeholders could include venture capital firms, med-tech-focused venture studios with manufacturing capabilities, government grants, and strategic partners like hospitals or manufacturers.

Pooling resources and knowledge improves the odds for everyone involved, a win for both investors and startups.

Innovation without risk mitigation isn’t sustainable

In an industry where innovation can mean the difference between life and death, de-risking medical device startups through a systematic approach is not just strategic. It’s essential.

By aligning with market needs and FDA requirements from the outset, validating concepts early, proactively planning production, and securing co-investment to offset long ROI timelines, startups can navigate the high-cost, high-risk landscape of medtech.

Success stories like the Spiro Wave ventilator prove that when these elements converge, the payoff is profound: lives saved, markets transformed, and a blueprint for future breakthroughs established. With regulatory hurdles tightening and costs soaring, this disciplined, collaborative model is the key to sustainable growth and lasting impact in medical device innovation.