#423: Inside the Investor's Mind: What VCs Look For in MedTech

In this episode, host Etienne Nichols sits down with Josh Eckelberry, Principal at Solas BioVentures, for an illuminating conversation about venture capital in the MedTech and life sciences sectors. Josh shares his journey from a medical background to a career in venture capital, driven by a passion for creating "leveraged change" by helping innovative technologies reach a broader patient population. He explains how this approach allows for a greater impact than what's possible in one-on-one clinical care.

Josh delves into the unique investment philosophy of Solas BioVentures, which is an operator-led firm that provides hands-on guidance to early-stage startups. He introduces the firm's core "dote, goat, float, and moat" framework, which evaluates a company's therapeutic efficacy, management team, economic viability, and intellectual property. The discussion provides a candid look at how venture capitalists assess risk and make investment decisions, highlighting the importance of building a strong, emotionally intelligent team and demonstrating a clear path to market.

The conversation also explores practical strategies for startups to de-risk their investment proposition. Josh offers insights on how companies can use a pre-submission to get crucial feedback from the FDA, and how leveraging the right advisory board can instill confidence in potential investors. He explains the value of bringing in key opinion leaders and how a well-structured clinical trial, with thoughtfully designed inclusion and exclusion criteria, is essential for proving a technology's safety and efficacy.

Key Timestamps

• 1:02 - Josh's transition from medicine to venture capital.
• 7:27 - The unique, operator-led investment approach of Solus Bio Ventures.
• 12:47 - The "dote, goat, float, moat" framework for evaluating startups.
• 15:02 - What makes a great management team ("the goat").
• 24:43 - De-risking strategies for early-stage MedTech companies.
• 27:55 - The importance of regulatory discussions with the FDA.
• 30:13 - Building and compensating a strong advisory board.

Quotes

• "I call that leveraged change. I try to change that fulcrum of not just one patient at a time like I felt like in clinical medicine, but advocating and changing the lives of hundreds of people by getting these drugs and devices to market." - Joshua Eckelberry

Takeaways

• Focus on the team: Investors, particularly at the early stage, place significant emphasis on the management team's experience, emotional intelligence, and ability to navigate challenges. Past success and a positive, collaborative culture are key indicators of future performance.
• De-risk early and strategically: To attract early-stage capital, companies must proactively address key risks. This includes securing strong intellectual property, proving therapeutic efficacy, and engaging with regulatory bodies like the FDA through pre-submissions to gain confidence.
• Build a knowledgeable advisory board: A well-vetted board of advisors with a strong reputation and deep industry knowledge—particularly in areas like reimbursement and regulatory affairs—can be a major confidence booster for investors.
• Understand the "Dote, Goat, Float, Moat" framework: Companies should be prepared to address these four pillars: Dote (therapeutic efficacy), Goat (management team), Float (economics/reimbursement), and Moat (intellectual property).
• Embrace the conversation: Early-stage investors are often more accessible than founders might assume. Reaching out and engaging with firms like Solus Bio Ventures can lead to valuable feedback and potential opportunities.

References

• Solas BioVentures: The investment firm where guest Josh Eckelberry serves as Principal.
• Etienne Nichols' LinkedIn: https://www.linkedin.com/in/etiennenichols/
• Greenlight Guru: A medical device quality management software (QMS) and electronic data capture (EDC) platform for a medical device company's entire product lifecycle.

MedTech 101

• Venture Capital (VC): A form of private equity financing provided by venture capital firms or funds to startups, early-stage, and emerging companies that have been deemed to have high growth potential. VCs invest in exchange for an equity stake in the company.
• Pre-submission (Pre-Sub): A formal request submitted to the FDA to receive feedback on a medical device before a marketing submission (e.g., 510(k), PMA). This allows a company to de-risk its regulatory pathway by getting clarity and guidance on clinical study design, quality system requirements, and the most appropriate regulatory path.
• Intellectual Property (IP): Intangible creations of the mind—such as inventions, designs, and patents—that are legally protected from being copied or used by others without permission. In MedTech, this is often a company’s most valuable asset and provides a competitive advantage.

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Sponsors

This episode is brought to you by Greenlight Guru, the only medical device success platform that offers both QMS & EDC solutions. Greenlight Guru helps medical device professionals get their devices to market faster and keep them on the market by providing a purpose-built software platform that streamlines the product lifecycle. From design controls to risk management and post-market surveillance, Greenlight Guru is your partner in improving the quality of life.