Startups represent a very lucrative opportunity for suppliers to enter the ground floor of an entirely new product line, but their low success rate and high contact needs can make them a dangerous distraction for your key customers. .
Kate Stephenson, Engineering Dyad
Enthusiastic and deeply committed to their cause, founders of medical device startups speak with a deep passion about righting the wrongs in healthcare and the immense profit potential that comes with it.
However, they also tend to be overconfident, naive about how much work their idea entails, and consistently underfunded.
The risks and rewards of working with startups are constantly changing. To mitigate risk without resorting to a blanket “no start” policy, there are three strategies that every medical device manufacturer and OEM supplier can turn to.
1. Help them help themselves
Among the ways startups frustrate manufacturers is the common bane of every sales funnel: spending too much time and effort on a prospect that never turns into a lucrative customer. Startups are new to what you are an expert at. For this reason, the first conversations with startups tend to be educated enough for you to decide if they are ready to work with you.
These types of conversations are ideal for creating online content. This content can include a readiness checklist to help potential clients identify the maturity stage of the product you’re working with, as well as the documents and information you’ll need to quote a project. General manufacturing education materials — either your own or links to credible sources — can be invaluable in familiarizing prospects with the processes and language you use.
Pack your leftovers and excess inventory for distribution at trade shows and educational events. I use them a lot to educate my startup clients on available materials and manufacturing methods.
Finally, if prospects disqualify themselves from using your content, be sure to link to trusted partners who may be more appropriate. This will greatly improve their chances of returning once they are ready for your services.
2. Align yourself with what they can offer you right now
When startups pitch to investors or other potential business partners, the discussion mostly focuses on the future value the company can claim. As a service provider or manufacturer, you need to focus on what startups can offer your business today.
It’s a concept I’ve challenged many of my startup clients to think about as they seek partners for their short-term needs. With chances of future success so difficult to determine, startups can still provide value to your organization in other ways.
There is the advantage of reputation. With everything from cars to toilets touted as innovative, working with startups developing new products gives their partners a similar aura of creativity and novelty by association.
Startups are also more willing to support project publications in exchange for pro bono services, allowing for more detailed case studies than might be acceptable for your cash-paying clients.
Startups also allow for experimentation with your own products and processes, without the potential reputational repercussions of failing to deliver to a key customer.
3. Be selective and strategic
Startups come in all shapes and sizes with varying needs, strengths and weaknesses. Just like you have a system to manage your main sales funnel, you need a system to identify the startups that work best for you.
You can focus only on startups that are of interest to certain strategies, giving you an on-ramp to a network of selective vendors. Startups that represent the first use of one of your products in an FDA-regulated device represent a major reputation boost.
If your products find use in a wide variety of devices, work with startups whose IP strategy gives you clear ownership of any new processes or manufacturing techniques you develop working with them. From a practical point of view, you can choose to only work with startups that need machinery and equipment underutilized by your paid projects.
Just as your ideal client tends not to bump into you, neither does the ideal startup: those that are funded, have a strong team, and offer major strategic value.
If you really want to incorporate startups into your business development, you need to include startup awareness in your marketing and sales efforts. It doesn’t need to be a major effort.
Potential strategies include sponsoring startup launch events, offering a few hours of consulting as in-kind services to a competition winner, or presenting at talks as part of incubator or accelerator programs. . It could be as simple as writing a brochure explaining your existing services, products, or financing methods that start-ups might be interested in.
A final thought
Most successful companies split their efforts between delivering excellence to existing customers and working on incremental improvements that will keep them competitive over the next 2-5 years.
While this divide keeps you competitive for now, it may leave you vulnerable to major disruption in 5-10 years. In life science products, this longer-term future is exactly what startups are aiming for.
Partnering with startups shouldn’t be part of your immediate growth strategy. However, the market insights they bring and the new technology you develop with them can be key to keeping your business relevant over the next decade.
Kate Stephenson is a fourth-generation machinist and a PhD in engineering from Stanford University. with medical device design and development experience spanning over 60 products. His research and private consulting practice focus on matching medical innovation with the manufacturing technologies needed to develop, test and manufacture them.
The opinions expressed in this article are those of the author alone and do not necessarily reflect those of MedicalDesignandOutsourcing.com or its employees.