Episode 267

What Impact Does a QMS & Regulatory Have on Fundraising and Pre-money Valuation?

How does a quality management system (QMS) and regulatory factors impact fundraising, pre-money valuation, market access, and commercialization for medical device companies?

In this episode of the Global Medical Device Podcast, Etienne Nichols talks to Cristiano Fontana, founder and CEO of ThreeBridges.

ThreeBridges is a consulting firm that provides business development advisory services for startups, distribution companies, and subject matter experts (SMEs) in the global medtech market. Also, Cristiano is a co-founder of CrossBay Medical, Inc., and partner of IStarter and ClubDealOnline.

Some of the highlights of this episode include:

When someone evaluates and/or values a company, QMS and regulatory impacts fundraising rounds and pre-money valuation by asking for backup evidence as well as understanding business models and financial motives.
Cristiano describes the common paths that startups and entrepreneurs take when considering valuation. Start with a clear idea of the entire journey to create a reliable and consistent business plan.
Cristiano’s fundraising strategy is knowing how much money is needed for different stages and consistently targeting the ideal investor (tier 1 or 2).
When approaching investors, expect a lot of ‘no’s’ from investors, but you only need one, ‘yes.’ It’s a learning process to identify QMS/regulatory inconsistencies related to fundraising and pre-money valuation.
Medical device companies may face specific challenges, such as demand, expertise, and selecting investors. Also, know about regulatory approval, debt, and reimbursement and mitigate risk, generate cash flow, and grow with a QMS.
There are several differences when it comes to fundraising in the United States compared to the European Union (EU), including the amount of equity/money in the market and investors’ expectations of how a company is managed.
Cristiano offers advice on the dilution of funds and company ownership. Consider how the money will be used and the actual versus relative numbers of valuation.

Memorable quotes from Cristiano Fontana:

“Come up with a business plan that is reliable as far as a business plan can be reliable.”

“You need a deep understanding of your business model, your market potential, your value position, so that you understand what really is the potential of the product.”

“Many times, people are not succeeding in fundraising or are delaying the time for getting their money because they’re not targeting the right people.”

“You need, also, to show that you know what a QMS is, you have that in place already, and it is really efficient and well managed. Having something that is well structured that is tailor made but is well recognized on the market that is working.”