Doing Your Diligence: The Value of Regulatory Strategy for Investors & Startups

Hal Stowe, Senior Manager, Regulatory Intelligence
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Executive Summary

In MedTech, there are no shortage ideas. This is not an industry encumbered by lack of entrepreneurial talent – with the combination of the academic and commercially savvy being commonplace. Defined by the demand for (often) complex engineering, robust clinical validation, and thorough regulatory review – MedTech is an industry characterized by high walls, but even higher ceilings. For start-up founders achieving major funding, regulatory, clinical, and reimbursement milestones is daunting – looming mountains against a flat horizon. For founders who successfully position their innovation as a strategic, clinically validated, de-risked asset – the sky is the limit.

The defining hurdle for MedTech start-up’s is access to capital – whether through venture capital or strategic. For both early and late-stage companies, the demand for capital is evergreen. In recent years, capital demands are increasing as a result of investors preferring more complex technologies with more clinically impactful indications – which have been de-risked through clinical investigation and higher regulatory pathway. In short, industry is self-selecting – reflected by capital moving toward those devices subject to De Novo authorization (Class II). And increasingly enticing, Premarket Approval (Class III).

Leading investors predict 2026 will build upon 2025 trends – with investors biased toward late(r) stage companies, and capital allocation being larger (in value) and less frequent (in volume) – fewer deals, with bigger price tags. With this trend toward later stage investment, exits (M&A or IPO) are increasingly exceeding the seven (7) year horizon. With all of these factors in mind, investors (and startup founders) are biased toward de-risk assets – underpinned by track record of achieving critical regulatory milestones.

To that effect, a company’s regulatory strategy is now an increasingly valuable asset for founders courting additions to their cap table, and for investors using it as key indicator during an exhaustive diligence. As competition for capital increases across the development lifecycle – antiquated thinking, and approaches, to regulatory affairs must be thrown from the window. For both sides of the deal, regulatory is now an intelligence apparatus – and strategic decision making tool. For commercial leaders where lean operation, and time minimization, is critical – regulatory affairs integrates decision making between clinical, business development, and commercial operations.

An investment in regulatory affairs is an investment in building brand equity with FDA – invaluable when rapport can be deployable capital in late-stage, high-stake, engagements with FDA. Most important to investors, robust regulatory is the key mechanism in risk-minimized asset. The objective of a savvy regulatory apparatus is not to answer FDA questions as they arise. Instead, the objective is to identify risk(s), understand their cause and potential impact(s), and how to solve – all before they come to a head.

New Normal – Navigating Today’s Investment & Regulatory Landscape

Competitive Advantage – Regulatory as an Asset, Not a Bureaucratic Hurdle

Making the Right Investment – Insights for Selecting the Best Regulatory Partner

Summary