How to Fund a Device Launch Without Heavy Dilution

Raise less by spending less, and raise from the right people. The old valley of death was getting through the FDA. Today a lot of founders have their clearance and are stuck on the next problem: paying for a commercial launch without handing over most of the company.

Why is commercial money so hard to raise right now?

Because investors have other places to put it. A lot of venture and private equity money has moved toward healthcare AI. If you are not practicing medicine with that AI, you can get into the market in about six months and generate cash. A device can take five, six, seven or eight years before the money starts coming back. Investors see that difference.

The bar has also gone up for devices that are already cleared. One founder told me the investor conversations kept stopping at the same question: how many real cases have you done? Clearance alone wasn't enough. They wanted to see the product used.

Why don't big funds want a small raise?

The math doesn't work for them. A founder might need five or six million dollars to start a launch. Private equity and venture capital firms don't want to think about a check that small. If they are going to get involved, they would rather put in $60 million or $80 million. Then you become an employee of your own company, and you are heavily diluted.

So you have to decide what matters most to you. If you don't want to go that route, you need a different kind of investor.

Who writes checks of that size?

Family offices and angel investors are the realistic route for most of the founders I talk to. The checks I see are usually in the range of $250,000 to $500,000 each, inside a raise of around $5 million.

Two things matter with these investors. First, family offices are very purpose and mission driven. If your product doesn't fit their mission, they probably aren't interested, so you have to find the right ones. Second, they want to know the play behind the money. Is it to get the product to market, to test the market, or to scale what is already working? Be specific.

How does a leaner launch reduce dilution?

Every dollar you don't need to spend is a dollar you don't need to raise. If you can launch with lower fixed costs, by keeping the team small, sharing overhead and paying more of the sales cost as commission, the raise gets smaller and you keep more of your company.

The savings can also go back into the product. I have seen founders find room for a $300,000 product improvement they never thought would fit in the budget, simply because the launch cost less.

Early proof helps too. If you have a letter of intent, you can get a pilot, and real cases make the next investor conversation much easier.

Once revenue starts, your options widen. When you are selling, and especially if you have subscription or recurring revenue, there are ways to finance growth that don't dilute your shares. Financing looks at recurring revenue very differently from a pre-revenue story. That is another reason to get to revenue as early and as cheaply as you can.

Where should I start?

• Write the use of funds by stage: launch, test or scale.
• Strip fixed costs out of your launch plan and see how small the raise can get.
• Build a short list of family offices and angels whose mission fits your product.
• Line up a letter of intent and a pilot so you can show real cases.
• Plan how your revenue model could support non-dilutive financing later.