What I Learned About Medical Device Funding in 2026 from the Founders Who Got It

The medical device funding conversation I keep coming back to this year happened with Ray Cohen a few weeks ago on an episode of State of MedTech that I did not think would land the way it did.

Cohen sold Axonics to Boston Scientific for $3.7 billion, and I asked him what was really different about the medtech operators who raised cleanly in 2026 versus the ones who stalled.

His answer had nothing to do with the market. It was all about what those founders built before the round ever opened.

That's the thread this piece pulls on. Every conversation I've had with a funded medtech founder this year traces back to the same underlying discipline, and none of it lines up with the analyst reports that describe 2026 as a collapsing early-stage market.

Great companies don't wait for markets to form. They engineer them. And what the funded founders taught me across a dozen State of MedTech conversations this year is that medical device funding in 2026 is not a market problem.

It is a market engineering problem, and the operators who understand the difference are still closing rounds.

Takeaways

• Every medical device funding conversation I had in 2026 with a founder who closed a round traced back to the same market engineering discipline, not to the market itself.
• Ray Cohen at Axonics, Dan Rose at LimFlow, and Mark McKenna at Prometheus Biosciences each told me the same thing in different words. The round closed because of what got built in the 18 months before the pitch.
• Jonathan Norris at HSBC Innovation named the structural Series A / Series B mismatch on the show. Todd Usen named the post-clearance no-man's-land. Both dynamics are real, and the funded founders had already priced them.
• Dennis McWilliams of Santé Ventures gave me the most useful reframe of the year. Some of the best medtech opportunities should skip institutional VC entirely.
• FDA clearance is the starting line, not the finish line. Great companies don't wait for markets to form. They engineer them, and the funding follows.

Jonathan Norris Named the Series A / Series B Structural Mismatch

I sat down with Jonathan Norris, Managing Director at HSBC Innovation, for an episode about the 2024 medtech investing outlook.

When I asked him what was making Series A so hard even for solid device companies, he gave me the structural answer most founders don't hear until they're already in the traction gap:

"It's really hard to find a Series A group that's willing to put that money out the door to get that initial product underway because nobody wants to come in for Series B. Series B is not pivotal trial funding, it's early clinical development. So what you end up having is the Series A investors almost have to do Series B on their own because they can't find investors that are willing to step in at that point in time."

Ray Cohen understood this before most of us did. When he walked me through the Axonics arc, he described the Series A as the front end of a much longer investor relationship, not a discrete fundraise.

Axonics used the Series A window to build the commercial evidence that would price the next round, because the traditional Series B lead wasn't coming.

That's the market engineering move Cohen made and most first-time founders miss.

Dan Rose ran the same playbook at LimFlow. His Series D that ultimately routed to the Inari acquisition wasn't a single conversation. It was years of cultivating strategic relationships in parallel with the financial ones, so the round always had multiple credible paths.

The medtech leaders who raised well in 2026 assumed their Series A investor was, functionally, their Series B investor too. They structured governance, milestones, and follow-on rights around that reality. And they had the conversation explicitly with their lead investor rather than discovering the traction gap 18 months later.

Todd Usen Named the Post-Clearance No-Man's-Land

When I had Todd Usen on to talk about running a public company versus a medtech startup, he described the moment most founders don't see coming:

"There seems to be kind of like a no man's land of funding for medtech companies these days. There's a moment where it's usually when a company is right after FDA approval, but they're pre-commercial where almost nobody wants to touch them."

FDA clearance is the starting line, which is exactly why it feels like the finish line and traps so many teams flat-footed. The clinical risk that justified early investment is gone.

But the commercial proof that justifies growth capital doesn't exist yet, because there hasn't been time to build it.

That is the traction gap in medical device funding. It swallows companies that treated clinical validation like it was the same thing as commercial traction.

It isn't.

Clinical validation ≠ commercial traction. Investors who write growth-stage checks know the difference on sight.

Mark McKenna told me a version of this pattern when we talked about Prometheus Biosciences, before Merck acquired the company for $10.8 billion.

Prometheus spent years educating potential acquirers under CDA before the Phase 2 data even landed. By the time Phase 2 hit, seventeen potential acquirers already understood the market narrative.

They weren't being pitched cold. They were being told the milestone they'd been tracking had finally arrived.

That's what shortening the post-clearance gap looks like from the founder's side. It isn't a fundraising tactic. It's a multi-year investor relationship habit that starts long before clearance is even a realistic milestone.

McKenna's approach was the practical answer to Usen's diagnosis. If the no-man's-land is real, you close it by having the next round's lead investor already tracking your milestones before you land.

The Data Behind the Pullback Matches What the Founders Told Me

I covered the numbers on an episode about $1B deals, spinout drama, and LSI's 25 to watch:

"Later stage funding was up 31%, early stage funding down 65%, the average deal size rose to 30.4 million. Biggest takeaway is investors are doubling down on proven performers rather than high-risk startups."

The same amount of money is chasing fewer, later, larger bets. Medtech isn't out of favor. The definition of an investable medtech company has shifted toward companies that already have commercial evidence.

That shift matches exactly what I heard from every funded founder I talked with this year.

Cohen described the long run of consistent commercial quarters of beating analyst expectations that preceded the Boston Scientific deal, and he told me the discipline it took to hit that streak wasn't optional.

Kevin Rocco at BioRez sold to CONMED off the back of a clinical dataset built with the buyer's evaluation criteria in mind, not just the FDA's.

Rose at LimFlow ran hard endpoint studies (amputation and death) instead of the surrogate patency studies most vascular device companies default to. He knew acquirers would eventually price the data, not the study design.

None of these founders got a check just because the market data was in their favor. They got checks because they built commercial evidence in advance of needing it.

That's what market engineering looks like inside a fundraise. The numbers are already true when the round opens, not a projection you're asking the room to believe.

What the Founders I Talked To Are Doing With Strategic Capital

When I asked the founders I know about the strategics moving deeper into venture, they all pointed to the same shift. I covered it directly on an episode about the $9B medtech secret:

"Large strategics like Boston Scientific, Intuitive, Medtronic, Stryker, J&J are starting to get a lot more active on the venture side because medtech costs a lot of money and sometimes venture capital is not enough, at least for now."

Strategic capital comes with a different set of tradeoffs than traditional VC. It often comes attached to a future acquisition conversation, and it comes from someone who already understands the category instead of someone who needs to be convinced it exists.

That's valuable during exactly the gap Usen described. A strategic doesn't need the same commercial proof a financial investor does. Boston Scientific already knows what a successful launch looks like in a given indication.

But every founder I've talked to who took strategic capital handled the relationship carefully. Rose was initially hesitant to bring a strategic into LimFlow's Series D. He described the hidden cost to me directly.

If a strategic invests and doesn't ultimately buy, other strategics notice and start asking why they aren't buying either. Your buyer field shrinks without you seeing it happen.

Strategic venture arms are a real line item in a modern medtech funding plan, not a fallback option.

But the founders I trust go in with clear eyes about what the relationship signals to the rest of the market. And they structure the deal so a non-acquisition outcome doesn't slowly close doors they were counting on.

Dennis McWilliams Gave Me the Most Useful Reframe of the Year

The single most useful reframe I got in 2026 came from Dennis McWilliams at Santé Ventures. It was late in an episode about VC discipline in early medtech strategy. He said this almost as an aside:

"We have a very high cost capital. If your opportunity doesn't require that much capital, really there are great avenues out there to fund you, whether non-diluted financing sources, family offices, there are a number of groups that love funding in that kind of angel round phase."

That's a VC telling founders, directly, not to raise VC money when they don't need it.

Venture capital is priced for the risk it's taking on. That pricing shows up in dilution, board control, and liquidation preferences that stay with the company for its entire life.

Some of the best-run medtech companies I've interviewed raised smaller amounts than the VC playbook assumes. Non-dilutive financing, family offices, and angel-stage groups all move on different timelines and different diligence standards than institutional VC.

They're often a better fit for a company that needs a few hundred thousand to a few million to reach the next real milestone, rather than the tens of millions a traditional fund is built to deploy.

McWilliams's reframe stayed with me because it inverts the whole framing of the medtech funding conversation.

The question isn't "how do I raise VC in a hard market." It's "does my company really need VC at all, or am I about to pay a very high cost of capital for money I could get somewhere else?"

That's the funding version of poor market-product fit. You're pitching to the wrong buyer for the capital you truly need, and the price of the mismatch stays on your cap table for the life of the company.

What Those Conversations Tell Any Medtech Founder Raising Now

Every one of those conversations pointed back to the same underlying discipline.

The operators who closed rounds in 2026 didn't treat the round as an event. They treated it as the tail of a multi-year market engineering effort, the same discipline Cohen, McKenna, and Rose each described in their own words.

A pitch built around "we'll have commercial traction soon" doesn't survive in a market where investors are already doubling down on proven performers.

The pitch has to show why this specific company is the proven performer, or why a strategic already has a reason to be in the room before the meeting starts.

This is the same discipline behind why medtech commercialization strategy fails after FDA clearance for most companies. The commercial evidence has to be built before the round opens, not during it.

That's what market engineering means in the context of medical device funding. The buyer education, the strategic warm-up, and the commercial proof-building all happen years before you need any of them.

When the round finally opens, the money moves because the market narrative was already written and the audience was already in the room.

So the medical device funding question isn't whether the market is tight. It's whether you engineered your position before the round opened.

If you did, the round closes on 18 months of compounding market work. If you didn't, the round stalls on a deck that has to earn context in real time.

That's what we built MarketCraft to solve. It's a market engineering practice that works upstream of the fundraise so the round has already been engineered by the time the pitch opens.

The medtech Series A funding that closes consistently in 2026 is the tail of 18 months of market engineering, not a Q3 fundraising sprint.

Frequently Asked Questions

Why Is Early-Stage Medical Device Funding Declining?

Early-stage medical device funding is declining because investors are concentrating capital on later-stage, proven companies rather than high-risk startups. Deal data shows this shift directly.

But the founders I've talked to who closed rounds in this environment don't describe the market as closed. They describe it as tighter around who can prove commercial evidence, not clinical hope.

Why Is It Hard to Raise Medical Device Funding Right After FDA Clearance?

Medical device funding is hardest to raise right after FDA clearance because the company is pre-commercial. The clinical risk that attracted early investors is resolved.

The commercial proof that attracts growth investors doesn't exist yet. Founders like Mark McKenna who shortened this gap did it by educating potential acquirers under CDA for years before the trial data even landed.

Should Medtech Founders Always Raise Venture Capital?

Medtech founders should not always raise venture capital. Dennis McWilliams of Santé Ventures told me directly that if the capital requirement is small, non-dilutive financing, family offices, and angel-stage investors are often a better fit than venture capital.

VC is priced for high-risk, high-capital deals and comes with dilution and control tradeoffs that outlast the immediate funding need.

How Should Founders Prepare for the Post-Clearance Funding Gap?

Founders should identify their next round's likely lead investor or bridge source before clearance lands, not after. The medtech leaders I've talked to spent years educating potential financial and strategic partners in parallel, so the round always had multiple credible paths open when they needed it.

Listen to the Full Conversations

• The 2024 Medtech Investing Outlook with Jonathan Norris
• Running a Public Company vs Medtech Startup with Todd Usen
• $1B Deals, Spinout Drama & LSI's 25
• $9B MedTech Secret Revealed
• VC Discipline in Early MedTech Strategy with Dennis McWilliams

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About the Author

Omar Khateeb is the founder of MarketCraft and host of The State of MedTech, a leading podcast in the medtech industry.

He works with medtech founders and commercial leaders on market engineering, commercialization strategy, and revenue growth. Visit marketcraft.ai or subscribe to The State of MedTech for weekly conversations with the people building the future of medical devices.