Medical Device Investors Fund Must-Haves and Pass on Everything Else

Medical device investors fund a company when it's a must-have for the patient and the buyer. They pass on nearly everything else.

That takes a clinically meaningful difference, an economic case a hospital can defend, and a clear path to an exit. I interviewed two investors whose funds look nothing alike, and their reasoning shows how the decision gets made.

You've probably heard the feedback. The investors liked the technology, took a second meeting, and then passed. The two I interviewed explain what sits behind that pass.

Key Takeaways

• Aneta Sottil of Andera Partners funds a new category only when it's a must-have, with a difference that's clinically meaningful and economically viable.
• Sottil says Andera once got excited about good pig data. Now it wants a decent amount of human data, often through commercial approval.
• Sottil says a medtech company had about 15 potential buyers 20 years ago and has three to five today, so acquirers can wait for proof.
• Eric Heinz of Heinz Ventures invests at pre-seed and seed in the Midwest and Southeast so Heinz's 25 years as an operator can still shape strategy.
• Heinz started the fund because traditional venture capital moved toward growth equity and left a vacuum between angel investors and institutional VCs.
• Heinz says a quick no is one of the most useful things an investor can give an early-stage founder.

Medical Device Investors Start With Whether the Device Is a Must-Have

Medical device investors evaluating a new category ask whether it's a must-have or a nice-to-have. The answer has to hold up clinically and economically. The difference must matter to the patient and pay off for the buyer.

I interviewed Aneta Sottil, partner at Andera Partners, on an episode of The State of MedTech about how AI is reshaping what makes medtech investable. Andera has invested in more than 100 life sciences companies over roughly 25 years. Sottil said:

"When you're trying to create a new category, it has to be something that will be a must-have versus a nice-to-have. We need to be creating a real difference for the patient, and that difference needs to be clinically meaningful and needs to be economically viable."

Both conditions have to hold at once. A device that clears the clinical bar but can't make an economic case to a hospital or payer still reads as a nice-to-have.

Making that case early is the work of category design in medtech.

Sottil's team doesn't take the founder's word for it. Andera speaks with physicians and key opinion leaders to ask whether the device is a must-have. A new category needs plenty of champions inside hospitals.

A product that only marginally improves on what's out there doesn't count as a new category in Sottil's view, even if it does the job a different way.

Andera backed MMI, a microsurgical robotics company, on that logic. In Sottil's view, MMI's robot is alone in suturing inside a frame of a millimeter or a millimeter and a half while removing the tremor from the movement.

Medtech Investors Want Human Data and a Clear Path to Liquidity Before They Fund

Medtech investors now want human data, and often commercial adoption, before they fund a company. Sottil said Andera used to get excited about good pig data. Today the firm wants a clear way to create liquidity within the fund's life.

The exit has to be believable when the check is written. A founder who arrives with animal data and a deck is asking an investor to underwrite years of proof that someone will eventually pay for the company.

Sottil described the change on the same episode:

"We invest when we think we can make it within the lifetime of the fund. I think more precisely, when we really have a clear vision as to how to create liquidity and create value from the investment."

Sottil traced the higher bar to consolidation among the big acquirers:

"Twenty years ago, if you developed a medtech technology, you'd have 15 buyers. Today, when you develop a medtech technology, you probably have three, four, five buyers."

That means buyers can wait until a company proves everything before they buy. Sottil said they pay big money when they do come in.

A company with competitive technology can still create competition for its asset early and provoke an exit, Sottil added.

Ray Cohen, who built Axonics, covered how medtech VC incentives sabotage the best exits in an MD&M 2026 keynote.

Early-Stage Medical Device Investors Write Checks While Strategy Is Still Forming

Early-stage medical device investors like Eric Heinz invest early so their experience can still shape strategy. Heinz describes 25 years as an operator at companies including Medtronic and Intuitive Surgical before founding Heinz Ventures, a pre-seed and seed fund.

I interviewed Eric Heinz, founder of Heinz Ventures, on an episode about how founders build strategic value toward an M&A exit. Heinz said:

"My fund thesis is, first of all, looking at the pre-seed and seed stage. I want to leverage my engineering background, my product management background, and be able to get in when I could still influence product strategy, business development strategy, the other investors that are around the table."

That timing is deliberate. An investor who writes the check after the roadmap is set can only react to decisions already made. Heinz also wants to help companies avoid the missteps Heinz saw as an M&A buyer during due diligence.

Heinz started the fund after watching traditional venture capital move from early-stage medtech toward growth equity. That left a vacuum between the angel investor and the institutional VC.

Heinz explained the geographic thesis on the same episode:

"From a geographic perspective, I really want to focus on the Midwest and the Southeast, because this is an underserved region of the country when it comes to venture capital, but there are a lot of institutions spinning out great IP."

Heinz named Minneapolis and Memphis as cities where medtech companies are concentrated. Fewer investors are looking in those regions, and the ones who are look on purpose, because local institutions keep spinning out strong IP.

Medical Device Investors Pass When They Can't Protect the Company or Name the Buyer

Medical device investors pass on companies they can't protect or can't sell. Sottil favors patented hardware that a new algorithm can't replace, and Heinz studies the exit strategy during diligence to see who would eventually buy the company.

Other investors sometimes ask Sottil whether Andera still backs traditional medtech. It does, because that technology is patented and a better algorithm from someone in a garage can't replace it. Sottil put it this way:

"Whatever Anthropic will release tomorrow, it's not going to save your heart. If you need a valve, you still need a valve."

Sottil added that companies that fail to integrate AI into their development process and products will struggle to compete on the hardware.

Heinz reaches a similar place from the other side. Asked about AI software applications, Heinz said:

"No, I don't take a look at it because that's really not an area that I have a lot of expertise in, and I also am concerned about the ability to create a differentiated moat to prevent entrance into the market if you spend all the capital to develop a novel technology and business."

Heinz said the path to a strategic buyer for AI tools is so undefined that it's hard to have conviction about how or when the company exits.

That buyer question runs through medtech due diligence, which looks past revenue to ask who buys the company.

A Quick No Saves Early-Stage Founders Months of Waiting

Early-stage founders lose time when investors ask for more evidence or another committee meeting and then pass anyway. Heinz said early companies need capital to hire patent attorneys and build prototypes, so a quick no helps more than a long process.

Heinz was direct about what the industry needs more of:

"I think one of the things that we need more of are investors that can assess the opportunity and be decisive about whether they're going to invest or not, and either go forward with it or just pass and say, 'I want to save you time. I don't want to stall things for you.' But I think a quick no is one of the things that's very beneficial to founders."

Heinz separates investors who build conviction from investors who look for consensus and follow other investors into deals.

I described a MarketCraft client on the episode that's on track for close to six or seven million dollars in revenue this year, with strategics interested.

Everyone they talk to says the same thing: let us know when you get a term sheet and share it with us.

Sottil adds the founder's side of the test. Before investing, Sottil asks founders where the business should be in two years and in five.

Commercialization plans are where visions most often split. One investor may want a test in two markets while the founder wants a distributor with relationships in every hospital. In that case, Sottil said, the answer is no.

What Does All of This Mean for Medtech Founders?

In my experience working with medtech founders, the common mistake is pitching every investor the same deck. A category-focused investor like Sottil wants the must-have case made explicit and backed by human data.

An operator-investor like Heinz wants to know who the eventual buyer is and where the product strategy can still change.

I made a similar point to Heinz on the episode. In general venture, the investors who do best weren't formally operators. Medtech is different because the industry has so many regulations and obstacles that an investor with operating experience matters more.

So the work starts before the first meeting. Define the category in terms a physician would call a must-have, show the human data, and name the likely buyers.

That's market engineering, and it means the investor never has to infer why the company matters. Medical device startup funding closes faster when category work happens pre-seed, and a medtech investor narrative turns clinical proof into commercial conviction.

And if the answer is no, ask for it quickly. A fast pass frees you to take the next meeting.

Frequently Asked Questions

Who are medical device investors?

Medical device investors include early-stage funds led by former operators, such as Heinz Ventures, which invests at pre-seed and seed.

They also include life sciences firms like Andera Partners, which can lead crossover rounds, and funds built around a specific region or stage. Each type weighs clinical evidence, economics, and exit differently.

What do medical device investors look for?

They look for a must-have: a clinically meaningful difference that's also economically viable for the buyer.

Many also want human data and a defined path to liquidity, plus a clear view of who would eventually acquire the company. Investors like Sottil check the must-have claim with physicians and key opinion leaders first.

Are medical device investors mostly based in major hubs like Boston and the Bay Area?

No. Some medical device investors deliberately focus on the Midwest and Southeast, which Eric Heinz calls underserved by venture capital despite the strong IP coming out of local institutions.

Others invest from further away. Andera Partners is based in Paris and backs life sciences companies across stages. Location follows each fund's thesis.

Do medical device investors need a finance background?

No. Eric Heinz spent more than 25 years in medtech, including operating roles at Medtronic and Intuitive Surgical, before founding Heinz Ventures.

In medtech, operating experience carries extra weight with investors because the industry has so many regulations and obstacles that most venture categories don't face. Heinz invests at pre-seed and seed so that experience can still shape strategy.

Where Should You Go From Here?

If you're doing this yourself. Run your deck through the MedTech Pitch Deck Analyzer to see whether it's investment-ready, then use the MedTech Investor & Acquirer List to start contacting investors.

If you want it engineered with you. MarketCraft takes on a small number of medtech teams each quarter, starting with The Market Engineering Audit. For founders preparing to raise, the audit flags whether the must-have case is there yet.

Listen to the Full Conversations

• How AI Is Reshaping What Makes MedTech Investable with Aneta Sottil of Andera Partners
• 90% of MedTech Exits Are M&A: How Founders Build Strategic Value with Eric S. Heinz, Heinz Ventures

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About the Author

Omar Khateeb is the founder of MarketCraft and host of The State of MedTech, the number one 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.