By Stefania Aulicino
The market for endoscopes is a huge market, given all the many procedures that can be done now from NET (nose, ear and throat) to colonoscopies.
As a $2 million repair business addressing these very medical devices, Alex understood all the problems the doctors were experiencing; after all, he was the repair shop for all the different brands.
Alex used the repair revenue and insights to fund a prototype of a universal devise that could support different attachments for each other the various medical disciplines: Swiss Army Knife style. It was all done.
Alex earned a meeting with an $80 million medical device company with marketing distribution into 12 different specialty medical practices. He was about give up his power, and a lot of ownership to introduce a new product.
Why? He needed funding for a routine FDA certification and he had to ramp up production.
Buying products/services is what customers are in business to do. It’s EASY for them. Investment requests take them out of their element and delay the process, and worse, such a request erodes your power in the exchange.
The last thing he needed was FDA clearance based on paperwork that confirmed the sterilization process. “Alex is there any chance you won’t get FDA approval? I asked. “No- it’s just a certification process as we have passed all the other procedural aspects.” How much does it cost? Perhaps $30,000 which would accelerate a 6 month process into a 5 week process”.
Fortunately, we had our conversation before he met with the equity owner/R&D Director who is also a founding equity owner of this privately held distributor company, and I dissuaded Alex from asking for financial help with the $30,000.
Instead, we discussed a different game plan for cheap cash. Alex went into that meeting to sell his product.
What is EASY is a decision to make a volume purchase as part of an exclusive distribution arrangement (for a limited time and geography) worth $300,000. To ink the deal, Alex could expect $100,000 upfront. Not only was that enough to cover the $30,000 for FDA, but it now allied both Alex and his distributor to want to accelerate the FDA. The distributor offered their internal engineers (for free) to accelerate the process to achieve this win-win. Plus Alex had cash to start the production ramp-up.
Taking this approach, Alex kept ownership of his product, unlike many of his smaller peers who had ended up with only licensing income. Alex controlled the FDA process by retaining authority over the process. Best of all, now he had a revenue stream, the cheapest form of capital to grow his company.
Alex’s prototype sold itself. The distributor could make their own decisions. And Alex has cheap cash and there is a lot more where that came from!
Stefania Aulicino, president of CapitalLinkUSA ensures business owns get cash to keep control of a bigger, more profitable company, faster, safer than they ever thought possible- in any economy. Let us help you become a magnet for non equity and equity sources to fuel your growth. Please explore our tools, solutions and consulting options tailored for different growth stages and different budgets: www.CashAndControl.com
Comments