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Exploring alternative medtech investment strategies

How build-to-buy model meets venture capital challenges

How can investors, strategic medtech companies, and entrepreneurs spur the next wave of medtech innovation? As startups face challenges with venture capital funding, regulatory changes, and reimbursement uncertainties, alternative financing solutions like build-to-buy co-development deals are changing the game. We spoke with 16 top investors to reveal the latest trends, strategies, and insider advice shaping the future of medtech.

Authors: Glenn Snyder | Sheryl Jacobson | Teresa Leste | Steve Davis

Traversing the medtech investment frontier
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Five keys to venture capital challenges

Trends, strategies, and insider guidance

The medtech investment landscape has undergone significant changes in recent years, shaped by shifting economic conditions and evolving industry needs. Understanding these trends is crucial for stakeholders navigating today’s funding environment. Below are the key takeaways that highlight how traditional investment streams in medtech are evolving and what this means for innovation and growth in the sector.
 
  • Investment peaked in 2021 due to pandemic-driven demand for digital and diagnostic tools.
  • Funding has declined since 2021—fewer deals, exits, and IPOs.
  • Investor caution is rising as interest rates hit all-time high in two decades.
  • Investors now focus on mature companies, making early-stage funding scarce.
  • Private equity (PE) is filling some gaps but mainly for later-stage deals.
  • Medtech innovations decline as clinicians are under increasing financial pressure.
As early-stage medtech companies face tougher funding conditions, new investment models are gaining traction. Strategic investors and PE firms are increasingly turning to co-development and structured deals to reduce risk and foster innovation.

Key investment models
 
  • Build-to-buy: A strategic medtech company partners with a startup, investing early and retaining the option to acquire if milestones are met. This model offers medtech startups resources and a clear path to acquisition, while strategic investors can derisk their investment.
  • Buy-to-build: Strategic investors or PE firms identify product gaps and acquire or form companies to fill them. This approach accelerates innovation and portfolio growth.
  • Hybrid and structured deals: Early-stage funding often blends traditional venture capital with alternative sources. Some deals involve partnerships between strategic investors, financial investors, and startups, providing flexibility but requiring alignment among parties.

These evolving models offer medtech startups new pathways to growth and liquidity, while helping strategic investors and PE firms manage risk and pursue innovation.

Medtech innovation alone isn’t enough to ensure startup success—effective governance and strong leadership are also important for attracting investors and driving growth. While investors can add value by recruiting talent, raising capital, and providing regulatory expertise, the risk of poor advice or strategic misdirection can stifle progress. Startups need experienced leaders to guide the company through its next phase, and having a single CEO helps minimize friction. Clear governance structures, milestone tracking, and well-designed incentive systems can keep employees motivated and aligned with company goals. Additionally, cultural integration is important when partnering with larger corporations, as differences in management style and organizational processes can pose challenges.
The medtech investment landscape is shifting toward later-stage companies with demonstrated clinical results and market readiness. This trend has made it harder for early- and mid-stage startups to secure funding. Even established companies are experiencing longer timelines to exit. At the same time, investor interest is growing in areas such as cardiovascular devices, neurostimulation, medical software, and the integration of AI and robotics—reflecting evolving healthcare needs and technological advancements.

Despite these opportunities, challenges beyond funding remain. Navigating complex regulatory environments, securing reimbursement, and gaining market access are all critical hurdles. Additionally, startups must often build specialized sales teams and demonstrate clear value to multiple stakeholders within health systems. Success in this environment requires not only innovation but also strong execution across regulatory, commercial, and operational dimensions.
Achieving significant revenue milestones in medtech is a lengthy process, and those who can accelerate this timeline gain a major advantage. With funding shifting toward later-stage companies, early-stage startups face greater challenges securing investment. Strategic partnerships and early engagement with investors are becoming more important to share risk and access resources. Early-stage investing remains high-risk, often takes longer, and requires more capital than expected. While new models like build-to-buy may help address funding gaps, their long-term impact remains to be seen. Success in medtech requires tailored investment strategies and an understanding of the sector’s unique demands.

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Sheryl Jacobson

Sheryl Jacobson

US & Global Medtech Practice Leader
+1 212 829 6016
Teresa Leste

Teresa Leste

Pedro Arboleda

Pedro Arboleda

Managing Director | Deloitte Consulting LLP
+1 617 437 3802