Trump Policies, Paperwork, & More: Advice for Startup Founders

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companies, says Mary Jo Gordon, another member of Wednesday’s panel. She has decades of experience in the medtech industry. Currently, she does consulting work for a variety of companies, including startups developing medical devices and drug delivery systems.

Gordon says that a number of companies have had to shut down because they made claims about their products for which they did not have clearance from the FDA and other regulatory bodies. She says the number one reason the FDA sends “Form 483” warning letters, which the agency uses to communicate concerns after inspecting a device, for instance, has to do with improper documentation.

“It’s more paperwork than it is actual problems with the product,” Gordon says. “And that’s a big surprise to founders who have been really pushing a product down the road, but haven’t … documented what they’re doing.”

She cites Palo Alto, CA-based Theranos as an example of an “arrogant” company that did not pay close enough attention to meeting FDA and CMS requirements, or other controls Theranos needed to have in place.

Theranos has raised more than $686 million from investors since the company was formed in 2003. That fundraising total is high, even by Silicon Valley standards (and practically unheard of in Wisconsin). Several startups headquartered in the Badger State have raised eight-figure rounds. But for very early-stage companies, it can be hard to get on the radar of VCs.

Some of these nascent businesses may instead opt to raise money from angel, or individual, investors. One advantage of doing this is that angels are often willing to give startups more friendly deal terms than VCs, says Andy Walker, co-founder and partner at Rock River Capital Partners. Walker, who participated in Wednesday’s panel, says raising a funding round from angel investors can be a good way to go, but only up to a certain point.

“I would say that if you’re asking for $1 million or more … the only way to do that is to start duct-taping together a bunch of angels, basically,” he says. “And that’s when things start getting really complicated with structures and terms.”

Thakkar points out that unlike VCs, most angels are not focused on investing in startups full-time. That means venture groups such as HealthX are able to offer more than just money, he says.

“We’ve helped [our portfolio] companies meet downstream VCs—not only from Wisconsin, but across the country,” Thakkar says. “Those are the connections that we build, because that’s our job. I do think the VC money allows companies to grow faster.”

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