I have changed my mind about what an orthopedic startup is.
We all casually toss the word “startup” around without any regard to what it really means.
Talk to 10 people and you may get 10 different definitions of a startup. Probably the most common definition is a company in the first stages of operations.
Since I talk with orthopedic professionals every day, I have run into a three specific definitions for “a startup”. Let me share these three with you.
#1 – The AGE definition
Some people define startups by how long they have existed. This is purely a time classification.
A true startup must be less than 5 years since inception. One exception to the age question Is Class III regulatory pathways.
#2 – The FUNDING definition
Some people define startups by the level of funding. This is a financial stage classification.
A true startup usually takes on Angel money only, or Series A, but certainly not Series B. Series B is beyond the startup phase. If a company has raised $100M, they are beyond startup status.
#3 – The RISK definition
Some people define startups by the amount of risk carried. This is an uncertainty classification.
The more open questions, the more it’s a startup. Is there a working prototype in the field? Is the technology tested? Is there a defined regulatory pathway? Is there a financial runway in place to reach proof-of-concept? Has the pricing been tested? Has the reimbursement been vetted? Is there a proven business model in place? etc. If there are more high-risk questions than answers, then the company is a startup.
I used to think that a startup was defined by all three – the funding level, the time horizon and the amount of risk. So a startup would be an early stage company with Angel money or Series A money in early development and certainly not profitable. This startup would certainly not be more than a few years old.
My new definition
My new startup definition is not about size, funding, or time… it’s all about mindset.
Startup is really just a mindset. With the right mindset an old company that is a turnaround or rebirth can become a startup.
Startup is a frame of mind, not a company age or size. Startups have these attributes: gritty, scared, urgent, fast, anti-bureaucratic, streamlined, transparent, aggressive, and comfortable with risk.
Let me share a few examples of unlikely startups.
After going through their IPO in 2004, a younger NuVasive lost money every year because they plowed their revenue back into innovation. I would say that NuVasive during that period was a startup.
Sometimes commercialization takes a long time. And yes, startup can be long-in-the-tooth, but still be in the first stages of development. There are startups like Intrinsic Therapeutics (founded in 2000), that are still in the “first stages” because they innovated with a Class III device. Armed with a mountain of clinical data including re-herniation rates, their new Barricaid is just being fully launched 20 years after funding. Another example is Active Implants (founded in 2004) with the NuSurface meniscus replacement, a Class III device. Active Implants hopes to commercialize in the US soon with an FDA clearance.
Even some of the big boys public companies with new leadership like ATEC (Pat Miles) and OFIX (Jon Serbosek) are acting more like startups. ECA Medical Instruments, a decades old company, is behaving like a startup with single-use torque limiting kits after a refocus in 2016. And Consensus Orthopedics is behaving like a startup with its TracPatch initiative.