Like it or not, we are firmly living through “The Austerity Era”. We have been here since May 2022.
If you’re in the orthopedic startup space, you’re feeling it. Startups or unprofitable ortho companies must find ways to survive in this “risk-off” market cycle.
Gone are the days of easy venture funding. With inflation and interest rates high, investors are wary, waiting for things to stabilize before pouring capital back into ortho startups. For founders, this means tough decisions are on the table. Right now, it’s all about survival—extending runway, driving organic sales, and making it to the other side of this storm when investors are expected to turn “risk-on” again in 2025.
The Reality Check: No More “Growth at All Costs”
Just a year or two ago, investors were chasing orthopedic innovators, eager to fuel rapid growth. But today, they’re more cautious, taking longer to make decisions and requiring stronger proof points before committing capital. If you’ve got a runway problem, it’s time to focus on sustainability over hypergrowth.
Breaking even through organic sales is now a must-have, not a nice-to-have. Here’s how to make it happen:
- Focus on Core Markets: Resist the urge to spread thin across multiple markets. Concentrate on the niche you understand best. Laser focus beats broad reach when resources are tight.
- Deepen Existing Relationships: Leverage your loyal users. Surgeons, hospitals, and distributors who already trust you are your best bet for stable sales. Go deeper, not wider.
- Leverage Digital Sales: Physical sales calls are costly. Lean into content marketing, webinars, and virtual demos—cheaper ways to bring in leads and maintain momentum.
Extending the Runway: Cash is King
If you’re counting down your cash runway, you’re not alone. Here’s how to get lean and stretch every dollar:
- Negotiate Payment Terms: Talk to vendors and suppliers about extending payment periods. Every bit counts, and many vendors are willing to help you stay afloat.
- Reconsider Staffing: Cut where you can, but be strategic. Fractional or part-time talent can fill critical roles without the overhead of full-timers.
- Optimize Inventory: Physical products mean significant inventory costs. Don’t overstock; work toward just-in-time manufacturing if possible.
Explore Alternative Capital Options
With venture capital tight, consider non-traditional funding sources:
- Revenue-Based Financing: Ideal for companies with steady sales, this funding model is more flexible than a loan, tying repayment to revenue.
- Crowdfunding and Angels: Crowdfunding platforms for orthos can bring in supplemental funds, and angel networks may offer small, flexible investments.
- Look for Grants: Non-dilutive funding can be worth the application effort, especially if your tech aligns with healthcare innovation goals.
Keep the Big Picture in Focus
The “risk-off” era won’t last forever, but it will likely stick around through early 2025. The IPO window will likely open up in mid-2025. The companies that make it will be the ones that focus on survival today to thrive tomorrow. Keep your operation lean, build steady revenue streams, and stay close to the end users who rely on you. When the market rebounds, you’ll be ready to hit the ground running with a stronger, more resilient business.