Despite tough markets, the co-founders of Canadian early stage medtech startup PulseMedica successfully raised a $12 million pre-series A. Here’s the inside scoop on how they did it.
Fundraising as an early stage startup is rarely easy, but being a life sciences startup carries extra challenges. While there have been extremely successful exits in this sector, investing in medtech companies can sometimes be less appealing to investors because of regulatory hurdles, a long development cycle, and longer timelines to realize returns. Canadian startup PulseMedica was able to overcome these challenges to raise a $12 million CAD pre-Series A this May.
PulseMedica aims to revolutionize how vitreoretinal disease is diagnosed and treated with their innovative eye floater device, which the company says shows great promise following recent preclinical and clinical studies. The exciting results, combined with savvy fundraising strategies on the part of co-founder and CEO Nir Katchinskiy, as well as co-founder and COO Eric Martin, led to their successful pre-Series A.
PulseMedica’s two co-founders recently sat down with us to share how they navigated fundraising as a life sciences startup in an uncertain economic climate and advice they’d give to other early-stage founders.
Do your research and engage with the market
PulseMedica’s journey to a successful fundraising round didn’t happen overnight—in fact, Katchinskiy and Martin began the process back in 2020. It took the duo two years of diligent work and proactive networking to secure their first funds from an investor. The co-founders prioritized engaging with their market from the very beginning.
“Since the early days of starting a company, we always prioritized engaging with the market and our future customers. We talked to key Opthamologists and we talked to strategic investors, as I think every startup company should do,” says Katchinskiy. “We asked them, ‘What are your thoughts on what we’re doing? Is this of value to you? If not, what can we do better? ’ These discussions led to the market telling us there’s a really big [unmet] need around treatment for eye floaters.”
He says PulseMedica put together a concept and returned to the market to share with them, “Hey, this is what we can do. What do you think?”
Those engagements led to connections with multinationals in the ophthalmic industry , which eventually led to securing investment, including $6.5 million CAD in 2023 from a multinational strategic.
“These discussions made sure we were on the path, with the right team, and were building the right technology,” Katchinskiy says. “Stakeholders quickly became excited because they could really see there’s a real need, they believed in our team, and they believed in our technology, and so they wanted to come along on the journey as well.”
Optimize your board of directors
While the credit for successful fundraising often falls to founders, the reality is there are many who support along the way.. PulseMedica’s co-founders say their biggest learning from fundraising their pre-Series A was that an experienced board of directors is critical.
“It’s important to have the right decision makers in place not only to help raise funds, but also to protect your company’s interests from a long-term perspective.”
“It’s important to have the right decision makers in place not only to help raise funds, but also to protect your company’s interests from a long-term perspective,” says Katchinskiy. “People who’ve already been there and done that know what to look for and where potential red flags exist. I really trusted our board and their opinions in terms of what to say yes to, what to say no to, and then sticking with it—and it paid off big time. Their contributions and guidance have been invaluable to us.”
Martin says they were fortunate to be part of the Calgary-based Creative Destruction Lab (also known as CDL-Rockies), a nonprofit startup program for seed-stage, science-based companies founded at the University of Toronto’s Rotman School of Management. Through CDL-Rockies, they were able to connect with seasoned mentors and experienced business people that were greatly supportive by providing advice, such as book recommendations on how to establish a board and the importance of strategic thinking.
“Ultimately, we were able to connect with individuals that are titans in the ophthalmology industry and really fantastic people who supported us on the clinical side, as well as ophthalmology-based investors and physician investors that supported us early on and connected us with their networks,” says Martin.
Key qualities they looked for in potential board members included their experience with building companies and their ability to support fundraising initiatives. . They also wanted members who had experience in operations and scaling teams. “In addition to that, the ophthalmology industry is fairly close knit community, therefore we are purposeful in connecting with business leaders who have built, scaled, or acquired companies in the ophthalmology industry –individuals who understand the keyplayers , current trends, and maintain a keen awareness of industry dynamics,” says Martin.
In the end, the co-founders rounded out their board with an operations expert, a fundraising expert, a legal expert, and an experienced business leader in the ophthalmology space.
Their advice to other founders looking to form their board, in addition to joining an organization like CDL-Rockies, is to put together a skill matrix unique to their company then pursue people who have those specific skills for a well-rounded board and advisors.
Be humble as an entrepreneur, even when it’s difficult
The board’s experience guided PulseMedica’s co-founders to stay focused on long-term success. “The challenge, on a personal level, is that when you start fundraising, someone says, ‘Here’s $5 million,” and you get excited. You think if you don’t take this, then what’s the alternative?,” says Katchinskiy. “On one hand, you’re concerned you might lose the investment, but, on the other hand your board might see better opportunities. You have to trust your board.”
“Remember, potential fantastic board members have all the reasons in the world to say no.”
This leads to their other key piece of advice for founders: “Be humble as an entrepreneur. Throw all your ego out the door because, in the end, where we really got lucky was having an incredible board behind us,” says Katchinskiy. “And when we asked our board members why they agreed to join us, they said it’s because we’re having fun building a company, we have great discussions, and the attitude is very positive. If that wasn’t the case, these sorts of people have 10,000 other opportunities they could take.”
“Remember, potential fantastic board members have all the reasons in the world to say no. If you want them on the board, you need to show them they’re going to enjoy it and get value from stepping up and helping you,” he says.
Negotiate with empathy
Negotiations with VCs and Strategics can be tough, but Martin and Katchinskiy advise founders it’s important to approach them from a place of understanding and empathy. “Being kind about it, and being committed to finding ways both parties can be happy, while not giving up on your key interests and core values is one of the key factors to successful negotiations,” says Katchinskiy.
They say it’s beneficial to ask key questions to potential VC investors, like what’s most important to them. And, think deeply about how you can achieve that by putting yourself in their shoes without sacrificing the most important things to you.
“Every discussion, it helped to ask, ‘What’s the rationale behind this particular request? Is there a real reason behind it?’ Once you get that, you can start speaking that same language, which facilitates the negotiation,” says Katchinskiy. It helps when you both understand the key things that each side isn’t willing to compromise, and that you move forward with empathy and foresight about where these differences could land you in the future.
What’s next for PulseMedica
With their pre-Series A behind them, PulseMedica has already embarked on their search for an investor to lead their Series A round, taking all they’ve learned with them on the next stage of their startup journey. Their goal in coming years is to be first-to-market in their space and, a decade from now, be the dominant design within the market and helping millions of patients.
“Ultimately, we want to reduce or eliminate disease and disability for those who are affected by eye disease. That’d be a first for eye floaters, because there’s currently limited to no diagnostics or treatment ,” says Martin. “But there’s also other significant eye disease such as diabetic retinopathy and age-related macular degeneration facing similar limitations…we want to further explore Pulsemedica’s technology for these and other debilitating diseases in ophthalmology and support as many people as we can.”
If you would like to learn more about PulseMedica, visit their website: PulseMedica.com.
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