MedTech startups need roughly 3 to 10 times more capital than a comparable SaaS startup to reach first euro of revenue. The reason is not that MedTech engineering is harder than software engineering. The reason is that MedTech has an 18 to 24 month regulatory path between a working prototype and a sellable product, and during that window the company has real costs and zero revenue. Plan for that window as a fixed, non-negotiable cost of entry. Not as a surprise you hit in month nine.

By Felix Lenhard and Tibor Zechmeister. Last updated 10 April 2026.

TL;DR

  • A SaaS startup can be in market with paying users in 3 to 6 months. A MedTech startup with anything above basic Class I cannot, no matter how fast the team moves.
  • The gap is a regulatory window of 12 to 24 months during which the company burns runway without revenue. That window is the single biggest driver of MedTech capital requirements.
  • Regulatory cost is not a fourth line in the unit-economics model. It sits inside Cost of Goods Sold, because it is the cost of being allowed to deliver the product at all.
  • The triangle that decides whether a MedTech business works is the same as for SaaS: customer acquisition cost, revenue per customer, and cost to deliver. The difference is that cost to deliver in MedTech is far higher, and most founders under-budget it by half or more.
  • Founders who raise a seed round sized for a SaaS timeline and then hit the MDR path end up in a bridge-round loop. Three bridges later, the company is still pre-revenue and out of options.

The shrimp farm that had everything except runway

A founder Felix worked with had, on paper, the cleanest startup story you could write. The product had real product-market fit. Customers wanted it. Early revenue was landing. The team could ship. By every SaaS-world metric, this was a winner.

The business was a shrimp farm. A real one, with tanks, biology, infrastructure, and a production cycle that was months long from input to output. The unit economics worked if the company reached the scale where the tanks ran continuously. To reach that scale, the company needed capital to build the tanks, run them through enough cycles to stabilise biology, and bridge the gap between early revenue and the point where cashflow covered operations.

The founder raised. The round closed. The money went into the tanks. The tanks worked. The shrimp grew. The customers showed up. And then the company ran out of money. Not because the plan was wrong, not because the product was wrong, not because the market was wrong, but because the financing was wrong. The round was sized for a shorter cycle than the real business had. The bridge never came. The company died with product-market fit intact.

Felix tells this story because it is the cleanest illustration of the single most important lesson a MedTech founder can learn before raising a first round. You can get every strategic thing right and still die if the financial plan does not match the real shape of your business. For a shrimp farm, the real shape is long production cycles. For a MedTech startup, the real shape is an 18 to 24 month regulatory path. If the financing does not match that shape, nothing else matters.

The capital math. MedTech runway vs. SaaS runway

Here is the arithmetic in the simplest form that still tells the truth.

A typical early-stage SaaS startup can go from founding to first paying customer in 3 to 6 months. The MVP is code. The distribution is the internet. The first dollar of revenue can arrive before the founders have finished their first round. With disciplined spending, EUR 200,000 to EUR 500,000 gets a SaaS team to a point where the unit economics are measurable and the next round can be raised on real data.

A MedTech startup building anything above unmeasured, non-sterile Class I cannot do that. Regulation (EU) 2017/745. The MDR. Requires that no device be placed on the market unless it conforms to the Regulation, and Article 10 sets out the manufacturer obligations that drive the cost. Technical documentation under Annex II, a QMS under EN ISO 13485:2016+A11:2021, clinical evidence, Notified Body engagement, testing. All of this has to be in place before the first paying customer. Done disciplined, the path is 12 to 24 months and EUR 150,000 to EUR 500,000 or more of direct regulatory spend, plus the team salaries that burn through the same window.

Stack that up and you get the 3x to 10x difference. A SaaS team needs to fund roughly 6 to 12 months of burn to reach revenue. A MedTech team needs to fund 18 to 30 months of burn to reach revenue, at a higher monthly burn because of the specialist roles MDR requires. Same team size, similar salaries, completely different runway requirement. Because the regulatory window is a fixed cost of entering the market, and it sits squarely between your prototype and your first invoice.

The number that shocks first-time MedTech founders is not the total cost of certification. It is the total cost of existing as a company for the 18 to 24 months before any revenue arrives. That is the line item that kills the under-funded rounds.

The 2-month delusion

The mirror of the shrimp farm story is the one Felix has watched more times than he can count. A first-time MedTech founder arrives with a Miro board and a plan that says MDR certification will take 2 months. They have a consultant lined up. They have a timeline. They have, in their head, a SaaS-shaped runway calculation and a regulatory path they have never read end to end.

They raise on that plan. The round is sized for a SaaS timeline. The founder budgets a 12-month runway because, in their model, they will have revenue at month 4.

Month 4 passes. The intended purpose is not clean. The classification is still contested. The Notified Body has not been contacted because "the file is not ready." The product works beautifully. The certification does not.

Month 8, the runway is burning toward zero. Bridge round one gets raised at terms nobody loves. Month 14, bridge round two. Month 20, bridge round three. Two years in, the company is still pre-revenue, the cap table is a mess, and the founder is running the project on fumes. The company Felix has in mind for this pattern is still in it. Not failed yet. Not succeeded yet. Three bridges deep into a plan that was wrong from the first round.

The 2-month delusion is not stupidity. It is a category error. The founder was planning a SaaS business and happened to be building a medical device.

Regulatory cost is not a fourth line. It is inside cost of goods sold

Most first-time MedTech founders model their unit economics the way they learned from SaaS books. They draw three lines: customer acquisition cost, revenue per customer, and gross margin. Then they try to staple a fourth line onto the model called "regulatory" and treat it as a separate fixed cost they will "deal with later."

That is wrong, and it is the reason so many MedTech financial plans fall apart on first contact with reality.

Regulatory cost is not a fourth line. It lives inside cost of goods sold. It is the cost of being allowed to deliver the product at all. A medical device that is not certified cannot be sold. The QMS, the technical file, the clinical evaluation, the Notified Body fees, the PMS system, the surveillance audits. Every one of those is a cost you incur so that the product can legally change hands. That is the textbook definition of a cost of goods sold input. The fact that a lot of the cost is front-loaded before the first unit ships does not change the category. It changes the cash flow profile, which is exactly the problem.

Once you model it that way, the triangle becomes visible. The triangle that decides whether any business works is CAC, revenue per customer, and cost to deliver. In SaaS, cost to deliver is roughly hosting plus support plus a slice of engineering. In MedTech, cost to deliver is manufacturing plus regulatory plus quality plus post-market plus vigilance plus the amortised cost of the certification that let you ship in the first place. Same triangle. Wildly different number in the cost-to-deliver corner.

The founders who underwrite that number honestly build businesses that survive. The founders who try to make MedTech look like SaaS in the model end up financing the regulatory reality with bridge rounds later, at worse terms than they would have raised at honestly in the beginning.

The 18 to 24 month pre-revenue phase is a fixed cost of entry

Say it plainly. For any device above basic Class I, there is an 18 to 24 month window between the moment you commit to building a specific device and the moment you can legally take money for it. That window is not a project risk. It is not a timeline you can compress with better execution. It is the structural cost of participating in a regulated market that exists because patients have to be safe.

During that window, you have real costs. Salaries for the core team. Regulatory lead, QMS owner, clinical lead, PRRC coverage under the MDR. Prototyping and verification and validation. QMS build-out. Testing fees. Notified Body fees. Clinical evaluation. Literature review at minimum, and sometimes clinical investigation on top. Rent, insurance, tools, overhead. All of it going out. Nothing coming in.

The disciplined version of this, done by a small team that has read the regulation and is running the Subtract to Ship framework, is still a 12 to 24 month burn of 150k to 500k+. The undisciplined version. Templates bought instead of processes built, wrong classification held too long, Notified Body contacted too late, documentation bloated instead of proportionate. Easily doubles that.

Either way, the window is real. The question is only whether you raised enough to survive it.

The bridge round trap

The failure mode that kills more MedTech startups than anything else is not a bad first round. It is a first round that was sized for a SaaS business applied to a MedTech timeline, and the bridge rounds that follow when the plan hits the wall.

Bridge rounds are expensive in three ways at once. They are expensive in terms, because the company is in a weaker position than at the previous round. They are expensive in dilution, because the valuation does not move the way the founder hoped. They are expensive in focus, because the founder spends months running the bridge instead of running the company, and during those months the certification does not move and the clock does not stop.

One bridge is survivable. Two bridges is a warning sign. Three bridges is a pattern, and the pattern is that the original financing plan was wrong by a factor that no amount of additional capital can fix cleanly. The honest fix is to redraw the plan. Classification, route, timeline, headcount, the full thing. And figure out what a real round sized for a real timeline would look like. The dishonest fix is to raise another bridge and hope month 36 looks different from month 24.

The way to avoid the trap is to never enter it. Size the first round for the real shape of the business, not the shape you wish it had. Felix's rule from the no-bullshit guide applies directly: estimate cost and time honestly, then double it, and raise on the doubled number.

The triangle. CAC, revenue per customer, cost to deliver

Once you accept that the triangle is the same and only the cost-to-deliver number is different, the strategic choices become clearer.

Customer acquisition cost in MedTech is usually lower than in SaaS at the same revenue point. You are selling to hospitals, clinics, or specialist practices that already know they need your category of device. The channel is slower, but the CAC per closed account is often reasonable.

Revenue per customer in MedTech can be very high. A single hospital deal can be worth what a SaaS startup earns from thousands of self-serve users. The absolute revenue per customer is rarely the problem.

Cost to deliver is where MedTech businesses live or die. It is the manufacturing. It is the post-market surveillance that runs for the life of the device. It is the vigilance obligation to report incidents. It is the continued QMS operation, the re-certifications, the change notifications, the surveillance audits, the technical file updates. And it is the amortised cost of getting certified in the first place, spread across the units you ship. Every one of these is real. Every one of these is specified by MDR Article 10 and the supporting annexes and standards. None of these goes away after launch.

The businesses that work are the ones where revenue per customer times expected customer count comfortably exceeds the cost-to-deliver line over the lifetime of the product. The businesses that do not work are the ones where the founder made the revenue side look good on the pitch deck and the cost-to-deliver side look SaaS-shaped in the model.

How to think about runway in MedTech

Here is the mental model that actually works for MedTech runway planning.

Start with the regulatory timeline, not the financial timeline. Work out, honestly, how long the path is from today to a certified device you can sell. For most startups above basic Class I, that is 18 to 24 months from a clean start. And from a clean start means after the intended purpose is written, the classification is defensible, the conformity assessment route is chosen, and the Notified Body is at least identified. Add buffer for the delays that always happen. Notified Body queue times, clinical evaluation iterations, audit findings.

Then add the commercial ramp. Even after the CE mark arrives, the first real revenue is 3 to 9 months behind it, because hospitals have procurement cycles and pilots run before orders. So total pre-revenue window is 21 to 33 months from clean start, and often more.

Then multiply that window by a realistic monthly burn for the team you actually need. Regulatory lead, QMS owner, clinical lead, PRRC coverage, enough engineering to finish the product, and a thin commercial function to prepare the market. That number is your runway requirement. Raise to that number. Do not raise to a smaller one and hope.

If the number is too big for the round you can actually close, that is information. It tells you the plan needs to change. Lighter classification if defensible, faster route if available, leaner team, smaller first device, stripped scope. It does not tell you to raise less and hope. Raising less and hoping is how the bridge trap starts.

The honest numbers founders avoid

The part nobody wants to put in the pitch deck.

A lean, disciplined Class IIa MedTech startup with a small team and a well-run Subtract to Ship approach will spend roughly EUR 150,000 to EUR 300,000 in direct regulatory costs, EUR 400,000 to EUR 900,000 in team costs across the 18 to 24 month pre-revenue window, and another EUR 100,000 to EUR 300,000 in infrastructure, testing, tools, and overhead. Total runway requirement: roughly EUR 700,000 to EUR 1.5 million to reach a certified device and first real revenue.

Class IIb is higher, often materially. Class III is higher still, sometimes by a factor of several. Class I non-measuring non-sterile can be lower, but it is still not a SaaS-shaped number.

These are not numbers that founders like to see on a slide in front of an early-stage investor. But they are the numbers that match the real shape of the business. The founders who raise against these numbers and execute disciplined runs survive. The founders who raise against smaller numbers hit the bridge trap.

Tibor's line on this, delivered flat, is the one worth printing above every MedTech founder's desk. "If you cannot afford regulatory, you cannot afford a MedTech project." That is not a discouragement. It is arithmetic. The regulatory path is a fixed cost of entering the market. You can make it lean with the Subtract to Ship framework. You cannot make it free.

The Subtract to Ship angle

Subtract to Ship does not make the regulatory window disappear. It compresses it. Sometimes substantially. By cutting the activities, documents, and process steps that do not trace to a specific MDR obligation. A disciplined Subtract to Ship run can take a bloated 30-month plan and bring it back to a realistic 18-month plan. It can take a consultant-driven EUR 500,000 regulatory budget and bring it back to EUR 200,000 without cutting a single required obligation.

What Subtract to Ship cannot do is bring the window to zero. The founders who try to subtract their way below the structural minimum end up in the same place as the founders who never subtracted at all. Under-funded, over-timed, and facing a Notified Body finding that blows the plan up.

The right way to think about it: Subtract to Ship tells you the smallest number you could honestly plan for. Then you raise for that number, with buffer, and you execute the disciplined version. That is how you survive the 18 to 24 month window on the smallest capital base the business permits.

Reality Check. Where do you stand?

  1. Do you know, in writing, how many months of runway stand between today and your first euro of revenue. Assuming nothing goes wrong?
  2. Have you added a realistic buffer for the things that always go wrong (Notified Body queue, audit findings, clinical evaluation iterations)?
  3. Does your financial model put regulatory inside cost of goods sold, or is it hanging off the side as a "fourth line"?
  4. Can you state your monthly burn in the pre-revenue window honestly, including the specialist roles MDR requires?
  5. If your current plan is correct, how many bridge rounds does it implicitly assume? (If the answer is more than zero, the plan is not correct.)
  6. Have you done the exercise of doubling your first cost-and-time estimate and asking whether the doubled version is still a fundable business?
  7. If someone handed you a cheque for 50% more than you are raising, would it change whether you survive the regulatory window. Or would it just change how comfortable it is?

Frequently Asked Questions

How much more capital does a MedTech startup need compared to SaaS? Roughly 3 to 10 times more to reach first revenue, depending on device class. A SaaS team can reach paying customers in 3 to 6 months on EUR 200,000 to EUR 500,000. A MedTech team above basic Class I typically needs EUR 700,000 to EUR 1.5 million or more to survive the 18 to 24 month regulatory window before revenue is possible.

Why is regulatory cost considered cost of goods sold and not a separate line? Because it is the cost of being allowed to deliver the product at all. A medical device cannot legally be sold without the QMS, technical file, clinical evidence, and conformity assessment that MDR Article 10 and the supporting annexes require. That is a direct input to delivery, not an overhead. Treating it as a fourth line leads to under-budgeting.

Can I just raise a bridge round if the first round runs out? Sometimes, but bridges are expensive in terms, dilution, and focus. One bridge is survivable. Two or three is a pattern, and the pattern usually means the original plan was wrong by a factor that more capital cannot cleanly fix. The better strategy is to size the first round correctly rather than rely on bridges to cover the error.

Is there any way to compress the 18 to 24 month window? Yes, within limits. Running a disciplined Subtract to Ship approach. Clean intended purpose, lowest defensible classification, lightest legitimate conformity assessment route, literature-based clinical evaluation where permissible, lean QMS sized to the actual risk. Can bring a bloated 30-month plan back to a realistic 18-month plan. It cannot reduce the window to a SaaS timeline because the structural minimum is set by the regulation itself.

What if I cannot raise enough to cover the full pre-revenue window? Then either the plan needs to change (lighter device, lower class, smaller first version, leaner team) or the project should be paused until the financing case is real. Raising less and hoping is the single most common way MedTech startups die. Honest conversations with investors about the real window are better than optimistic ones that fall apart in month nine.

Sources

  1. Regulation (EU) 2017/745 of the European Parliament and of the Council of 5 April 2017 on medical devices, Article 10 (manufacturer obligations) and supporting annexes on technical documentation, classification, and clinical evaluation. Official Journal L 117, 5.5.2017.
  2. EN ISO 13485:2016 + A11:2021. Medical devices. Quality management systems. Requirements for regulatory purposes.

This post is part of the Funding, Business Models and Reimbursement series in the Subtract to Ship: MDR blog. Authored by Felix Lenhard and Tibor Zechmeister. The shape of a MedTech business is set by the regulatory window, not the pitch deck. Plan for the window, fund the window, survive the window. And the rest of the business has a chance to work.