Start by Looking for Your First Investor, Not Your Lead Investor

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

In raising funding, some founders focus solely on finding their lead investor.

In most cases, it's better to find investors to join the round even if they are not leading.

By using convertible notes and SAFE notes, investors can join the raise.

Start with investors who are most likely to join and sign them up.

This shows traction with the fundraiser.

The investor who takes the lead will look for some evidence that other investors will join.

It's rare that the first investor is also the lead investor.

In most cases, the lead investor is the 5th, the 10th, or often the 25th investor the founder meets.

By picking up investors in the round, this often helps polish the pitch, fill out the data room, and prep the founder for a prospective lead investor.

It's easier to pick up investors on a convertible or SAFE note because the valuation is not set.

There's a valuation cap that protects the investor from outsized valuation by the founder.

Start your fundraise by looking for your first investor, not your lead investor.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

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On this episode of Investor Connect, Hall welcomes Barry, who presents a medical device focused on improving treatment for hydrocephalus, a condition caused by excess fluid in the brain. Barry describes the current standard approach—ventricular-peritoneal shunts that drain fluid from the brain to the abdomen using a long rubber tube—and outlines key issues including infection, clogging, and siphoning that can over-drain the brain. He notes a 40% first-year reintervention rate, with roughly $1B in first-year reintervention costs and about $3B in annual overall health system costs, and explains that patients typically face a lifetime of revisions averaging about 10 surgeries. Barry explains their alternative approach, "physiologic shunting," which drains cerebrospinal fluid into part of the venous system and is placed entirely on the cranium, avoiding the long-tube failure points.

The procedure is described as a 15–30 minute implant that can be done under local anesthesia, requires no navigation/robotics, uses standard neurosurgical tools, and is designed for constant, self-regulating flow. He positions the device as a Class II de novo/510(k) pathway and says the team has had two FDA pre-submission meetings, is currently in sheep animal studies, and plans a GLP study later in the year to support an IDE for human use. Barry shares market context: the U.S. hydrocephalus shunt market is about $170M annually with around 100,000 surgeries per year, including about 70,000 revisions; worldwide the market is about $500M. He argues a more reliable device could rapidly capture the revision market and notes the current market is dominated by Medtronic and Integra. He also discusses an additional opportunity in normal pressure hydrocephalus (NPH) in patients over 65, stating there are about 700,000 diagnosed in the U.S. and only 1% receive shunts despite symptom improvement. Barry states the company has raised $2.5M to date and is seeking an additional $2.5M via convertible note to reach a first-in-human pilot targeted around 2025, with initial offshore pilots potentially in South America or Australia.

Barry is a medical device industry professional who presents a cranial implant designed to simplify hydrocephalus management and reduce revision surgeries. He emphasizes the device's ease of training for neurosurgeons, multiple cranial placement locations, and a "no bridges burned" approach where the implant can be removed and replaced through a small skin incision if needed. Barry describes a competitive landscape that includes one competitor pursuing an endovascular technique, while his team's approach is a surgical technique intended to be safer, simpler, and not dependent on specialized equipment. He also discusses manufacturing readiness, stating a supplier/contractor has been identified and that devices used in animal studies meet sterility and related standards. Barry discusses the shortcomings of current shunts, the company's physiologic shunting approach, the regulatory and study plan toward first-in-human use, the funding raise, and the market opportunity—especially capturing the large revision segment and potential expansion into normal pressure hydrocephalus.

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For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

Check out our other podcasts here: https://investorconnect.org/
For Investors check out: https://tencapital.group/investor-landing/
For Startups check out: https://tencapital.group/company-landing/
For eGuides check out: https:/_/tencapital.group/education/
For upcoming Events, check out https://tencapital.group/events/

For Feedback please contact info@tencapital.group

Please follow, share, and leave a review.

Music courtesy of Bensound.

Track Interest, Committed, and Invested

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

In raising a round of funding, most founders focus on the invested funds so far.

When asked about the progress, the founder quotes the invested amount and the amount left in the raise.

This undersells the traction the founder has.

In addition to the invested, also track the interest and committed funds.

For each investor who has some interest, ask for their level of interest.

Add up all the interested investor amounts.

For those who are committed but not yet invested, add up those funds as well.

In discussing with prospective investors, quote the interest, commitment, and investment.

This shows additional interest from investors in the round.

A typical update would be, in our $1M raise, we have $600K invested, $250K committed, and interest at $800K.

It's often the case that the interest and committed funds are greater than the remaining amount in the raise.

This creates scarcity and generates FOMO with the investors who now see that there's not enough room to cover all potential investors.

Use this to help close the fundraising round.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

_________________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

Check out our other podcasts here: https://investorconnect.org/
For Investors check out: https://tencapital.group/investor-landing/
For Startups check out: https://tencapital.group/company-landing/
For eGuides check out: https://tencapital.group/education/
For upcoming Events, check out https://tencapital.group/events/

For Feedback please contact info@tencapital.group

Please follow, share, and leave a review.

Music courtesy of Bensound.