Technology risk: many medical devices technology research and development from universities, research institutes and other institutions, from their laboratory out of the research results, from the real clinical application there is a long way to go. At the same time, due to the involvement of a variety of technologies, the research and development of medical devices increases the technical complexity. At the same time, the need to integrate the strengths and resources of multiple parties makes the organizational costs also increase. Therefore, investors need to make careful decisions on whether to invest in medical devices with breakthrough technologies or those with incremental improvements. In today's era of encouraging innovation, companies must not fall into the innovation trap: innovation for the sake of innovation. By trying to be new and different just for the sake of having their own patents or trying to differentiate themselves from their competitors, they will most likely put themselves in a passive position.
Market risk: product marketing includes: market analysis, product positioning, pricing system, distribution channels, promotional methods, after-sales service and other links. Each link contains a risk, the more links, the greater the risk. Details determine success or failure, the assessment of market risk will be a specific and tedious work. Changes in product technology, the intensity of market competition, changes in the market, the management of dealers, customer relationship maintenance are the main aspects that must be considered.
Refinancing risk: In the field of medical devices, a product from the project to the final listing, to go through the research and development, production, clinical trials, registration and review and other links. The time span is long, there are many intermediate links, and there are more uncertainties. At the same time, in many links, need a lot of financial support. Enterprises that do not lack funds at a certain stage are likely to see a surge in the demand for funds at the next stage, in the implementation of the next development plan. The enterprise's future financing ability is not strong, the channel is not open, for the early entry of investors will constitute a great risk.
Exit Risk: Like investments in other industries, can we realize safe exit? In what way to exit? At what price? are important indicators to determine the success of the investment project. Generally speaking, there are two main ways for venture capital to exit, i.e. mergers and acquisitions (M&A) and listing. Venture capital in the medical field takes two to three years for a short period of time and five to six years for a long period of time. As many factors are difficult to predict, it is difficult to determine whether a company can exit through listing or M&A in the future several years in advance. For listing, whether the enterprise's shareholding structure, corporate governance, turnover and profit can meet the minimum requirements for listing are the primary considerations. At the same time, enterprises choose to go public in the market generally have the U.S. New York Stock Exchange, Nasdaq Stock Market, Hong Kong market, the domestic A-share market. The domestic market is further divided into the main board, small and medium-sized boards and the Growth Enterprise Market (GEM). Each market has different criteria for enterprise IPO. In addition, more importantly, each market has different preferences, which will directly determine the listed market value of the enterprise, that is, the final rate of return on venture capital.