Following the first part of this series, which discussed how investors evaluate startup teams and business potential, this article focuses on technical due diligence through the lens of the product development process.
While software and hardware development may differ in approach, both must follow a reasonable timeline and milestones, with proper documentation of testing, reviews, and verification at each stage.
Joseph Shen, Senior Medical Affairs Manager, BE Health Ventures
Preparation Before Development
Professional talent is the most essential resource in any product development process.
Developing a medical product requires a multidisciplinary team — including R&D, quality assurance, regulatory affairs, clinical specialists, and business development. In smaller startups, these roles may overlap, but each should still be clearly defined under proper organizational leadership.
Companies should maintain basic personnel records, such as education, training, and experience, to demonstrate that team members possess the necessary qualifications for their roles.
Unlike consumer products, medical devices must pass through rigorous regulatory reviews before entering the market.
Therefore, the verification process — including applicable test standards, timelines, and budgets — should be planned early in development. Since testing standards directly impact product design, it is advisable to review relevant clauses in advance and design accordingly.
Similarly, regulatory pathways and documentation requirements for target markets should be defined from the start to avoid costly redesigns later.
Investors will closely examine whether the proposed regulatory strategy and development schedule are logical, compliant, and achievable.
The product development process itself forms a key part of technical due diligence in an investment evaluation.
From Development to Design
The design and development of medical products must be conducted with precision and traceability, following established guidelines such as those from the U.S. FDA.
The process generally begins by identifying user needs, which are then translated into engineering specifications. After design and development, product and clinical validations are conducted to ensure safety and effectiveness.
For investors, it is vital to confirm that the startup has followed a structured and compliant development process, supported by verifiable documentation. Reviewing project schedules and manpower allocation allows investors to assess feasibility and efficiency.
Furthermore, verification processes and regulatory approaches can be compared with similar competing products to evaluate completeness and realism.
During due diligence, investors may also interview team members from various departments to understand real-world challenges and solutions — offering insight into both the team’s technical maturity and the practicality of their timelines.
Post-Development Verification
After the product development phase, medical devices must undergo validation and clinical trials, depending on the product’s risk class and regulatory jurisdiction, to ensure they meet initial user requirements.
Because clinical studies require substantial financial investment, their budget and design directly impact overall progress and quality.
As a result, investors pay close attention to the clinical validation strategy and resource allocation, as these factors reveal whether the team’s technical roadmap aligns with commercial and regulatory goals.
Conducting due diligence from a technical and product development perspective helps venture investors better understand a startup’s team, technology, and product readiness — providing a more accurate picture of market feasibility and investment potential.
For more information, please contact: Joseph.Shen@be.tworg.app
