Business model selection determines your unit economics, the kind of investor who'll fund you, and the comparable companies your exit will be priced against. Most medtech founders default to a model without examining alternatives - and discover at Series B that the wrong choice has compounded.
The five common archetypes
Each has distinct gross margin, sales cycle, and investor base.
- Capital equipment - high upfront price, long sales cycle, hospital capital committee approval
- Razor + blade - equipment placed at low/zero cost, recurring consumables drive economics
- Per-procedure / pay-per-use - usage-aligned billing, often through GPO/IDN contract
- SaaMD subscription - software-as-a-medical-device with annual or monthly licensing
- Service / pathology - internal device powering an outsourced clinical service line
Match the model to the buyer
Hospital capital committees evaluate equipment annually with 18-month budget cycles. Service-line directors approve consumables monthly. Health-system CIOs sign SaaS. Knowing who signs determines what you build - and how you price it.
Build a defensible moat
FDA clearance is a moat for ~24 months. Long-term defensibility comes from data network effects, clinical workflow integration, GPO contracts, or installed-base lock-in. Identify yours before Series B - investors will ask.