In this episode of MedTech Snapshot, Justin Farry, CFO of Endovascular Engineering, explains that the most defensible startup valuations aren't built on optimism. They're built on evidence.

​Every Milestone Changes the Conversation
One of the biggest misconceptions Justin addresses is that all pre-revenue companies should be valued similarly, which isn't true.

A startup with promising bench testing isn't in the same position as one that has completed first-in-human procedures. Likewise, a company entering a pivotal clinical trial carries a very different level of risk than one generating early commercial revenue.

Every milestone matters because every milestone reduces uncertainty.
As Justin explains: "Every milestone that you achieve fundamentally reduces risk, and the valuation typically goes up."

Investors aren't simply buying technology. They're evaluating how much uncertainty still exists between where a company is today and a successful commercial outcome.

Why Founders Often Overvalue Their Companies
Valuation quickly becomes an emotional discussion. Founders naturally see years of hard work, sleepless nights, and personal investment reflected in their company. Investors, however, are evaluating market opportunity, comparable transactions, financial projections, and execution risk.

Those perspectives don't always align. Justin explains that guiding founders through this process requires more than financial expertise. It requires emotional intelligence.

Rather than telling founders what they want to hear, advisors should help them build objective financial models, forecast realistic revenue, and apply valuation methods that can be defended during fundraising and acquisition discussions.
The goal isn't to lower expectations.
The goal is to replace assumptions with evidence.

Why Comparable Transactions Matter
One of the most important inputs in any valuation is understanding what similar companies have actually sold for. Looking at comparable acquisitions helps founders answer critical questions:

• What stage was the company in?
• Who acquired them?
• What valuation multiple was paid?
• How does my company compare?

This provides context that removes much of the guesswork from negotiations.
After performing this analysis repeatedly for early-stage MedTech companies, Justin and his son built InflectionBI, a platform designed to make acquisition data more accessible to founders, investors, and strategic buyers. Instead of relying on isolated examples or outdated assumptions, companies can benchmark themselves against a broad database of medical device transactions.

Don't Compare Yourself to a Unicorn
One mistake Justin cautions founders against is anchoring their expectations to headline acquisitions. Every industry has companies that achieve extraordinary valuations, but those transactions are exceptions, not the rule.
Basing your expectations on a once-in-a-generation acquisition can create unrealistic expectations that ultimately hurt fundraising discussions.
Instead, Justin recommends focusing on the broader market.
Median transaction values, comparable companies, and objective financial data provide a much stronger foundation than chasing unicorn outcomes.

A Defensible Valuation Builds Credibility
Ultimately, valuation is about finding the number you can defend. When founders understand where their company sits in its development journey, support their projections with realistic financial models, and benchmark against comparable transactions, conversations with investors become far more productive.
Remember, the strongest valuations are built on data.

"The real gap isn't market access," Brad explains. "It's patient acceptance."

His point is simple but powerful. Many patients delay procedures at the beginning of the year because insurance deductibles reset on January 1. While manufacturers successfully move inventory in December, hospitals often end up with products sitting on shelves as procedure volumes decline during the first quarter.

The result is a cycle that repeats year after year. Companies discount products to drive purchases, inventory builds up, procedure demand slows, and commercial teams spend months trying to recover.

​Brad proposes a thought experiment. Instead of using commercial dollars to discount devices at the end of the year, what if manufacturers invested those same resources in reducing financial barriers for patients? Rather than encouraging hospitals to stock more inventory, those investments could help qualified patients move forward with procedures they have already been recommended to receive.

As he puts it:
"Let's take that 10% discount dollarized and use that to offset the patient's out-of-pocket..."

The facility still receives payment. The manufacturer sells the device at full price. Most importantly, patients receive care when it's clinically recommended instead of postponing treatment because of financial barriers.
​
Brad's perspective also raises a broader question about how commercialization strategies are developed. If manufacturers already know that procedure demand fluctuates based on patient insurance cycles, shouldn't that information shape planning across the business?

Commercial teams, operations, manufacturing partners, and supply chains could all benefit from forecasting around actual patient behavior rather than reacting to year-end purchasing patterns.

Instead of rushing expedited orders, managing excess inventory, or trying to recover from predictable slowdowns, organizations could make more informed decisions months in advance.

In a recent sit down for the MedTech Snapshot Podcast, Torry Lamp, President of RKL Technologies, and Kip Sullivan, CEO of RKL Technologies, discussed a challenge they frequently see with OEMs: companies trying to optimize inventory without having the forecasting, communication, and manufacturing partnerships needed to support those decisions.

The issue often doesn't appear immediately. A company may successfully reduce inventory levels and see short-term savings. But months later, demand increases, an unexpected supply chain disruption occurs, or production needs change. Without sufficient safety stock or a clear forecast, manufacturers are suddenly asked to produce significantly more than planned.

That shift can create a domino effect.

Materials need to be expedited. Tooling vendors have to adjust timelines. Production teams may need to add overtime. A manufacturing process designed for a predictable, efficient production schedule suddenly becomes a reactive process.

As Torry and Kip explained, companies may save a few thousand dollars by reducing inventory, only to spend significantly more trying to recover when demand changes. The cost of expediting materials, adjusting production schedules, and rushing resources can quickly outweigh the original savings.

The challenge is that inventory strategy cannot exist in isolation. It requires collaboration between the OEM and the manufacturing partner.

A common mistake companies make is viewing manufacturers simply as suppliers: a company that receives a purchase order, builds a part, and delivers it. But in medical device manufacturing, the relationship needs to go deeper.

"When you go from more of a supplier to a partner, the communication flows evenly across both teams," Kip explained.

That partnership means manufacturers understand more than just what needs to be built. They understand upcoming demand, production challenges, timelines, and potential roadblocks before they become emergencies.

When communication is strong, teams can plan ahead. When communication breaks down, everyone ends up reacting.

Forecasting plays a major role in that process. Torry and Kip pointed out that many companies have access to demand information, but the challenge is turning that information into a clear, actionable forecast that reaches the right people.

Sometimes information is filtered through multiple departments. Sometimes forecasts are based on assumptions rather than data. Sometimes manufacturers are simply told that demand has changed without understanding the reasoning behind the change. Without that visibility, manufacturing partners are forced to respond instead of prepare. The solution is not necessarily holding more inventory, it's creating better alignment.

When OEMs share forecasts, discuss challenges early, and involve manufacturing partners in strategic conversations, both sides can make better decisions. Manufacturers can plan capacity, materials, and resources more effectively while OEMs gain a supply chain that is more predictable and resilient.

This same principle applies beyond inventory strategy. Whether a company is scaling production, improving efficiency, or preparing a product for commercialization, the right manufacturing partner can make a significant difference.

The best partnerships are built on transparency, communication, and trust. A manufacturer who understands the long-term goals of a medical device company is not just making parts. They are helping solve problems before they impact the business.