What are the ‘usual’ distribution options for Europe?
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The most promising start-ups with strong clinical results may have an opportunity to sign a global distribution agreement with a major industry corporation. The optimism to gain immediate access to global markets through a massive sales force creates huge expectations with the small start-up wanting to access global markets. The natural appeal/flattery of one of the corporate giants wanting to represent a small start-up’s device, in theory, may support the founder’s belief that this partnership will lead to an acquisition and complete their exit strategy sooner than planned. In reality, the control of the new device is now in the hands, for example, of a 40.000 product code corporate mogul. A potential acquirer of the start-up now has access to the intellectual property and global distribution control of the start-up’s device. The promising small one-product company has lost leverage with its exit strategies in the future with this new partner/potential acquirer being allowed to get so close without any firm reciprocal commitments. Moreover, there will be a natural pull back of other potential acquirers who will look to align with an alternative new device addressing the same clinical issue. At the early critical stage of market development, the control and success of the device is placed out of the hands of those singularly focused on its growth and its image. The marketing decisions will be made by the corporation that controls the device that is best for its overall portfolio, not necessarily including your one new device. Some corporate distribution agreements will end up satisfactory for the founders of the start-up. However, many will end up frustrated by the loss of control, by the sales results and the subsequent sharp decline in the company’s value. Or:
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