Leveling Up Startups: How Fogarty Institute’s Stage-Gated Model and Resource Empowerment Drive MedTech Companies to 'Max-Level Graduation'

On May 11, 2021, UltraSight, a digital health company specializing in cardiac imaging and other fields, announced the completion of its $13 million Series B financing. In the funding announcement, UltraSight CEO Davidi Vortman extended special thanks to the Fogarty Institute.

Why the special acknowledgment? In fact, UltraSight was the first “graduate” of the Company Accelerator Program (CAP) launched by the Fogarty Institute in 2020. When this startup initially joined the Fogarty Institute, it was still in the early stages of formulating its business strategy and validating its market. Today, it has rapidly completed two rounds of financing, and multiple products in its pipeline have received regulatory approval and been launched on the market. This achievement is certainly attributable to the efforts made by the Fogarty Institute.

It is reported that the Fogarty Institute is a globally renowned educational non-profit incubator located within El Camino Hospital in the heart of Silicon Valley, USA. Its primary mission is to reduce regulatory and fundraising hurdles for medical device startups, provide a safe environment for their innovations to thrive, and educate and train the next generation of medical innovators.

According to statistical data, in 2020, nine startups initiated and incubated by the Fogarty Institute collectively secured over $10 million in funding and donations, while four startups that graduated from the Fogarty Institute obtained nearly $20 million in funding. In 2021, HeartFlow, the Fogarty Institute’s first resident company, successfully went public on the New York Stock Exchange with a valuation of $400 million.

For a non-profit incubator operating independently during the pandemic, achieving such milestones is quite remarkable, especially given that it was founded less than 15 years ago.

So, what are the unique advantages of the Fogarty Institute in incubating early-stage medical projects? And how does it help startups survive amidst the "howling gales"? To unravel this mystery, VCBeat’s Orange Bureau conducted an in-depth analysis of the Fogarty Institute’s incubation model.

The founder of the Fogarty Institute is Thomas J. Fogarty, a renowned cardiac surgeon. This medical professor, hailed in the United States as the “Father of Medical Device Invention,” faced considerable hardships on his path to entrepreneurship.

Although Fogarty’s academic performance was less than ideal due to his passion for various inventions, he was fortunate to encounter an outstanding mentor. Under the mentor’s guidance and encouragement, Fogarty gradually embarked on a career in medicine and, after graduation, became a surgeon at a renowned hospital in the United States.

The encouragement and meticulous guidance from his mentor planted a seed in Fogarty’s heart. “Someone (Cranley, Fogarty’s mentor) truly invested a significant amount of time and energy in him,” which was a major reason why he wanted to establish the Fogarty Institute.

Because, in Fogarty’s view, the Fogarty Institute can truly help young innovators who are eager to pursue innovation and who greatly need mentors to guide and encourage them in mastering the skill of “innovation.”

However, the entrepreneurial journey should not rely solely on mentorship; it also requires a gateway to connect with innovative resources. During his own entrepreneurial endeavors, Fogarty discovered that medical device companies require substantial capital investment and face regulatory risks during the registration process, leading many venture capital firms to hesitate in investing.

To truly help these innovative projects overcome challenges, reduce the regulatory and fundraising burdens for startups, and assist doctors and engineers in bringing their concepts and products to market, Professor Fogarty established the Fogarty Institute in 2007, embarking on its journey of corporate incubation.

This year marks the 15th anniversary of the Fogarty Institute. After 15 years of exploration, the Fogarty Institute has developed a unique and proven incubation model—a vertical development model that combines continuity with flexibility.

How should this be understood specifically?

It is reported that under this development model, each innovator and their team or enterprise can apply for one of the following three vertically sequential incubation programs based on their goals or stage of development: the Invention Accelerator Program (IAP), the Company Accelerator Program (CAP), and the Company-in-Residence Program (CIR).

The Invention Accelerator Program (IAP) focuses on the early “concept” stage, collaborating with clinicians, researchers, and university professors to assess the drivers and barriers to development, thereby helping them transform ideas into mature, innovative inventions.

“Startups” applying to participate in this program are generally still in the concept ideation stage. The IAP will assist these nascent applicants by defining their needs, evaluating solutions, demonstrating through prototypes and models, and helping them understand relevant topics such as intellectual property (IP), market analysis, and regulatory pathways.

Throughout this process, the Fogarty Institute will connect them with an extensive network of partners and resources, including healthcare institutions, government organizations, and industry technology experts.

The program will last for three to six months. Notably, it is a free service offered to inventors, and the Fogarty Institute will not claim any intellectual property rights or equity in future companies.

After clearing the IAP “levels,” the next step is to enter the Company Accelerator Program (CAP). This program primarily targets small startups—enterprises whose concepts and business plans have been preliminarily validated through the IAP program, enabling them to establish their companies on an initial basis.

These early-stage companies often need to develop further strategic plans and secure early-stage funding. Therefore, the Fogarty Institute “incubates” the ideas of these startups through structured timelines and mentorship, such as optimizing their pitch platforms, clinical or regulatory pathways, or providing additional commercialization advice.

The program lasts for six months, during which participants spend several days each week co-working at the Fogarty Institute’s facilities. Companies successfully incubated under the CAP program will have the opportunity to advance to the next stage of incubation—the Company-in-Residence (CIR) program.

The Company-in-Residence Program (CIP) is a flagship initiative of the Fogarty Institute and represents the most advanced stage of its tiered incubation model. To qualify for this stage, applicant companies must be formally incorporated, have a full-time CEO, possess a well-defined product concept, and address unmet clinical needs or offer significant improvements over existing therapies.

Under this program, the Fogarty Institute will provide companies and their teams with an “immersive” experience. Incubated companies will work alongside designated Fogarty mentors and other executives in office and laboratory spaces provided by the Fogarty Institute. These individuals will form an accessible, representative senior management team that rigorously oversees and manages the company’s operations across research and development, intellectual property, quality systems, clinical and regulatory affairs, operations, finance, commercial strategy, and human resources management.

Such close and long-term interaction enables Fogarty Institute staff to gain deep insights into the actual conditions of incubated enterprises and provide tailored solutions. As the founder of Fogarty Institute stated, “Roll up your sleeves to strategize and solve problems alongside entrepreneurs, rather than directing from the sidelines.”

Overall, these three programs provide startups with a comprehensive incubation package. In practice, however, applicants are not required to start with the first step, the IAP program; instead, they can select the appropriate program stage based on their specific circumstances. This “flexibility” enables startups to minimize unnecessary resource expenditure while rapidly identifying their strategic positioning and advancing more efficiently.

Fogarty Institute’s distinctive incubation model has made it highly favored by entrepreneurs and startups, but this is not the sole reason; its extensive resource ecosystem is the true key driver behind Fogarty Institute’s emergence as an innovation benchmark.
Its core capabilities are mainly reflected in two aspects:

On one hand, there is extensive and in-depth education. Education has always been the core focus of American incubators, and the education provided by the Fogarty Institute is not only aimed at incubated enterprises but also at "young people" with innovative capabilities.

The Fogarty Institute has established a team of dedicated, full-time mentors. The majority of these resident experts are executives from medical device and health technology companies, each boasting over 25 years of industry experience. Consequently, these mentors not only leverage their extensive expertise to guide new CEOs in utilizing internal and external resources but also, by virtue of their full-time commitment, provide enhanced guidance and support through daily interactions with incubated companies.

In addition to online guidance from full-time mentors, the Fogarty Institute also invites external experts to engage on topics of interest, facilitating connections between entrepreneurs and industry leaders through workshops or short courses.

Encouraged by our founder, Professor Fogarty, the Fogarty Institute is deeply committed to providing educational opportunities for young people. To support college and high school students who are interested in medical technology and its commercialization, or who simply wish to gain a deeper understanding of the healthcare industry, the Fogarty Institute has established dedicated summer internships that offer hands-on practical experience.

For example, the Lefteroff program for university students hosts participants from diverse regions around the world each summer. The Fogarty Institute provides them with opportunities to engage in projects alongside startups and medtech partners, while also involving them in structured courses focused on career development and broadening their perspectives on the healthcare innovation ecosystem.

Summer programs for high school students also kick off in the summer. The Fogarty Institute has partnered with Stanford Online High School to enrich its curriculum on medical technology innovation and business, fostering students’ passion for life sciences.

Another aspect is its strong capability for resource synergy. A visit to the official website of the Fogarty Institute reveals the following statement: “The Fogarty Institute has a unique ability to build partnerships and bridge gaps among groups that traditionally do not collaborate with one another.”

Indeed, this is the case. The Fogarty Institute first established long-term partnerships with El Camino Hospital and Stanford University’s Byers Center for Biodesign, which not only brought abundant medical resources to the Fogarty Institute but also provided innovation momentum to both organizations.

For example, physicians from El Camino Hospital participate in the Fogarty Institute’s Innovation Accelerator Program (IAP) to translate ideas from medical practice into reality. In return, El Camino Hospital provides Fogarty fellows with clinical and managerial practical experience and education, thereby establishing an ecosystem characterized by bidirectional interaction and mutual benefit.

In addition to collaborating with relevant research institutions, the Fogarty Institute also establishes connections with U.S. government agencies—the Food and Drug Administration (FDA) and the Centers for Medicare & Medicaid Services (CMS)—which is one of the key reasons for the Fogarty Institute’s strong incubation capabilities.

By collaborating with the FDA and having its leaders directly participate in a week-long program at the Fogarty Institute, cooperation between entrepreneurs and regulatory agencies has been significantly enhanced, improving mutual understanding. This collaboration has also yielded substantial results: it not only shortened the time-to-market for corporate products but also drove improvements in the FDA’s drug management processes, thereby accelerating the delivery of life-saving technologies to patients.

The collaboration between the Fogarty Institute and CMS is primarily dedicated to addressing the greatest challenge faced by medical technology companies: the complex reimbursement process for new medical devices.

In addition, the Fogarty Institute collaborates with several medical technology strategy organizations, such as medtech Strategiator (MTS), a proactive advocate in the healthcare industry, and MDMA, which voices the interests of small innovative and entrepreneurial medical technology companies.

Diversity is also a key indicator of the Fogarty Institute’s development. By actively collaborating with organizations that focus on gender and racial diversity, the Fogarty Institute demonstrates its humanistic commitment as a non-profit institution.

A unique “clearance mode” and robust external resources, coupled with seemingly simple and transparent operational mechanisms, have enabled these medical device startups to develop sharp wings by the time they “graduate.” This will empower them with greater confidence to withstand subsequent market risks and drive their continuous ascent to the pinnacle.