This is the first in a series of articles designed to provide SXSW and LSI USA ’26 attendees and other MedTech professionals with practical considerations for efficiently executing mission-critical life science deals.

Most MedTech companies scale through collaboration.

Early traction often comes from a health system pilot, an academic partnership, a co-development arrangement, or a strategic enterprise customer willing to move first.

That is normal.

What matters is how those early relationships are structured. Those documents are what investors and buyers read later.

Governance Is Not an Afterthought

In early-stage collaboration, governance often seems simple. Everyone is aligned. Decisions get made smoothly.

The issues tend to surface when capital is involved.

Investors ask:

• Who controls product direction?
• Who controls pricing?
• Who can block expansion into adjacent markets?
• Does any partner have approval rights?
• What happens if the relationship breaks down?

We often see advisory committees evolve into approval bodies once money enters the picture. Supermajority provisions that seemed reasonable at formation can create deal risk during a financing.

The collaboration itself is rarely the problem. It’s the decision rights and future considerations that can create some conflict.

If the governance structure only works with one partner, it usually does not work with the second.

Platform Dependence and Concentration Risk

Many MedTech companies depend heavily on one institution or strategic partner at the outset.

That dependence can create credibility and revenue.

The question is whether the structure allows:

• Migration to additional partners or sublicensing.
• Reuse of improvements across customers.
• Deployment in competing systems.
• Expansion into new verticals.
• Finding a new strategic partner if the deal sours.

Revenue concentration shows up in the numbers. Structural concentration shows up in the contracts.

We regularly see early agreements that grant broad field exclusivity or approval rights over adjacent use cases. Those provisions become leverage points later.

IP and Improvement Rights

Founders often focus on patent ownership. That’s important. In modern MedTech, value is often tied to workflow integration, embedded software, AI models, training data, and iterative product improvements.

If improvement rights and reuse rights are not clearly preserved, that issue surfaces quickly in diligence. The details matter, and they vary by device and software model.

Investors also look at whether the partner or the partner’s customers could use the collaboration to build a competing product. If the granted rights are too broad, that risk is real.

Those specifics are often negotiated early and revisited later when capital is involved. They are rarely easy to unwind once revenue depends on the relationship.

Data Rights and Commercial Use

In many transactions, data rights drive value.

Access is not the same as commercial rights.

Investors look for clarity around:

• Rights to aggregate and de-identify data.
• Rights to use data for product improvement.
• Restrictions tied to legal requirements, or institutional policy.
• Limitations on cross-customer analytics.
• Data ownership and licensing.
• Rights to use data or products/processes derived from data with different customers.
• Downstream restrictions.

If a company cannot clearly explain its data rights, perceived risk increases.

This is especially true where AI tools are involved. Model training and refinement depend on defined rights to use and improve datasets.

We often see data use agreements that permit use for a specific study but not for broader product development. The specifics depend on the research and institutional agreements in place. That distinction matters once growth capital is involved.

Royalties and Other Commercial Terms

Early-stage companies usually focus on financial considerations that work for the company as is. This makes sense. Time to market matters and bigger partners can be slow, so taking financial terms that work today often feels reasonable.

Sophisticated teams negotiate financial considerations with an acquisition or later stage commercials in mind. Bigger companies often structure sales with volume discounts, packaged goods/services, and other terms that require financial flexibility. If royalties or other commercial terms cut too far into margins on a key product, then an acquirer might view this as a serious diligence risk.

But margin structure becomes a diligence topic quickly. If royalties, revenue shares, or pricing constraints cut too far into margins on a core product, an investor or buyer will treat it as deal risk.

Experienced teams build in options: buy-outs, step-downs, or change-of-control mechanics that keep the economics workable if the company scales or sells.  

Exclusivity and Change-of-Control Provisions

Early partners sometimes request exclusivity. Sometimes it is narrow. Sometimes it is broader than founders realize.

Field or geographic exclusivity can limit expansion into adjacent markets. That limitation affects valuation.

Change-of-control provisions deserve equal attention. We regularly see termination rights tied to a sale of the company. That creates transaction risk and negotiating leverage at the wrong time.

These provisions are often agreed to early in exchange for validation or revenue. They should be reviewed with financing and exit in mind.

What Experienced Teams Do Differently

Teams that manage these issues well tend to:

• Define decision rights clearly and narrowly.
• Separate advisory input from operational control.
• Preserve reuse rights for improvements.
• Limit exclusivity to defined pilots or fields.
• Draft agreements assuming they will be reviewed in diligence.
• Review royalties and other commercial terms with a next stage in mind.
• Negotiate deal terms to preserve financing and exit flexibility.

You don’t need to be adversarial. You need to be deliberate.

Most MedTech collaborations are formed with good intent. The issue is how the structure holds up later.

Early documents tend to last longer than expected. They often define how much flexibility a company has when capital comes in or when a buyer is evaluating risk. Founders and investors who understand this dynamic are better positioned to build companies that can scale and exit without unnecessary deal risk.