No secret that the Administration is cutting funding in many ways, including University research and the FDA.  Although we do not know the full extent of these cuts as to substance and time, no doubt start-ups and M&A activity will be affected.

Many start-ups roll out of university research.  With less funding new enterprises will need to spin out more quickly, meaning need for more time and money to get to an inflection point in the business plan.  VCs will evaluate the greater risk, may step back or alternately price their investments with greater return and thus dilute founders.

Cuts at FDA will negatively impact FDA ability to monitor technology progress, will increase review times, and similarly will increase investment risk and make early stage money more expensive. Delay means longer to get to market/cash flow.

Depending on the facts of a given case, M&A approaches will be impacted; in some instances emerging companies may join forces for greater strength to persevere; in some cases doing so might simply make the investment nut just so much larger.  Established companies may be tempted to do a quick early-stage acquisition, which could enhance existing products and/or fund further and faster development, but with less return to entrepreneurs and to any seed stage investors.  Low current value also could attract larger enterprises with established markets to “catch and kill” innovation at a low price.

Further afield, think about possible shrinking of Federal financial support for insuring/covering medical costs.  Markets for cures for less common diseases, often with high development cost for palliatives, may be negatively impacted as successful costly cures may not find reimbursement.

All the above also ignores a possible growing pessimism as to financial support for emerging technologies, not even just restricted to med-tech– fear and caution surrounding equity markets bespeaks difficulty in exits as well as dampening of entrepreneurial zeal.