We say this in our investment principles, and we mean it literally: the FDA pathway is a moat, not a hurdle. Companies that internalize this early build differently — and the ones that treat regulatory compliance as overhead, something to deal with after the product is built, tend to pay for it in ways that are expensive and sometimes fatal to the business.
This isn't an abstract principle. We've watched three device companies in our broader network face recalls in the past two years because quality management systems were bolted on after product launch. We've seen digital health companies lose hospital contracts because they hadn't established their HIPAA compliance posture before the security review. We've passed on companies that had brilliant technology and no coherent regulatory plan. Not because the technology wasn't real — it was — but because the regulatory path was so uncertain that the timeline to first revenue was unknowable.
What "regulatory as strategy" actually means in practice
It means the regulatory pathway shapes product decisions, not the other way around. When a device team is designing their product architecture, the 510(k) predicate search happens in parallel with the engineering spec. The intended use statement gets written and reviewed before the hardware design is locked. The risk management file (ISO 14971) starts on the first day of formal design controls, not six months before submission.
For software-enabled medical devices, this is even more important. FDA's Software as a Medical Device (SaMD) framework and the Predetermined Change Control Plan (PCCP) pathway that allows for AI/ML updates post-clearance — these aren't optional reading for digital health companies. They're the framework within which the product has to be built. A company that designs its AI diagnostic platform without understanding PCCP requirements will have to redesign significant parts of it before submission. We've seen this happen more than once.
In biotech, regulatory strategy means engaging with FDA early and formally — through pre-IND meetings, Type B meetings, and End-of-Phase 1 meetings where the clinical development plan gets validated before it's executed. The companies in our portfolio that have moved through clinical development fastest are universally the ones that invested heavily in FDA dialogue from the beginning. They didn't see those meetings as delays. They saw them as insurance against far more expensive course corrections later.
The competitive moat piece
Here's where "moat" language is apt: FDA clearance is hard to copy. A competitor can see your product, hire engineers who reverse-engineer your technology, and potentially replicate your clinical capabilities. They cannot shortcut your cleared indication, your validated manufacturing process, or your established predicate lineage. The regulatory package you build over years becomes an asset that's genuinely difficult to replicate quickly.
This is especially true in the context of FDA's CDRH Safer Technologies Program (STeP) and Breakthrough Device Designation, which provide priority review pathways for devices that address serious conditions. Companies that qualify for these programs — and are prepared to demonstrate why they qualify — get to market faster and have a defined public record of priority status that complicates the competitive picture for anyone following them. You can't buy a Breakthrough designation with speed-to-market thinking. It has to be earned over time with the right evidence package.
What regulatory competence signals to investors
We use regulatory posture as an indicator of operational maturity. A founding team that understands their regulatory path — who has articulated it clearly, who has engaged with FDA formally or through consultants, who has built their quality system with the right classification in mind — is usually a team that's doing other things well too. Regulatory thinking requires long time horizons, attention to process, and an ability to absorb and act on feedback from a demanding external party. These are the same capabilities that build good companies.
The opposite is also true. Founders who treat regulatory as an afterthought often treat other operational disciplines the same way — contracts, data governance, security, manufacturing quality. We're not looking for perfection at the early stage. We are looking for the right mentality, and it shows up most clearly in how founders talk about their regulatory plan.
Ask a founder "what's your regulatory pathway?" and you learn a lot in 60 seconds. A prepared answer tells you they've thought carefully about the hardest constraint on their timeline. A vague answer tells you something important too.
Getting started earlier than feels necessary
The most common version of "regulatory as strategy" that fails is not the team that ignores it entirely — it's the team that understands its importance but keeps delaying engagement until the product is more finished. They want to have something real to show FDA. They don't want to waste the Pre-Sub slot on questions they might be able to answer themselves later. They're waiting for the right moment.
The right moment is always earlier than it feels. FDA pre-submission meetings don't require a finished product — they require a defined question. "Is our intended use appropriate for the 510(k) pathway, and is this predicate a reasonable choice?" can be asked with nothing more than a product description and a target indication. Getting the answer in writing, before you've built the thing, is worth far more than the meeting itself. It shapes the next 18 months of development and eliminates a category of expensive surprise.
Companies that do this consistently — that treat formal FDA interaction as a standing practice rather than a one-time event — end up with both better products and better regulatory packages. That combination is what generates the moat. Not the clearance letter itself, but the process discipline that produced it.
