Three Pillars, One Foundation: Aligning IVD Development, Regulation & Fundraising from Day One

The Alignment Framework
Where the Alignment Breaks Down
Why Your CDMO Choice Matters Here
Planning Your Development, Regulatory and Capital Strategy Together
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In our latest blog, Chris Yates, CCO & President of Abingdon Health USA Inc, and Jonathan Sharp, Director and Co-Founder of Cerelo Advisory – a leading corporate advisory firm – explain the connection between diagnostic development milestones, regulatory progress, and fundraising stages; and how getting the alignment right can protect your valuation, your timeline, and your route to market.

Abingdon Health and its subsidiaries CS Lifesciences, IVDeology and Abingdon Analytical work with founders across a range of IVD (in vitro diagnostics) and MedTech sectors. Many of our partners are working through the fundraising process and we always try to support founders and CEOs in aligning their development strategy with their fundraising strategy. Often we are also asked to discuss the development plans with funders as they conduct due diligence on possible investment and gain confidence on the timing of milestones, the management of risk and the path to market. As a former investment banker advising healthcare companies on fundraisings and now a CDMO (contract development and manufacturing organisation) partner to IVD and MedTech companies, I have seen both aspects of this and I understand the challenges in synchronising development, regulatory progress, and fundraising. I’m also delighted that Jonny Sharp, co-founder of corporate advisory group Cerelo has added his insights and perspectives to this article, given his extensive experience of working with VC (venture capitalists) and other finance providers.

Most IVD and MedTech founders building a diagnostic product understand the technical development process in principle: feasibility, proof of concept, design verification, validation, regulatory submission. And most understand their fundraising trajectory: pre-seed to build the hypothesis, seed to prove it works, Series A to scale, Series B to commercialise. However, it is often difficult to map the technical development process and the regulatory pathway together against the fundraising timeline. There is no one-size-fits-all solution; it will vary according to the product and its development risk profile, the regulatory route selected, the fundraising process to date, the current investor base, the fund raise being targeted, the specific investor profile and the broader market environment. It’s essential for these three timelines to be tightly aligned, and investor expectations need to be anchored to both the development pathway and the regulatory route to market.

We regularly see companies that raised a strong Series A but burned months of runway because their lateral flow development was not at the stage investors assumed, or because their regulatory strategy was undefined. From a fundraising perspective, this is one of the fastest ways to damage credibility with an existing syndicate and to complicate the next round. Investors remember missed milestones more than they remember the pitch that set them. We see projects that completed impressive technical feasibility work, but cannot raise their next round because they lack the design review documentation, clinical data, or a costed regulatory plan that institutional investors and strategic partners expect to see.

The way to understand the IVD design review process is it’s not just as a regulatory requirement. It is the framework that proves to investors, partners, and eventually regulators, that your product development is systematic, controlled, and on track. Understanding how design review milestones and regulatory milestones map to fundraising stages can fundamentally change how you plan your development, your regulatory strategy, and your capital deployment.

The Alignment Framework

In vitro diagnostics development under design controls follows a structured sequence of review gates, each of which runs in parallel with an evolving regulatory process. Each gate produces specific deliverables that serve a dual purpose: they satisfy the requirement for systematic design controls under FDA 21 CFR 820 and ISO 13485, and they provide investors with objective evidence that development risk is being retired in a disciplined and regulatorily credible way.

Here is how design review stages, regulatory milestones and fundraising stages typically align for a lateral flow diagnostic device development company. Timelines will vary depending on assay complexity, regulatory pathway, and sample matrix; but the general mapping holds across most IVD development programmes.

Table 1: Funding Design Review Gate Regulatory Milestone Map Outline

As previously mentioned, specific circumstances may change the alignment of funding stage against the design review gate and regulatory milestone. However, this outline provides a guide as you map your funding plan against the technical and regulatory development plan. A great starting point is to work with a reputable CDMO to build out a full development plan from feasibility through to manufacturing, and this will give you an indication of timing and costing. From this you can plot the funding requirements and start to build an investor strategy. The step-up in valuation from Seed to Series A is driven less by the science itself and more by the evidence that development risk is being mitigated on a predictable timeline; and that is exactly what the design review and regulatory gates are designed to demonstrate. This outline also enables providing valuable due diligence information for your data room and can be backed up by direct discussions between your investors and CDMO partner to gain confidence in the process.

One aspect we strongly recommend to our customers is commissioning a Regulatory Strategy Plan, preferably combined with an FDA pre-submission (Q-Sub), as early as possible. This is an in-depth analysis of your regulatory path to market covering performance evaluation requirements, clinical trial design, and submission timelines and costings. For clinical IVDs this is a critical piece of the jigsaw: it ticks a lot of boxes for investors, provides real clarity on timescales and cost, and demonstrates that you understand the full journey from development through to regulatory clearance or approval.

Where the Alignment Breaks Down

The most common and most expensive misalignment we see is companies that raise Series A capital on the strength of promising feasibility data, but have neither completed the design input and design output documentation nor defined a credible regulatory strategy. The science works in the lab, but the development process is not under formal design controls and the regulatory pathway has not been properly scoped. When these companies approach Series B investors or strategic partners, the due diligence process reveals gaps that require months of remediation; months they are spending funded runway to fill. Institutional Series B investors rarely wait for remediation. They either re-price the round, insist on a bridge at potentially unattractive terms, or walk away entirely. The cost of fixing design-control gaps is almost always paid in dilution, not just time.

The reverse problem is equally damaging. Some companies invest heavily in formal design documentation and regulatory consultancy from day one, burning pre-seed and seed capital before they have established that the core assay concept is technically viable. Design controls exist to manage risk in a proven concept, not to validate an unproven one. Similarly, commissioning a full regulatory strategy before you have confirmed your target product profile and primary market is premature spending.

The right approach is progressive formality. At pre-seed and seed, your development should be rigorous but not burdened by full design control documentation, though you should have at minimum scoped your regulatory pathway and classified your IVD diagnostic device. As you approach Series A, formal design controls should be initiated, design inputs documented, design outputs defined, verification protocols established, and a pre-submission meeting completed with the FDA and/or other chosen regulatory authorities. By Series B, you should have a complete design history file and a regulatory submission filed or imminently ready, telling the story of a systematic, controlled development process from concept through clinical validation.

Why Your CDMO Choice Matters Here

This is where the choice of development partner becomes a fundraising decision, not just a technical one. A CDMO that understands design controls and can guide your documentation strategy from the outset saves you from the remediation trap that trips up so many Series A companies. An experienced lateral flow CDMO will know what level of documentation is appropriate at each stage, enough to satisfy future regulatory and investor scrutiny without over-engineering the process at a point when capital should be focused on technical risk reduction.

A CDMO with an integrated regulatory capability is particularly valuable because it allows you to synchronise your regulatory strategy alongside your development and fundraising strategies from day one. Rather than engaging a separate regulatory consultant at Series A, when the clock is already running, an integrated partner can ensure your regulatory pathway is defined, your pre-submission is filed at the right time, and your design controls are structured to meet the evidentiary standards your chosen submission type requires.

The ideal partner also understands design-for-manufacture from the beginning of development, ensuring that the assay you verify and validate is one that can actually be produced at commercial scale. Companies that develop with one team and then transfer to a separate manufacturer frequently discover that their verified design does not translate to production conditions, requiring design changes that invalidate previous verification work and reset the regulatory timeline. Finally, a CDMO partner experienced at working with customers’ investors is incredibly helpful. The ability for investors to triangulate what founders tell them with the CDMO partner can provide a great deal of confidence and ultimately speed up the due diligence process. In writing this article, Chris shared with Jonny that he spends a fair amount of time talking to the investors and potential investors of Abingdon Health’s customers, providing them with insights into the development and regulatory process and giving them confidence in the approach.

Planning Your Development, Regulatory and Capital Strategy Together

The founders who navigate this most effectively treat their IVD design review milestones and regulatory milestones as investor milestones.

Each design review gate produces deliverables that become evidence in your next fundraising narrative, and each regulatory milestone de-risks the story for the next tier of investors. Practically, this means design history file and regulatory correspondence are not just compliance artefacts, they are core data room documents. Completed feasibility with a defined regulatory pathway supports your seed raise. A locked design with verification results, a manufacturing strategy, and a filed pre-submission meeting supports Series A. Clinical validation data with a regulatory submission filed (or imminent) supports Series B.

This means your development plan, your regulatory plan, and your fundraising plan should be built together, not sequentially. Jonny’s advice is to ask yourself, before you raise your next round: “what design review gate will we have completed, and what regulatory milestone will we have achieved, by the time this capital runs out?” If the answer does not correspond to a meaningful milestone that the next tier of investors will recognise and that regulators will expect, you have a planning problem that no amount of technical brilliance will solve.

The diagnostic companies that raise efficiently and develop on schedule are those that understand this three-way alignment from day one. They choose development partners who can guide the process from feasibility through design transfer and regulatory submission, they document progressively rather than retroactively; and they plan their capital deployment around the design review and regulatory gates that de-risk product development for both regulators and investors.

Looking for Support?

The team at Abingdon Health has successfully navigated pre-seed funding – Series raises all the way through to IPO and secondary placings – and we work closely with founders and CEOs of our commercial partners to support their development, regulatory and fundraising strategies. Abingdon Health’s service capabilities include integrated lateral flow development, IVD technical transfer, regulatory affairs and commercial manufacturing services from facilities in Madison, Wisconsin USA and York, UK. Our dual-site capability enables companies to develop and manufacture close to their primary markets, with regulatory expertise supporting FDA 510(k), PMA, and CE-IVDR submissions. Get in touch (below) to explore how our integrated approach can accelerate your path to market.

Cerelo Advisory have a track record of working with a range of technology customers, advising category-leading, high-growth companies and entrepreneurs to raise capital and transform the growth of their businesses. Get in touch to see how we can support your growth plans.