Background
Ecton is a startup company trying to break into the ultrasound equipment market. Started in 1996 by a team of industry veterans, Ecton’s vision is to develop products that will enable cardiac ultrasound technologies to be used as a screening and monitoring tool instead of an expensive diagnostic tool and it’s primary goal was to be acquired by a competitor. After two years of development, they’ve created a portable, hand held ultrasound device using state of the art Doppler echocardiography technology. Lightweight, affordable and easy to use, the new machine is a breakthrough in the ultrasound equipment market and has the potential to make good on their vision. However, there are a number of issues facing the firm that need to be addressed if Ecton wants to put itself in a position to commercialize the product or achieve their goal of selling out to a competitor.
Critical Issues
Should Ecton attempt to position itself in an existing market or look to create “new” markets?
Ecton has made a critical error in their product development process by building a product without a clear picture of the market the product will serve. They’ve generally assumed that their machine will be most attractive to the alternative imaging market but they don’t have any insight into what features and functions are highly valued by these alternate buyers. Identifying who their market segment should be is critical as it will help them define their priorities with future product development and enable potential acquisition targets value them when the time is right to discuss exit strategies. This is the #1 issue Ecton needs to resolve before they can do anything else.
Should Ecton pursue 3rd round funding for marketing, sales and production or should they seek an acquisition target?
The founders of the company have clearly stated that their exit strategy is to be acquired by a larger firm. They’ve taken great pains to create a financial structure that...