At the 2025 HealthInvestor Healthcare Summit in London, healthtech took centre stage with its own dedicated stream for the first time, recognising digital health’s growing influence in health and social care as well as its vital role in the UK economy. I joined Paul Hemmings, partner and co-founder of Nelson Advisors, for a session focused on the nuts and bolts of deal structuring in healthtech.
Whether you’re a founder navigating cash-flow challenges or an established business eyeing profitability and exit options, deal structure matters. The session highlighted how factors like company size, location, products/services and incentives such as EIS can shape your options and compliance requirements. We also explored how the UK’s evolving investment landscape affects companies from startup to scale up and beyond.
Here are the key takeaways for healthtech businesses looking to make their next move.
Healthcare isn’t the place to “move fast and break things.” Compliance, effective clinical and corporate governance, and strong partnerships are essential from the outset. Regulatory and other due diligence assessments covering areas like medical device classification, AI compliance, IP ownership, and data protection shouldn’t be left until an investment round or a sale process is underway. Investors and buyers will walk away if relevant consents and registrations aren’t already in place and requirements being complied with.
Founders often rush into institutional funding too early. Angel investors and experienced entrepreneurs can provide capital and guidance without the heavy terms that come with institutional money, such as board seats, veto rights, and complex term sheets. If your business is still validating its market or ensuring it has all necessary authorisations, angel funding may be the better route. Wait until you have traction to negotiate from a position of strength.
Tax incentives like the (Seed) Enterprise Investment Scheme ((S)EIS) remain a powerful tool for early-stage healthtech companies, attracting investors by offering tax reliefs and encouraging capital flow into the sector. However, the structure and timing of funding rounds - especially when using convertible instruments rather than advance subscription agreements - can affect (S)EIS eligibility. Founders should seek specialist advice to ensure that their fundraising approach doesn’t inadvertently disqualify them or their investors from these valuable incentives.
As companies progress through multiple funding rounds often involving angels, friends and family, and latterly institutional investors, cap tables can quickly become crowded and complex. A messy or fragmented cap table can be a major obstacle during future fundraising or M&A, making it harder to secure new investment or close a sale. Founders should regularly review and simplify their cap table where possible, ensure clear vesting schedules, and be mindful of how each new investor or share class affects control and decision-making down the line. A clean cap table makes you more investable - and more saleable – as do well-drafted drag along provisions to enable founders and lead investors to carry minority shareholders with them.
Convertible loan notes and advance subscription agreements are common in early-stage funding, including for bridging rounds or Series A extensions. However, these instruments can cause real headaches during M&A. Unconverted notes may include steep repayment obligations or complex consent rights that can block deals. Founders should always consider whether a deal structure could make the business harder to sell or raise money for in the future.
Anti-dilution clauses can protect investors in down rounds, but full ratchets are founder-hostile; a weighted average approach is usually fairer. If you must give anti-dilution protections, negotiate something in return, like shorter vesting or limits on duration. Liquidation preferences can also be a minefield. While a 1x non-participating preference is relatively standard, more aggressive terms can leave founders with little or nothing at exit, especially if the business sells below expectations.
Governance evolves as a company grows, but founders shouldn’t give up control prematurely. A board seat for someone with just 5 -10% ownership might sound reasonable, but should only be conceded if they or their representative bring real value. When negotiating board roles, test what value each person will add, whether through introductions, sector expertise, guidance, or strategic input.
Not all investors are created equal. The best ones bring genuine value, others just money and restrictions on control. Founders should do “reverse diligence” and ask what investors will contribute beyond capital. The best investors challenge, support, and help you succeed - not just monitor your progress. Cultural and strategic alignment is as important as valuation.
The right deal structure doesn’t just close the next round - it sets the foundation for long-term success. Founders who stay ahead of regulatory, structural, and investor dynamics will be far better positioned when opportunity knocks, both in terms of speed of execution and extracting real value.
For more information, please contact our healthcare, digital health and life sciences team.
Jocelyn Ormond
Partner and Head of the Healthcare & Life Sciences Sector
+44 (0)7872677082 j.ormond@ashfords.co.uk View more
