Launching a healthcare startup or medtech company is not just a technological challenge; it’s a legal and regulatory one. Founders who ignore early-stage compliance, privacy rules, and structural housekeeping risk burning investor bridges and triggering enforcement.
Here is a strategic legal due diligence checklist for healthcare startups in their first 100 days.
Why the First 100 Days Matter
Whether you’re building a remote patient monitoring app, a telemedicine SaaS platform, or a biotech diagnostic tool, your first 100 days set the legal tone for everything that follows.
By addressing core due diligence items early, you:
- Eliminate red flags that can block future funding rounds
- Ensure IP ownership is clean and enforceable
- Avoid violations of healthcare privacy laws (like HIPAA, CPRA, and more)
- Show maturity to investors evaluating your regulatory roadmap
1. Verify Foundational Corporate Hygiene
Healthcare VCs will walk away from even the most promising startup if your cap table is murky or your corporate records are disorganized. Early diligence means:
- Forming the appropriate entity (typically a Delaware C-Corp)
- Assigning IP to the company from all founders and contributors
- Drafting bylaws or operating agreements
- Adopting board resolutions for stock issuance
- Implementing founder vesting and equity schedules
Every dollar of investment depends on a clean foundation.
2. Confirm Ownership of All IP and Data
Medical startups often build products using:
- University-generated research
- Outside developers
- Licensed algorithms or models
To ensure no IP disputes arise later, execute:
- Invention Assignment Agreements with all contributors
- Developer contracts that include “work for hire” clauses
- Clear documentation of source data rights and restrictions
If your startup uses AI or machine learning, ensure rights to training datasets are documented, especially if they include PHI (Protected Health Information).
3. Map and Mitigate HIPAA Exposure
If your software collects or transmits health information, HIPAA may apply. Even if you think you’re “not subject to HIPAA,” investors will ask:
- Are you a Covered Entity or Business Associate?
- Do you sign Business Associate Agreements (BAAs)?
- Are you implementing administrative, physical, and technical safeguards?
Startups must:
- Perform a HIPAA risk assessment
- Implement basic policies (security, privacy, breach notification)
- Sign and store BAAs with vendors and clients
For mobile apps, also consider CPRA compliance if data from California residents is collected.
4. Avoid Unlawful Medical Claims
Marketing copy is low-hanging fruit for regulators. Avoid statements like:
“Diagnoses skin cancer with 98% accuracy.”
Unless you have:
- Clinical validation
- FDA clearance (for regulated devices)
- Legal review of claims
The FTC, FDA, and state AGs actively monitor health app marketing. Build compliance reviews into your marketing workflows.
5. Get Investor Due Diligence Ready
VCs and strategic investors will conduct a thorough review before funding. Here’s what they’ll want to see:
- Clean cap table and stock issuance docs
- Privacy policies and HIPAA assessments
- Data processing agreements and terms of service
- Pending IP filings or patents
- Regulatory strategy (e.g., FDA pre-market review plans)
Prepare a secure data room with labeled folders for:
- Legal entity formation
- IP assignments
- Customer contracts
- Regulatory documents
- Marketing claims/legal review memos
The more prepared you are, the easier it is to raise capital.
Best Healthcare Startup Attorney
Founders in the healthcare space operate under a magnifying glass. Getting early advice from a seasoned startup and technology attorney can mean the difference between regulatory traction and ruin.
David Nima Sharifi, Esq., founder of the L.A. Tech and Media Law Firm, is a nationally recognized IP and technology attorney with decades of experience in M&A transactions, startup structuring, and high-stakes intellectual property protection, focused on digital assets and tech innovation. Quoted in the Wall Street Journal and recognized among the Top 30 New Media and E-Commerce Attorneys by the Los Angeles Business Journal, David regularly advises founders, investors, and acquirers on the legal infrastructure of innovation.
Schedule your confidential consultation now by visiting L.A. Tech and Media Law Firm or using our secure contact form.
