Converting ties into trust How networks, entrepreneurial capabilities, and legitimacy, shape the survival of early-stage medical device startups

Abstract

Building and sustaining a new venture is inherently difficult with more than two-thirds never delivering a positive return to investors. The medical device industry presents a particularly interesting context in which to study this, characterised by extensive regulation, long capital-intensive development timelines, and the need to satisfy multiple demanding stakeholders, including patients, clinicians, investors, and regulatory bodies. This study explores how early-stage medical device startups (MDSs) build legitimacy through network development, and how these processes shape venture survival. An exploratory qualitative approach was adopted, drawing on fifteen semi-structured interviews with MDS founders, support organisation representatives, and experts across primarily the DACH region and the United States. The data were later analysed through thematic analysis. The findings show that transitioning from outsider to insider within the established industry network is an iterative process driven by persistent weak-tie cultivation, repeated interaction, and sustained visibility at industry events. Affiliation with supporting actors - universities, hospitals, incubators, and advisory boards - accelerates both network access and legitimacy signalling through spillover effects. Legitimacy emerges as a continuous, multi-source process in which clinical data constitutes the primary currency, but must be complemented by additional legitimacy signals to satisfy key stakeholders. Team composition is identified as a critical and often underestimated factor, with dysfunction found to actively block access to capital and damage legitimacy. The central contribution of this study is that networks, entrepreneurial capabilities, and legitimacy are interdependent and form a self-reinforcing system. Entrepreneurial capabilities function as the connective mechanism enabling founders to translate network relationships into legitimacy signals and vice versa. They enable and constrain each other, and it is the founder’s ability to develop and maintain momentum across all three simultaneously that determines early-stage MDS development.