Nelson Advisors: Strategic Transformation in HealthTech Conformity: Scarlet and the Industrialisation of AI Medical Device Certification
Nelson Advisors: Strategic Transformation in HealthTech Conformity: Scarlet and the Industrialisation of AI Medical Device Certification
Capital Formation and Corporate Architecture
The commercialisation of software and artificial intelligence as medical devices (SaMD and AIaMD) has long encountered an operational bottleneck generated by the structural mismatch between rapid algorithmic development cycles and legacy medical device conformity assessment protocols.
Traditional certification bodies, established primarily around electromechanical and physical biomedical hardware engineering paradigms, enforce linear, document-heavy audits that frequently impose backlogs of 12 to 18 months for initial market authorisation and secondary delays of 6 to 8 months for minor algorithmic iterations. This systemic latency creates severe financial and technological risks for digital health enterprises, stranding high efficacy diagnostic and therapeutic software in bureaucratic queues while depleting venture reserves.
Scarlet was established to address this regulatory deficit by operating as an AI-native, government designated certification body engineered specifically for medical code and probabilistic systems. Headquartered in London, the organisation completed a $50 Million Series B financing round in October 2026 led by Headline, with participation from new institutional investor Notion Capital and existing venture partners Atomico, Creandum, Kindred Capital and Entrepreneurs First. Nancy Xiao McLaughlin, Partner at Headline, joined Scarlet’s board of directors in conjunction with the transaction.
The Series B capitalisation brings Scarlet’s cumulative balance sheet funding to over $75 Million, following a £6 Million seed financing in August 2022 led by Creandum and a $17.5 Million Series A round in June 2024 led by Atomico. The company has allocated this capital to finance strategic geographic expansion across the United States and the Asia Pacific (APAC) region, scale its roster of specialised algorithmic evaluators and clinical safety engineers and broaden its statutory certification scope to accommodate complex generative foundation models and multi agent clinical architectures.
Financing Round | Date Announced | Lead Investors | Capital Raised | Strategic Corporate Milestones |
Seed | August 2022 | Creandum, Entrepreneurs First | £6.0M | Initial platform architecture development; formal application for European and statutory designations. |
Series A | June 2024 | Atomico, Kindred Capital | $17.5M | Attainment of EU MDR (NB 3022) and UK MHRA (AB 8536) designations; issuance of inaugural EU MDR certificates. |
Series B | October 2026 | Headline (lead), Notion Capital, Atomico, Creandum, Kindred Capital, Entrepreneurs First | $50.0M | Expansion into the United States and APAC; scaling technical review infrastructure; deployment of continuous algorithmic surveillance systems. |
Tri-Partite Regulatory Designation and Institutional Positioning
Scarlet was co founded in London in 2021 by Chief Executive Officer James Dewar and Chief Technology Officer Jamie Cox. The founders previously spearheaded machine learning research and clinical software engineering at Babylon Health, a London-based digital healthcare pioneer.
Dewar, an Imperial College London graduate with an advanced degree in artificial intelligence, and Cox, a University of Bristol surgical and medical graduate who transitioned into systems engineering, observed firsthand how legacy notified bodies struggled with code audits, modern software testing regimens and continuous delivery models.
Recognising that consultative services alone could not resolve systemic regulatory delays, the founders established Scarlet to operate directly as a statutory conformity assessment body. Rather than issuing rapid commercial certifications, the organisation spent its initial three years navigating rigorous institutional audits by competent authorities across European, British and American regulatory bodies. This foundational investment established an institutional barrier to entry, transforming Scarlet into a designated certification body across three primary jurisdictions.
In the European Union, Scarlet operates as Notified Body 3022 via its registered entity, Scarlet NB B.V., located in Amsterdam, Netherlands. Designated on November 27th, 2023, under the European Medical Device Regulation (EU MDR 2017/745), Scarlet became the 42nd EU MDR Notified Body cataloged on the European Commission's New Approach Notified and Designated Organisations (NANDO) information system. Supervised by the Dutch Ministry of Health, Welfare and Sport through the Health and Youth Care Inspectorate (IGJ), Scarlet remains the sole organisation among approximately 52 total MDR-designated notified bodies operating with an exclusive statutory scope dedicated to software (code MDA 0315: Active non-implantable therapeutic devices and general active non-implantable devices).
Within the United Kingdom, Scarlet operates as UK Approved Body 8536 via Scarlet NB UK Ltd, audited and designated by the Medicines and Healthcare products Regulatory Agency (MHRA) under the Medical Devices Regulations 2002 (SI 2002 No 618, as amended). This statutory accreditation authorises the company to conduct conformity assessments and grant the UK Conformity Assessed (UKCA) marking for medical software across Great Britain.
In the United States, Scarlet is recognised by the Food and Drug Administration (FDA) as an Accredited Third Party Review Organization under the 510(k) Third Party Review Program (3P510k). Operating under Scarlet NB B.V., this accreditation authorises Scarlet to execute primary premarket reviews across eligible Class II medical device product codes spanning diagnostic radiology, computerised physiological monitors, computational calculators and clinical software, effectively providing an alternative to direct FDA premarket review queues.
Beyond pre market device authorisations, Scarlet acts as an accredited registrar for international management systems, auditing and issuing certifications for ISO 13485 (Medical Device Quality Management Systems), ISO/IEC 27001 (Information Security Management), and ISO/IEC 42001 (Artificial Intelligence Management Systems), while supporting global audit consolidation via the Medical Device Single Audit Program (MDSAP).
Regulatory Jurisdiction | Competent Authority | Designated Legal Entity | Identification Reference | Scope of Statutory Authority |
European Union | European Commission / IGJ (Netherlands) | Scarlet NB B.V. | Notified Body 3022 | EU MDR 2017/745 Annex IX & XI; Code MDA 0315 (Medical Software) Class IIa, IIb, III. |
United Kingdom | MHRA | Scarlet NB UK Ltd | Approved Body 8536 | UK MDR 2002 (SI 2002 No 618); UKCA certification for active software devices. |
United States | US FDA | Scarlet NB B.V. | FDA 3P510k Accredited Body | 510(k) Third Party Review across eligible Class II SaMD and algorithmic categories. |
International | IAF / National Accreditation Boards | Scarlet Global Holdings Ltd | Multiple Standard Registrar | ISO 13485, ISO/IEC 27001, ISO/IEC 42001, MDSAP pathways. |
Macro Regulatory Drivers and the SaMD Conformity Deficit
The systemic bottleneck in medical software commercialization stems directly from macro-regulatory structural shifts, most visibly demonstrated by the enforcement of EU MDR Annex VIII Rule 11. Under the predecessor Medical Devices Directive (MDD 93/42/EEC), the majority of standalone healthcare software was categorised as Class I, enabling developers to enter the market via self certification without prior notified body intervention. Rule 11 removed this self regulatory framework by establishing classification thresholds tied directly to the clinical significance of software outputs.
Under Rule 11, any software intended to provide information used to make decisions with diagnostic or therapeutic purposes is categorised at a minimum as Class IIa. If those decisions could lead to a serious deterioration of a patient’s health state or require surgical intervention, the software escalates to Class IIb; if an erroneous decision could cause death or irreversible physiological deterioration, it enters Class III. Similarly, software intended to monitor vital physiological parameters whose variations present immediate danger is assigned to Class IIb, with all other physiological monitoring falling into Class IIa.
The empirical consequence of Rule 11 was an immediate up classification of an estimated 80% to 90% of medical software into Class IIa or higher, legally mandating notified body review for technical dossiers, clinical evaluation reports and ISO 13485 quality systems.
Simultaneously, the transition from MDD to MDR triggered a contraction in total European conformity capacity. Demanding institutional requirements surrounding auditor qualifications, clinical scrutiny and permanent staff reduced the total number of designated European notified bodies from over 80 under the MDD to roughly 52 under the MDR.
Because legacy notified bodies such as BSI, TÜV SÜD, and DEKRA oversee broad mandates spanning cardiovascular implants, orthopaedics, in vitro diagnostics, personal protective equipment and industrial machinery, their technical staffing is weighted toward physical biomedical engineering. When evaluating complex software, legacy bodies rely on outsourced generalist assessors and manual documentation reviews, generating severe frictions across the development lifecycle.
The resulting disparity between software iteration cycles and regulatory assessment timelines creates substantial industry friction. Modern data science teams refine model weights, adjust feature embeddings and retrain neural networks within days or weeks, but traditional conformity assessment procedures enforce 12 to 18 months of review latency.
Furthermore, traditional regulatory frameworks treat algorithmic updates as significant product changes under MDR Article 120 and MDCG 2020-3, triggering separate 6 to 8 month re-audits for minor software modifications. Consequently, developers are forced to lock and freeze potentially life saving clinical models in obsolete states to avoid bureaucratic delays, slowing medical software innovation.
Platform Architecture and Continuous Surveillance Methodology
Scarlet resolves these operational frictions by combining statutory certification authority with an automated, cloud-native review platform. Rather than relying on manual file transfers, Scarlet deploys an ingestion engine capable of parsing technical documentation across variable digital structures, including continuous integration and deployment pipelines, Git repositories, electronic document management systems and unstructured project boards.
The technical platform ingests the manufacturer’s entire design history file, including ISO 14971 risk management logs, IEC 62304 software lifecycle files, clinical evaluation reports and algorithmic bias test suites. Automated contextual models parse the technical dossier to assess cross referential integrity, identifying conflicting statements, missing verification data, or discrepancies against EU MDR General Safety and Performance Requirements (GSPR) before human review begins.
Statutory certification determinations remain strictly in the hands of qualified human assessors. Scarlet employs an internal team of medical device auditors, clinical specialists, software safety engineers, and machine learning researchers who utilise the platform's trace matrices to interrogate technical submissions systematically.
The core operational divergence between Scarlet and incumbent notified bodies lies in its commercial and surveillance model. While legacy organisations bill on an unbundled, hourly basis for every document review, email and audit interaction, Scarlet operates an enterprise subscription model.
Manufacturers pay a fixed upfront initial certification fee, typically starting at €100,000 for Class IIa and IIb devices, which covers the baseline technical dossier evaluation, quality management system audit and regulatory decision. Following initial approval, clients transition to an ongoing service fee, typically starting at €5,000 per month, which bundles rolling product changes, annual surveillance audits and continuous post market review.
By auditing the manufacturer's underlying engineering infrastructure, automated testing protocols and Predetermined Change Control Plans (PCCP), Scarlet evaluates the development process alongside specific model weights. This approach allows pre-validated algorithmic parameter adjustments and performance optimisations to be evaluated on a continuous basis, reducing release validation cycles from months to weeks without compromising safety thresholds.
To satisfy the oversight demands of the Dutch IGJ, the UK MHRA, and the US FDA, Scarlet’s platform maintains immutable logging. Every evidentiary finding, non conformity report and clinical decision is indexed within the system, allowing competent authorities to inspect the technical rationale and evidentiary trail supporting any certification decision.
Operational Characteristic | Legacy Notified Bodies (e.g., TÜV, BSI, DEKRA) | Scarlet Conformity Architecture |
Initial Review Lead Time | 12 to 18 months standard queue. | 5 to 16 weeks across active device categories. |
Algorithmic Change Assessment | 6 to 8 months per major release iteration. | Continuous evaluation within 1 to 2 weeks. |
Commercial Billing Model | Unbundled time and materials; unpredictable hourly fees. | Predictable upfront fee plus an all inclusive annual/monthly subscription. |
Dossier Ingestion Format | Rigid tabular templates and compiled PDF binders. | Format agnostic ingestion integrated with developer workflows. |
Specialization Profile | Broad generalists covering hardware, implants and consumables. | Specialised focus dedicated to software (Code MDA 0315) and AI. |
Regulatory Logging | Fragmented audit summaries and periodic paperwork. | Real-time, continuous audit trails accessible to regulators. |
Commercial Deployment and Cross Specialty Client Traction
Scarlet’s commercial deployment spans high risk autonomous diagnostic tools, enterprise imaging platforms and large scale generative AI applications.
In high risk autonomous diagnostics, Skin Analytics leveraged Scarlet’s review process to secure EU MDR Class III CE mark certification for DERM, its AI driven skin lesion analysis technology. Operating within NHS referral pathways and commercial clinical settings, the DERM system demonstrates a 99.8% sensitivity in ruling out high risk skin cancers such as melanoma, exceeding average face to face dermatologist evaluations of 98.9%. Given the potential for mortality from missed malignant diagnoses, the software falls under the strictest provisions of MDR Rule 11. Achieving Class III status validated Scarlet’s capacity to assess high risk clinical AI models and authorised autonomous clinical cancer decision making in Europe.
In autonomous therapeutics and physical rehabilitation, Flok Health utilised Scarlet’s platform to achieve full EU MDR certification for its musculoskeletal software within 14 weeks. The platform's continuous compliance model enabled Flok Health to transition into an agile clinical deployment rhythm, releasing validated software updates every two weeks while maintaining conformity across NHS clinical workflows.
In diagnostic radiology, where model retraining and scanner calibration require continuous iteration, Scarlet has facilitated rapid market access and certificate transfers. German radiology AI developer Floy secured EU MDR certification for three distinct imaging systems alongside an ISO 13485 transfer and scope extension within 16 weeks, while its FloyMammo breast cancer detection algorithm completed initial submission to certification in 5 weeks. Similarly, Lucida Medical executed a certificate transfer away from a legacy notified body in 7 weeks to unblock its prostate cancer MRI analysis models.
At the enterprise level, DeepHealth, the artificial intelligence division of RadNet, selected Scarlet as its notified body to manage European regulatory clearances across its oncology and diagnostic imaging portfolio.
In consumer digital health, Flo Health, whose cycle tracking and clinical advisory application has exceeded 500 million downloads, works with Scarlet to manage SaMD compliance frameworks as its predictive health capabilities expand.
Concurrently, the clinical documentation sector has seen substantial capital deployment, highlighted by nine figure financing rounds among ambient generative AI providers. Tandem Health raised a $100 Million Series B in September 2026 led by EQT’s Scaleup Europe Fund, establishing an installation base across 10,000 European care settings and primary care distribution through Accurx and the NHS. Tandem holds EU MDR Class IIa certifications across three discrete tools: its AI Scribe, Medical Coding Assistant and Clinical Decision Support engine.
Similarly, Heidi Health secured a $65 Million Series B financing round supported by Point72 Private Investments and Blackbird Ventures, processing millions of weekly consultations globally while utilising medical device conformity standards to expand from administrative transcription into autonomous care workflows.
Enterprise Client | Clinical Specialty | Core Product Functionality | Regulatory Scope and Milestones |
Skin Analytics | Oncology / Dermatology | Autonomous lesion analysis and melanoma screening (DERM). | EU MDR Class III CE Mark; autonomous cancer triage authorization. |
Flok Health | Musculoskeletal Care | Autonomous physiotherapy assessment and dynamic exercise therapy. | EU MDR certification achieved in 14 weeks; bi-weekly update cycles. |
Floy / FloyMammo | Diagnostic Radiology | Incidental finding detection on MRI/CT; automated screening mammography. | 3 MDR devices + ISO scope in 16 weeks; 5-week approval for FloyMammo. |
Lucida Medical | Oncology / Imaging | Machine learning prostate cancer MRI analysis (Pi). | Notified body certificate transfer completed in 7 weeks. |
DeepHealth (RadNet) | Diagnostic Radiology | Multi-organ imaging analytics, screening mammography, and clinical triage. | EU MDR notified body partnership for international market access. |
Flo Health | Women’s Digital Health | Predictive menstrual health, symptom triage, and reproductive tracking. | SaMD compliance architecture across >500M user footprint. |
Tandem Health | Ambient Generative AI | Ambient scribing, automated diagnostic coding, clinical decision support. | EU MDR Class IIa certified across 3 tools; backing $100M Series B expansion. |
Heidi Health | Ambient Generative AI | Ambient clinical encounter documentation and structured care automation. | Rapid global adoption supported by $65M Series B financing. |
Strategic Governance, Transatlantic Synthesis and Policy Outlook
The emergence of a venture backed certification body presents unique governance considerations, balanced by opportunities for regulatory convergence. Under EU MDR Article 36 and Annex VII, notified bodies are legally mandated to maintain strict independence, objectivity and impartiality. A notified body is strictly prohibited from offering commercial design consultancy, participating in device development, or holding economic relationships that could compromise assessment neutrality.
Because Scarlet operates with venture equity backing and generates revenue through recurring client subscriptions, market observers have highlighted the potential friction between venture scaling expectations and statutory enforcement duties. An assessment body that depends on recurring subscription fees could, in theory, face commercial pressures when evaluating whether to issue a non conformity notice or suspend a client's certificate.
To insulate its statutory responsibilities from its commercial operations, Scarlet established an independent Impartiality Panel to review assessment ethics and corporate governance. The panel includes regulatory figures such as Howard Kerr, who served as Chief Executive Officer of the British Standards Institution (BSI) from 2009 to 2021.
Furthermore, Scarlet's internal governance model strictly separates intake automation platforms and initial audit teams from its statutory Final Reviewers and Decision Makers. Under the company’s operating charter, certificates can only be granted upon the sign off of an authorised director and the organisation retains full statutory authority to refuse, suspend, or revoke certifications without financial penalty or commercial recourse from clients.
From a transatlantic perspective, Scarlet’s multi-jurisdictional designations establish a unified regulatory bridge. Medical technology enterprises routinely face fragmented regulatory expectations: the United States FDA emphasises predicate comparisons via the 510(k) pathway, supplemented by De Novo requests and Predetermined Change Control Plans under Section 515C of the FD&C Act, whereas the European Union relies strictly on intended purpose, clinical evaluation data, and Rule 11 risk classifications.
By unifying designations across the EU (NB 3022), the UK (AB 8536), and the US (FDA 3P510k), Scarlet enables manufacturers to upload unified technical files and streamline conformity assessments across European and American markets simultaneously. This framework allows US developers to enter the European market with minimal friction while providing European startups with an accelerated review path into the United States.
Looking ahead, Scarlet’s platform architecture aligns with broader regulatory shifts in the European MedTech sector. In response to industry wide certification backlogs, the European Commission has drafted structural reform proposals for the MDR and IVDR frameworks. These proposals consider revisions to Rule 11 to re-classify lower-risk software back to Class I, the elimination of mandatory five year certificate expirations in favour of risk based continuous surveillance and the establishment of statutory review caps (such as 120 day limits for quality system audits).
Additionally, the implementation of the EU Artificial Intelligence Act introduces horizontal safety and governance requirements for high risk AI deployments. Because medical device software that requires notified body assessment is classified as high risk under Annex II of the AI Act, developers face intersecting layers of medical and algorithmic compliance.
Scarlet’s incorporation of ISO/IEC 42001 (AI Management Systems) alongside standard MDR and UKCA reviews positions the organisation to function as a unified conformity assessment provider under both healthcare and artificial intelligence legal frameworks.
By replacing linear, paper based auditing with continuous, software enabled surveillance, Scarlet addresses one of the most critical structural bottlenecks in modern healthcare.
The deployment of its $50 Million Series B funding will accelerate the integration of automated conformity infrastructure across transatlantic healthcare systems, ensuring that clinical AI can evolve continuously without compromising evidentiary rigor, regulatory transparency, or patient safety.
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