Archive | February, 2013

Establishing a Web Presence for your Life Science Firm

26 Feb

By Tom Crosby, Marketing Manager, LSN

In our increasingly connected world, the Internet has become not only the new marketplace of ideas, but in a very real sense, it is the new marketplace – where the majority of business is conducted every day, all over the globe.

This is not news to anyone with an Internet connection, but even the most successful and intelligent people in their respective industries can have trouble keeping up with the ever-changing environment, and often times fail to recognize how critically important it is for their own businesses. To the chagrin of traditionalists everywhere, web presence has become a vital piece of your company’s image or brand, and helps to deliver your message. In other words, it is too important to treat as an afterthought, especially when it comes to fundraising – if you don’t have web presence, you don’t exist. Worse yet, if you have a poor web presence, you are publicly out of touch, and sending the message that you do not “get it.” Investors are savvy, and it takes only a few seconds to see if you are brand-aware, and your message is on point.

Web presence takes careful planning and professional execution. For those attempting to raise funds in the life science arena, this often means using a specialized third party to execute this piece. The development (and subsequent marketing) of your products, creating dialogue with prospective investors & maintaining investor relationships, and your on-line branding all at once are too much for an executive to focus on, and will likely yield poor results. This is not to say that it can’t be done by the right individual with enough time, effort, and funding. However, the most cost-effective route long-term is the one that brings in capital the fastest and promotes a quicker path to market.

In order to raise funds efficiently today, a strong web presence is of pinnacle importance. This is something that is too often overlooked by industry leaders, whether they would like to admit it or not. Many life science firms will pay an uninformed third party – lacking any sort of industry-specific insight – what amounts to a nominal fee to establish their entire online identity, and leave it there. This is where having a dedicated team in place to establish your web operations can easily put you ahead of your competition for precious investor dollars. This can be done in-house, or by a team of industry-specific consultants, but either way, it is not an area in which you should underspend or cut corners.

Although your initial returns may be slower than outsourcing the work to the most affordable third party, having a dedicated, contextualized team presents your firm with many advantages that are worth the extra investment, not the least of which is a higher overall quality. First, your team will be in charge of shaping the performance of your brand, and therefore, will be personally invested in its success. Furthermore, by having constant, informed dialogue with your team, changes and updates to your web presence will take place quickly and fluidly. Finally, a team with specific understanding of the industry will be able to perform tasks surrounding your firm’s Internet identity that can’t necessarily be outsourced, or are better done by an individual in direct context with your goals.

One aspect that makes marketing a life science firm difficult is that there is often a disconnect between scientists and investors; the desire to do business is all there, but ideas are frequently lost in translation. This is even more so today, as life science VCs wane and new investors fill the void. Of course, any serious investor will quickly bring in a scientist to ultimately vet the technology. There are the cases of the scientist-turned-investor, or the business person who speaks biotech, but the message here is, plan for both, make sure your messaging is at least generally understandable, and save the deep-dive tech-talk for the scientists. Any vetting scientist will have to understand the value of your product, and from there, the businessperson will be able to value the market.

To effectively market any idea, simplicity is key. And it can be tempting for a drug developer in phase II to highlight the complexities of their work, touting novel pharmacological action and unique pathways. To the scientific community, this information is understandable, and even engaging. However, to an investor, this could very well be the obstacle standing between your firm and an allocation. Confidence is a huge factor in investing, and a coherent, easily understood message goes a long way towards creating investor confidence.

If you bring the messaging of your web presence in-house, or go through a consulting team that understands how to translate fluidly between the languages of science and business, you can effectively turn your product into an idea. Of course, your product is what lands your firm the allocation to push through to distribution, but unless it also exists as a single, digestible idea, getting your product to market becomes harder than it already is. An uninformed third-party can get your website up and running, but without some degree of outside understanding, you run the risk of being obscure and unattainable. The impact of a simplified, streamlined web presence cannot be underestimated, and, in a word, is a crucial factor in garnering investor confidence. Creating a brand and having your team all reciting the same message has a big impact when you are being evaluated as a firm who “gets it.”

Why Investors are Speaking to Academic Scientists

26 Feb

By Max Klietmann, VP of Research, LSN

The academic scientist is playing a more critical role in the commercial life sciences space than ever before. This is due to the fact that large pharma is replacing early-stage drug development initiatives with M&A and in-licensing of technologies emerging from academic labs, strategic investors are aggregating early stage asset portfolios, and CROs are seeking to create relationships early to pre-emptively establish market position for the future.

It is obvious why early stage investors such as angels are interested in establishing dialogue with academic scientists, but even late-stage investors are in a continuous dialogue with academic scientists today. What makes this group of innovators so critical to the industry? Fundamentally, it is because they represent a crystal ball forecasting the long-term, groundbreaking industry trends that will affect the entire industry.

Academic innovation and commercialization are closer than ever, and this trend is accelerating. Academics were once all but irrelevant to investors because their work was often decades away from market potential, and most scientists didn’t care about or even consider commercializing their work. Academics wanted to be respected by other academics, and lived by the mantra “publish or perish.”

All of this began to change in the late 90’s, when a massive surge in academic publication occurred that led to a huge rise in patent registration around various technologies. This made investors suddenly aware that academic scientists were not just professors in labs trying to impress their peers – they were sources of deal flow/investment opportunities, market intelligence, and could point out disruptive technologies before they reached the “commercial realm.” The big pharmas, investors (early and late-stage), and even secondary constituents like insurance firms all maintain dialogue with academia precisely for these reasons. Academia is the industry’s oracle, and has the most future-oriented perspective on emerging trends in the space.

The line between academia and commercialization is blurring and the two, once-disparate realms are becoming tightly intertwined. As such, creating relationships with academic laboratories and innovators is a critical piece of market intelligence for all constituents in the space. Creating strong relationships with research institutions will be a vital to the adroit navigation of an increasingly complex space moving forward.

How to Easily Select Investors that may be a Fit

26 Feb

By Alejandro Zamorano, VP of Business Development, LSN

Fundraising in the life science sector has changed significantly over the past five years, as old players fall by the wayside and new players come in to take their place. The overriding observation is that the sands are shifting and we are about to see the new landscape. What this means is that since the roster of life science is changing, everybody better update the rolodex.

Nothing wastes time more than using an out-of-date map to get somewhere new. From LSN’s conversations with executives who have successfully navigated the new fundraising environment, it is apparent that the investor landscape is much broader than most would have expected. LSN now classifies the life science investor space into eight defined categories:

  • Syndicated angel groups
  • Private equity, including venture capital
  • Private asset managers, including family offices and wealth advisors
  • Life science corporate funds, large/midsize pharma and biotech
  • Information technology corporate funds, computer manufacturers, large info providers and telecom
  • Alternative institutional investors, pensions, endowments, and foundations
  • Hedge funds, specifically pipes/event driven and special situations strategies
  • Government grants and contracts

These categories of investors have their own investment preferences and style. The first role of any life science executive tasked with the role of fundraising should be to create a Global Target List (GTL) of investors that you should reach out to and stay connected with throughout the life of your company’s development. As a result, the first step is obtaining a list of investors that operate in the life science space. This can be done by leveraging your internal network, or working with a third party research company that specializes in the collection of investor information (like LSN).

Once a general list has been obtained, the next step is to filter investor based on their investment preferences. This is critical in order to avoid reaching out to investors that are not a fit. LSN has identified six major criteria that investors use to filter though initial deal:

  • Financing type (equity, debt, royalty)
  • Ownership type (private, public)
  • Sector preferences (medtech, therapeutics, service providers, and diagnostics)
  • Development phase of the product
  • Allocation size
  • Indication categories (cardiovascular, diseases of the nervous system)

For example, take a broad-brush first pass, create a rough indicator that draws out the most common investors during each phase of clinical development that you would be able to put on your radar screen as a general fit. The task of determining investor preferences is the most difficult part any fundraising effort, as it requires in depth information about your investor prospects. The aggregation of this information is time consuming, and requires commitment and considerable resources.

As a result, one of the easiest ways to aggregate a list of potential investors is to identify comparable companies that are developing similar technology and assets. Once a list of comparable companies has been identified, the next step is to look at each of the comparable financing rounds to identify the names of the lead and co-investors. When identifying comparable companies, you should divide them into three tiers: exact fit, good fit, and rough fit. This will allow you to prioritize investors based on the fit of the comparable company. Reaching out to these investors should enable you to create a GTL of investors that are knowledgeable about your technology and space. Remember, many investor strategies have to do with aggregating assets under a particular silo or indication.

One of the common misconceptions in the industry is the belief that investors will not invest in competing technologies and assets. This could not be further from the truth. Remember, investors are interested in returns, and if a technology or asset competes with one those held by their portfolio companies, they are particularly interested in order to hedge their risk. Investors demand diversification and understand that investing is a number game.

The recommended route to identifying preferences of investors is to work with an established third party research group that specializes in the aggregation of investor data. These companies will help you navigate through the complex maze and enable you to find investors that are a fit for your companies’ profile and capital needs.

Having filtered your GTL to a list of investors to around 500, it is your turn to reach out to them and begin a conversation that will morph into a relationship, which will turn into an allocation. Remember, investors are people too, and at the end of the day, they are mostly investing in you.

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