By Dennis Ford, CEO, LSN
Understanding where emerging life science companies fit into the competitive landscape and how to position them in front of an investor audience are two of LSN’s guiding mantras. It is critical to take the time to understand where your firm fits and to develop a cogent, lucid and compelling brand and message. This helps investors understand the bet they are making. Understanding the “technology impact” of your product or service and its relationship with the general marketplace is crucial.
Personally, I parse technology according to my own rule of three. Is the product disruptive, breakthrough or iterative? Answering the question allows me to map the technology against the universe of investors that are a good fit. After all, context is really what you are trying to achieve when meeting with an investor. Being able to quickly get the investor to understand where your technology sits in the overall scheme of things counts a lot. I spend lots of my time with life science entrepreneurs and I will share some of my insights regarding the few categories.
Life science companies with “disruptive” technologies have the potential to change the world in a big way. The word “disruptive” is often overused in the life science industry, so let’s take a moment to discuss exactly what it means: These are technologies that literally disrupt the industry – This is the rare, once in a blue moon, technology that literally changes the game (However, in the “golden age” of life science, these disruptive technologies may be on the rise.) This could be a cure for diabetes, an AIDS vaccine, or something similarly groundbreaking on a huge scale. These disruptive technologies are the holy grail that all investors are looking for and when identified are quickly shepherded to the A-list VCs. That is all well and good except that it’s 20 or so high flying VCs and 30-40 chosen companies (anyone’s guess). So what about the rest of the marketplace?
The “breakthrough” technology companies have significant technology solutions for major medical needs. These can be viewed as “leapfrog technologies” that change treatment paradigms or improve outcomes in a big way. These are not necessarily “disruptive,” but they are undoubtedly valuable innovations that impact patients in a very major way. Let’s just say for arguments sake that these breakthroughs companies number in the hundreds, and they are tasked with marketing themselves to the right investors, because the shrinking VC population isn’t necessarily accessible or the best route for them. The breakthrough companies need to be educated on the new categories of investors are filling the void left by the VCs.
The “iterative” technologies are next generation innovations. This can be distilled down to a better, faster, cheaper, or otherwise improved next generation of existing technologies. These are easy to understand, because the previous version exists, so investors can easily grasp the value. However, these companies number in the thousands, and they have a challenge getting on any investor radar screens. These companies are tasked with having to really dig deep in terms of finding the right investor fit and translating that into a cogent, targeted marketing campaign.
I started Life Science Nation (LSN) to track the other 10 categories of life science investor that are filling the VC void. LSN researchers create profiles through one-on-one personal interviews regarding their particular interest in life science investment. These investors are family offices (single and multi), venture philanthropy/patient groups, virtual pharma, mid-level PE, angel syndicates, hedge funds, foundations, endowments, pensions and corporate venture. At the end of the day LSN’s job is do the research, find investors, interview them, write up their profiles and investment mandates and get that data into the marketplace. Understanding how your technology fits into the marketplace allows you to understand which investors you should be targeting.