A Word On When To Go Outbound

23 Jan

By Jack Fuller, Business Development, LSN

Jack 2Many of the people we talk to here at LSN are convinced that a pre-existing relationship or a referral from a close associate are the only ways to engage potential investors.  LSN has gone to great lengths to dispel this deeply engrained myth in the life sciences.  However, helping an entrepreneur to grasp the significant advantage of approaching investors based on fit is not nearly as difficult as convincing them to actually do it. All too often, fundraising executives agree that the principle of “fit vs. referral” makes absolute sense, yet they exclusively reach out to people within their network to source a new round of capital.

The universal problem facing all startups is that every day is critical.  When it comes to fundraising, the result is binary – either you secure funding, or you don’t and have to start over.  This fear keeps fundraising executives awake at night, as the ability to raise capital can be the difference between bringing a life saving device or therapy to market, or squandering a great technology. Veteran entrepreneurs understand this through and through, yet the question persists: When should I go outbound?

LSN’s emphatic answer: YESTERDAY!

While this may seem cliché, the logic is very simple and powerful: If you only raise capital from your network, you will either be successful or fail.  Once your network is exhausted, you may then go outbound. However, valuable time has been wasted in the process (potentially dooming your prospects). Those individuals who pursue both an internal effort within their network, as well as an outbound campaign with a global target list of qualified investors, have significantly more shots on goal and are not running the risk of relying solely on one method. Anecdotally, one of LSN’s clients was able to increase his number of meetings with qualified investors several times over in just a few weeks using a well-constructed global taget list (GTL) and an outbound strategy!

Every biotech and medtech CEO faces the same problem of limited time and (even more) limited capital.  At the end of the day, fundraising tends to be the most vexing problem in a life science company.  Trusting the fate of the company to a small group of prior relationships is idealistic at best, and can put an organization at risk.  Pragmatic fundraising today requires utilizing every available lead, and the drive and commitment to develop a tactical approach to raising capital.

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