The Long Tail of Life Science Investment

20 Feb

By Lucy Parkinson, Research Manager, LSN

lucy 10*10Every day at LSN, our research team is confronted with a vast amount of information about investment activity in the life science sector; this comes in the form of investor interviews, analysis of headline news, as well as conversations with partners and clients. LSN spends a lot of time in dialogue with the marketplace, and parsing this overwhelming amount of data is what we do for a living.

News stories often focus on the big names in the sector on both sides of the table – revolutionary disruptive technologies and the early-stage investors who were backing them in their seed rounds.  But these are the superstars of the industry; they’re not representative of the tens of thousands of biotech and medtech startups out there, or of the thousands of active investors in the sector. We’ve touched on the principle of parsing technology before, and how important it is to understand where you fit in terms of disruptive, breakthrough and iterative technology. However, rarely do companies follow through and select the right investors that fit their technologies.

When you’re looking for investors to support your emerging life science company, you need to turn over every stone.  It’s possible to start your fundraising campaign by working your own network, exploring local options such as your region’s government programs or angel groups, and sending proposals to big-name VCs – but where do you turn once those options have been exhausted? This strategy tends to waste time, and results in unproductive meetings that don’t move forward. The key is identifying fits and creating a global target list that is targeted with an institutional style outbound campaign. This should be done from the onset, to maximize campaign efficiency and win an allocation as quickly as possible.

There are a lot of investors out there who don’t have top-flight, headline-making funds.  They might even be deliberately flying under the radar, or maybe they’re across the world from you.  That doesn’t mean they aren’t actively looking for opportunities in your field, in your location.  Indeed, it’s in this long tail of potential investors – including investors that weren’t formerly known for backing startups, such as family offices and big pharma – where the equally long tail of biotech startups will find the investors who are a perfect fit for what they’re offering.  What we’ve found at LSN Research is that the only way to know for sure if an investor is currently actively seeking new life science opportunities is to make a phone call or write an email, and ask them.

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