Investors Want Companies to Be Open to Pivoting

3 Apr

By Michael Quigley, Research Manager, LSN


As a research manager at LSN, I spend my time researching, calling and interviewing life science investors from around the globe to find out where the money is, and where investors are planning to direct their funding. It’s an ongoing learning experience, and it has given me the opportunity to identify some interesting patterns. Here are few things I’ve learned along the way:

New Investors Are Surfacing to Fill the Void Left by Venture Capital

Due to a shift in the investor landscape, new entities are emerging to fund science that has been left behind by the VCs. Having spoken with many of these new investors it becomes apparent that being new is one of their greatest hurdles. They do not have the draw of big pharma or top 10 VC names that every industry blog article seems to reiterate as if those few sources was all there was to the life science investment landscape. These investors are more under the radar and as a result are looking for targeted deal flow.  From service providers going direct to new virtual pharmas looking to in-license assets and nurse them through the clinic, to foundations and family funds, these investors want to hear about potential opportunities and tend to be much more responsive than their more institutional counterparts. Additionally these investors tend to be much more targeted in terms of types and stages of companies that they are looking to invest in, so is it important to determine who they are, and where their focus lies.

Investors Want Companies to Be Open to Pivoting

Having asked many investors what they look for in potential investments, one quality sought by many is flexibility or the ability to pivot. Many biotech entrepreneurs are overly headstrong in what their target indication is or what they envision for their company’s future. In many cases it may be advantageous to target an alternate indication with a less stringent regulatory pathway first, begin generating revenue, then look to repurpose the product to the original indication. This is applicable both for therapeutics and devices, and is a function of the industry as it currently stands. Investors of all types are interested in time to market and the difficulty of the regulatory pathway so if pivoting your product’s focus to begin generating revenue sooner is a possibility, investors are going to be more attracted to companies that realize this and take the lower hanging fruit before going big.  Across the globe, regulatory agencies define the life science marketplace and you are better off trying to work in alignment with them when possible rather than swimming against the tide.

The one commonality between all of these issues is change. Following old roadmaps for investing and fundraising in biotech can be a fatal mistake. The industry is maturing through natural selection and only those investors and companies that are able to adapt to the changing environment will be able to stay alive and prosper.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: