Archive | July, 2014

July Roundup: 76 Mandates

31 Jul

By Lucy Parkinson, Senior Research Manager, LSN

lucy 10*10It’s been a busy month here at LSN, with our researchers gathering 76 mandates from a wide variety of investors between July 1 and July 25. (See Exhibit 1.)

 

 

 

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Exhibit 1

If we had focused solely on talking to VCs this month, we would have had about a quarter of the number of investor conversations we actually had.

As always, we spoke to many investors who are interested in opportunities globally. Of those investors focused on one or more regions, most were interested in Canada, Europe, or the U.S. (See Exhibit 2.)

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Exhibit 2

Investors who were interested in medical technology slightly outnumbered those focused on drug development. We also spoke to many investors who were interested in biotech R&D services or healthcare IT and lab engineering. (See Exhibit 3.)

Sectors of Interest

Exhibit 3

According to MedCity News, CB Insights Venture Capital Activity report confirms a continuing interest in medtech. The report notes that medical devices accounted for most of the deals during the second quarter, followed by biotechnology and drug development companies.

Are you surprised that we’ve had so much success in reaching out to investors during the month of July? In the past two years, we’ve learned that making contact with investors can often be a countercyclical process; while the rest of the business world is winding down for the summer or making the most of a holiday week, investors may have more time to respond to calls and emails and start building a relationship. Summer is no time to take a break from your fundraising campaign. Rather, it’s a great opportunity to follow up with people who haven’t gotten back to you or who expressed initial interest but haven’t taken the next step. The lighter summer schedule may provide the right opportunity to win a moment of an investor’s time.

 

Engineering the Future of Healthcare: RESI Conference Announces Medical Device Strategics Panel

31 Jul

By Tom Crosby, RESI Conference Manager, LSN

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The medtech space currently represents an attractive opportunity for a large number of investors, as recent LSN data shows that there is a steady interest in medical devices. This all-new RESI panel focuses on investors who seek emerging medtech opportunities. LSN has assembled a stellar group of top medtech investors to give attendees a better understanding of how these investors view the market, evaluate a sector and parse early stage medtech firms and technologies.

Moderated by Karthik Ranganathan, Strategic Innovation at Becton, Dickinson & Company, the audience will hear from:

Josh Phillips, Managing Partner, Catalyst Health Ventures

Juan Carlos Serna, Vice President, HPA Ventures

Lawrence Cho, Senior Director, Corporate Strategy & BD, Medtronic

Aaron Sandoski, Co-Founder & Managing Director, Norwich Ventures

Specifically, panelists will introduce and cover  the types and classes of devices they seek to invest in. How do they work with their portfolio companies? What stage of device and level of data are they looking for? What is the role of intellectual property in initial correspondence? Panelists will also discuss preferences for investment size and structure, geographical and team requirements, and how to better identify organizations that are actively investing in early stage medtech companies.

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Early Stage Investors and Your Website

31 Jul

By Michael Quigley, Director of Research, LSN

mike-2When speaking with investors during the past week, I made a point of asking what information they look for on a life science company’s website in order to determine if they want to have a more in-depth conversation. The responses tended to be very similar despite coming from investors in multiple categories, including traditional VCs and family offices. Here are the six items that were most cited.

A Clear and Concise Description of What a Company Is Trying to Achieve

Your firm’s tagline should be the first thing that catches investors’ attention when they come to your website. In approximately four to eight words, your tagline should describe simply and adroitly your value added. You should elaborate on this in an elevator pitch, which describes your technology and mission in four to six sentences. Both your tagline and elevator pitch should describe your technology in a fundamental way that can be easily understood by people without a scientific background. Having these items supported by a few relevant images or a video is something that can really help investors visualize and better comprehend what it is that makes your investment opportunity interesting. By keeping the initial message as simple as possible, you can grab the interest of investors who may not be scientific experts in your particular field.

Information that Elaborates on the Opportunity

After catching investors’ interest with your tagline, elevator pitch, and visuals, you need to elucidate the market opportunity for your technology. This means clarifying the target market, its size, and any niche area that highlights the unmet need. Many technologies have the potential to target multiple indications and serve more than one market. However, it is very important that you demonstrate which of those markets you are targeting first. The majority of investors look for focused companies that have a clear path to a value-inflection point or exit. I am not advising against mentioning other possible uses for your technology, as these can add value to your opportunity. However, it is imperative that you make your immediate plans clear to investors.

A Company’s Complete Funding History

All of the investors who I spoke with specifically mentioned having a complete funding history available on the website. They said it makes it easier to decide whether or not to have a further conversation. Their preferences differed, however, with some investors looking for well-known institutional investors to already be on board, while other investors, particularly those that classify themselves as very early stage investors, prefer to be one of the first institutional sources of capital so that they can get in while the valuation is low and the cap table is still intact. NIH grants, incubator awards, a Series A round—investors want to know about all organizations that have invested in you and how much you have raised. By showing who has allocated capital to your company, you both establish credibility with investors and give them a better understanding of whether or not you are a fit for their investment mandates.

Management Biographies

A company’s management is arguably its most important asset when garnering interest—and ultimately an allocation—from potential investors. Your website should list every member of your management team with a photo and a short biography that covers their career accomplishments thus far. Again, this establishes credibility by showing investors what the members of your core team have been involved in prior to now. It is also important to note that both successes and failures can establish credibility in the space. Some of the investors I have spoken with specifically mentioned that they like working with management teams that have had an unsuccessful company, as teams often learn more from failure than success. Many investors consider management as important as, and sometimes even more important than, the technology, so by giving them a small window into your management team, you have the chance to directly market one of your most influential assets.

The Origin of the Technology

Investors want to know where your technology came from. Did you in-license the product from a university or did you develop it in house? If the former, which university and how did that relationship come to be? Were there any strong academics working on the technology, and if so, what are their backgrounds? By answering these questions on your website, your story becomes more complete, allowing investors to more fully understand how your company came to be and why the investment opportunity is a good one.

The Replicability of the Results

Although not always available, having your results and data validated by a third party through replication, the gold standard of scientific research, is becoming an extremely valuable piece of information to present to potential investors. If you have this kind of validation, it is crucial that you include it on your website, as the inability to replicate results is becoming a growing problem.

By incorporating these items into your website, you will make the decision process easier for investors, which will in turn earn you responses more quickly and save your campaign valuable time. Additionally, by having this information easily accessible, you have the opportunity to learn why investors are interested in your technology—or why they aren’t. Understanding your strengths and weaknesses lets you further hone your message and improve your ability to market yourself. Your website will likely not be the deciding factor that pushes an investor to make an allocation. However, a good site can save you invaluable time by reaching more investors with increasing effectiveness, which ultimately improves your odds of success.

For more information on website messaging, see our new book, The Life Science Executive’s Fundraising Manifesto, and the “Establishing a Web Presence” chapter.

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Hot Life Science Investor Mandate 1: Corporate Venture Capital Arm of Multinational Corporation Seeking 510k Devices and Diagnostics

31 Jul

The corporate venture capital arm of a multinational conglomerate corporation seeks to invest in disruptive early stage technologies and business model innovations. The firm looks to invest in six areas including the life science space that are strategically relevant its parent company. The firm prefers to invest in Series B round or later, but it is open to consider seed and Series A round. The firm generally allocates approximately $2 million -$5 million for early-stage companies, on a case-by-case basis. Investments are typically in forms of equity, whereas other capital structures may also be considered. The firm is seeking new investment opportunities around the globe with a focus on United States, Europe, Brazil, Singapore and China.

The firm is currently looking for new opportunities in Medical Technology, Diagnostics, Specific biotech areas and Healthcare IT. In the Medtech sector, the firm is interested in companies developing Class II Medical devices with 510(K) regulatory pathways preferably in clinic. The firm focuses on companies developing dental devices, would care, coatings and diagnostic devices. In the Biotech sector, the firm focuses on companies targeting infection prevention and food safety (such as testing and hygiene monitoring products). The firm is also interested in Healthcare IT companies developing software, solutions and platforms for better clinical and financial performance.

The firm focuses on investments in private companies. The firm considers pre-revenue companies with strong and experienced management team. The firm will take a board seat occasionally, depending on the investments.

If you are interested in more information about this investor and other investors tracked by LSN, please email mandates@lifesciencenation.com

Hot Life Science Investor Mandate 2: European Hedge Fund Seeking Molecular Diagnostics

31 Jul

A hedge fund with multiple European Offices is looking to invest in growth, expansion and roll-out stage companies, primarily in Series D-E rounds, and sometimes in Series C rounds. Initial investments are typically $8-10 million. The firm is generally focused on Western Europe but is also open to opportunities in North America.

The firm’s primary investment themes are personalized medicine and agriculture. Within personalized medicine, the firm focus subsector is molecular diagnostics, but other areas of diagnostics technology may be of interest; however the firm is typically not interested in patient monitoring technologies or care management. The firm has also invested in medical devices, but is only interested in devices that are highly disruptive or which represent completely new markets. The firm will consider any indication but is particularly interested in oncology and neurology. The firm only invests in life science companies that have products which have attained approval or which are very close to approval and have significant amounts of data. 

The firm prefers to invest in companies at the early commercialization stage that have completed development of a technology but require capital to expand sales and marketing efforts. The firm is also open to early growth investments in companies with existing revenues. The firm is currently focused on investing in privately held companies but will also consider investing in publicly traded companies.

If you are interested in more information about this investor and other investors tracked by LSN, please email mandates@lifesciencenation.com

Hot Life Science Investor Mandate 3: New VC Fund Seeking Life Science Opportunities in US and Asia

31 Jul

A VC fund with offices in the US and Asia manages roughly $70 million that it is actively seeking to invest. The initial investment size is highly variable though the firm is looking to provide up to $10+ million over the lifetime of the investment. The firm generally provides capital in the form of equity though they also have experience in working with convertible notes. The firm is interested in companies located either in the US or Asia. The firm’s primary focus is on private companies while public investments are also made selectively.

The fund is currently interested in companies developing Therapeutics, Diagnostics, Medical Devices, Healthcare IT, and R&D Services Companies. The firm is entirely opportunistic in terms of subsector and indication. In terms of phase of development, the firm is looking for companies with lead assets in the preclinical stage to companies that already have products on the market. The firm will consider companies in various stages on a case by case basis including seed financing.

The fund views the management team as one of the most important variables in selecting a potential investment. The firm looks for highly experienced and trustworthy management teams. The firm is highly interested in US based companies that are looking to expand into Asian markets or vice versa as member of the fund can add much value in these situations with their vast Asian network. However this US-Asia business development angle is not a criteria or requirement for the firm’s investment.

If you are interested in more information about this investor and other investors tracked by LSN, please email mandates@lifesciencenation.com

Hot Life Science Investor Mandate 1: Virtual Pharma Seeking Therapeutics with Proof of Concept Data

24 Jul

A pharmaceutical development company seeks to acquire assets in the therapeutics sector, and form new companies to develop these assets to commercialization. The firm primarily works with biotech companies based in North America.

The firm is interested in a broad range of therapeutic assets that have some level of proof of concept data (preferably in humans); the firm’s primary area of expertise is dermatology, and assets in the inflammation and oncology sectors are also highly of interest (but not immuno-oncology). In general the firm does not invest in infectious diseases, diseases of the nervous system, mental and behavioral disorders, or disease areas that require large trial sizes such as cardiovascular disease and diabetes.

When the firm acquires an asset, the firm typically keeps on the key team members associated with that asset and works with them throughout the development process.

If you are interested in more information about this investor and other investors tracked by LSN, please email mandates@lifesciencenation.com