By Shaoyu Chang, Research Analyst, LSN
Coming from a scientific background, I thought I knew well enough about using slides and making presentations, whether in laboratory journal clubs or at hundred-attendee conferences. However, as I start to help fellow scientists on their fundraising campaigns, it has become apparent to me that academia and business speak very different languages.
Looking at the concept scheme (Figure 1), scientists are used to a standard structure that emphasizes on literature background, study design, and interpretation of data. However, building a successful investor pitch deck requires a different set of considerations, framework, and skills than an academic presentation. In addition to scientific merit, an investor pitch deck must showcase the superiority of the management team, market potential, business model, and competitive landscape, among other factors.
Unfortunately, many scientists who become life science CEOs often assume pitching investors is the same or similar to presenting at an academic conference, and they begin a fundraising campaign on the wrong foot. This article summarizes as 11 tips the recommendations for building a successful pitch deck from experienced industry veterans and investors who we interact with on a daily basis.
- Keep it simple. Pitch decks serve as a vehicle to initiate a conversation. Try to draw a smooth and intriguing story line about where your invention came from and where you are planning to go. Ideally your pitch deck should be anywhere from 10-15 slides. Far too often do we come across entrepreneurs with pitch decks of 20 or more slides and while the data may be compelling, the reality of the matter is that investors do not have the time to review that amount of material on every opportunity they are presented with. Do not try to answer all possible questions in your pitch deck, simply aim to provide the investor with enough information to convince them that it is worthwhile to hold an in-person meeting.
- Begin with the conclusion. Academic presentations describe a journey of scientific investigation that leads to a discovery or a conclusion. By contrast, a pitch deck should open with a high-level overview of the entire pitch. Time is of the essence. Investors want to know within the first two slides why they should care about this innovation, what is your solution, and what are the opportunities and risks.
- Showcase your team. Standard academic presentations do not mention teammates until the last slide; however, when pitching investors, you and your team are as important as your science. Who are you? What is your contribution to the company? What credentials do your teammates have? Are they award-winning scientists or seasoned business professionals? Showcase the members of your team. Remember, investors fund the science and the team.
- Describe the “pain” in the market. Explain where the current problem is, how it impacts people’s lives, what the commercial opportunities are, and how you got started. This section should be a shorter version of the background section in academic presentations. Many entrepreneurs waste their time preaching common knowledge, such as telling investors that breast cancer is one of the top killers in women or orphan drugs are a big business. Remember that your job is to get investors’ buy-in by defining a pain specifically and providing a compelling case for how your technology will alleviate it.
- Explain your technology. Where did it come from? How does it work? How will it make an impact? What phase of development is it in? How is your technology different from others? What is your “secret sauce”? Tell a succinct story of the journey you have been through to get to where you are today. Sell your science by carefully laying out data and results from studies and prototype-testing that support your claims. A lot of data is not necessarily a good thing, as it may be difficult to explain and comprehend. (Remember, this is not a thesis defense.) However, some scientists cut back on key data and only speak about the big picture. This approach makes their claims look groundless and untrustworthy. Try to get feedback from industry experts or veteran investors before you make your pitch. It may take a few tries to strike the right balance for your specific financing round.
- Describe product pipeline and address the risks. Early stage R&D is risky, especially in life sciences; every investor knows that. Still, investors appreciate pitches that acknowledge the risks associated with the ongoing project and lay out risk management and mitigation plans. Provide a roadmap to risk reduction that includes milestones, such as filing patents to protect intellectual property, establishing a safety profile, and demonstrating superiority over competitors. Risk mitigation does not need to be a stand-alone slide, but it should be addressed in a presentation or during a Q&A.
- Propose a roadmap to future exits. What are the potential value-inflection points and how long will it take to get there? Are you aware of potential acquisitions and recent exit valuations in your sector? Many investors will obtain this information during due diligence. That being said, they appreciate entrepreneurs who know such information, as it demonstrates a level of preparedness.
- Present the finances. How much capital have you raised to date? How much more are you raising now? What is the planned use of these funds? What are the milestones you want to achieve (such as chemistry, manufacturing, and controls (CMC); animal toxicology tests; and first-in-human trial)? Although life sciences are notorious for high uncertainty, it is still recommended to have a two- to five-year financial projection so that investors know you will adhere to your budget and can be trusted with their money.
- Choose graphics and language that are suitable for your audience. A common mistake made by first-time life science entrepreneurs is to overwhelm the investor with too much data and unnecessary jargon. Use crisp and easy-to-understand visuals to display data and save the details for an appendix to provide to investors upon request. Try to explain abstract ideas in a language that a layperson can understand and use analogies when appropriate. For example, instead of saying “the chelating agent binds to heavy metal ions and therefore reduces their concentration in circulation,” try saying “the specially designed molecule acts like a magnet that attracts metal ions and takes them away from your body.”
- Touch on intellectual property and the competitive landscape. While having IP protection and a competitive advantage are strongly emphasized in IT and other industries, these factors are seldom the make-or-break points when it comes to investing in early stage life science projects. Given LSN’s experience and the expert opinions we received, these points can be addressed in the flow of a presentation, but they should not occupy too much valuable time that could be used to explain the science or introduce the management team.
- Ensure continuity in branding and messaging. As Dennis Ford discusses in The Life Science Executive’s Fundraising Manifesto, a company’s communication flow should be seamless. A company’s tagline should lead into its four- to six-sentence elevator pitch, which dovetails into its one- or two-page executive summary and its 15-slide pitch deck. When new information is added, it must be fully integrated into the flow to build a consistent and easy-to-understand message.
It is important to note that this article aims to provide a starting point of building a pitch deck instead of a one-size-fits-all template. Every life science company is different. The pitch deck for an early-stage biotech start-up seeking seed capital to develop small molecule cancer therapy should look very different from that for a medical device manufacturer seeking growth capital to scale up operations.
Good luck pitching!