Archive | September, 2015

Seeking Capital? Learn A Little Sales (There I Said It)

24 Sep

By Dennis Ford, Founder & CEO, LSN 

Dennis book

Five years ago, the universally accepted investment path was to write a proposal for grants, hit up a list of friends and family, and canvass the local regional angel groups to help get you on your way to commercialization. After the first wave of funding, the second wave was to canvass the venture capital entities or find strategic partners, each coming with their own unique set of challenges and outcomes.

The good news is the investor landscape has morphed and the goal of enlightened scientist entrepreneur should be to find the investors that are a fit for his or her technologies sector and stage of development. This entails putting aside some of the old dictums regarding fundraising and separating the facts from fiction as it applies to fundraising today. Let’s dispel some of the out-of-date notions regarding fundraising and commercializing technology. Below are some of the old myths that circle in and out of the conversations around funding updated for how the reality has changed. A lot of these items below setback scientists before they even have a chance to get into the game.

The old myths

The funding choices are limited to SBIR grants, friends & family, angels, VCs and strategics.

  • Update: There are 10 categories of investors to go after.

You must limit yourself to regional players.

  • Update:It’s a global marketplace and once you get past the regional angels and VCs, its global.

The average fundraising process takes 6-9 months.

  • Update:After interviewing more than 300 firms, LSN has uncovered that it generally takes 9-18 months from start to finish.

It is not necessary to understand how each category of investor works, just go after them all.

  • Update:Each investor category has its own personality, strategy, and motivations. Knowing the nuances and subtleties of each is imperative.

The science/technology is the only thing that matters to healthcare investors. You can convince or finesse an experienced investor with your science.

  • Update: Investors buy you, your team, and your technology. It is imperative to showcase you and your team in your marketing materials as well as your technology.

Scientist entrepreneurs are smart people; therefore you should scale based on your technical knowhow and prowess (founder blindness).

  • Update:Basic marketing and sales skill-sets are needed.

A scientist’s empirical training should augment and compliment the overall effort when moving into the commercial arena.

  • Update:Some capability translates but you need to augment your knowledge with experienced professionals to build a well-rounded team.

Science is the hard part and it is easy to learn the business side.

  • Update:Both science and business are complex disciplines that need to be learned.

You need to be referred to an investor in order to get a meeting.

  • Update:Investors care about fit for their investment mandates. Referrals help, however being a fit for what the investor is looking for is crucial and enough to get meeting.

Scientists are the rock stars and don’t need the business executive on the team.

  • Update:Having a business person with the technology mavens creates a well rounded team.

The major revelation to understand is that when you step out of the laboratory, you have entered a world that does not necessarily play by the rules of the scientific method or basic and applied research. You are entering a fuzzy world where learning to create dialogue and foster relationships are as important as having replicable data. You leave the analytic domain and head into the world of the” buyer”— potential investors and partners — and the “seller”—you. Like it or not when you are raising capital you have to start by marketing your product, your team, and your company. When you are sitting across the table from a potential investor you are selling yourself. Welcome to fundraising 101!

Call for Innovation: RESI San Francisco, January 12, 2016

24 Sep

By Shaoyu Chang, MD, MPH,  Senior Research Analyst, LSN

Shaoyu 10*10

Life Science Nation is calling on innovative early stage companies to present at the next Redefining Early Stage Investments (RESI) conference. RESI will bring together over 200 active early stage investors for a one day partnering event and is accepting applications from emerging companies developing therapeutics, diagnostics, medical devices, and healthcare IT products to participate in a technology showcase on January 12, 2016.

If you are one of the 30 companies selected by our in house scientific evaluation team, you will be given full-day exposure to investors and potential partners in the exhibit hall, through a poster display, allowing for the creation of meaningful dialogues. Unlike traditional 5- to 15-minute pitch presentations that do not allow any real one-on-one interaction and provide no actionable feedback from investors, the RESI Innovation Challenge enables executives to pitch directly to attendees, which can generate more in-depth and frequent conversations with investors throughout the event.

The RESI Innovation Challenge winners are declared by accumulating “RESI Cash” votes. Each attendee receives “RESI Cash” to “invest” in the Innovation Challenge companies with the most exciting technologies. If you are a fundraising entrepreneur work with therapeutics, medical devices, diagnostics or healthcare IT and you think you have what it takes, apply now.RESI-SF-2016-RESI-Innovation-Challenge

Diagnostics Investors Speak to How They Are Looking at Opportunities

24 Sep

By Christine A. Wu, Research Analyst, LSN

chrsitine

What defining elements make a diagnostic company stand out? What do diagnostic investors look for and why should the healthcare marketplace care about diagnostics? What should these companies do to get their foot in the door of these investors? These are the types of questions our Diagnostic Investors panel answered at our RESI Conference in Boston last week.

Moderated by Parker Cassidy, Executive in Residence, RA Capital, the audience got to hear from:

The panel revealed the key elements they seek when evaluating a diagnostic company and the reasons behind them. Together they discussed four main criteria—the impact in the healthcare delivery marketplace, the regulatory and reimbursement pathway, the “push” and “pull” from investors and clinicians, and the ability to prove positive patient impact with the tests results—before closing with advice for fundraising companies.

Diagnostic companies can get their product on the market faster, according to Steuart. The attractiveness of diagnostics is that they “capture a disease before it gets bad and expensive.” Cunningham further explains the general desire in healthcare to invest in huge pain points, yet the difficulty of finding diagnostic opportunities that directly address those pain points and really drive change. There is a big explosion in testing in oncology now, in which predicting difficult cancers early while they are still treatable is huge and will continue to grow in the diagnostics space. The argument of course will always be whether finding certain cancers earlier will improve chances of length of survival, Cunningham points out.

Diagnostic investors look at every obstacle to a successful product. Williams explains that regulatory and reimbursement bodies are not subsiding as much in the diagnostics space, and as an entrepreneur that needs to be expected. Because of the tough reimbursement landscape, investors want to know if the technology will take money out of the system or drive cost. “If the payer thinks it will open a bunch more people up to confirmatory procedures they are going to pay for, then that’s a mountain to climb over,” Cunningham explains.

Then there is the push and pull dynamic, the final hurdle that a company faces that is often overlooked but can actually be the most costly. Companies and their investors push their technologies through reimbursements and regulatory approvals. Yet the “pull” from the clinician that will be administering the test is a keystone to the strategy. “Just because you get the ‘push,’ doesn’t mean the clinicians will ‘pull,’” Williams describes. Williams has worked with a number of companies that have spent far more money on getting key opinion leaders (KOLs) to pull products than on the development of the technology. “If you can get the key opinion leaders and physicians on board, you are golden.”

Summer finishes that among it all, investing in the diagnostics space is all worth it. Companies just have to know how to prove the impact of its worth. Steuart provided the example of Genomic Health, a diagnostic company with an assay that paved its way via studies and endorsements with KOLs that by the time they went to CMS, they had a pharmaco-economic study to prove that they were worth millions of dollars.

To close, here are two pieces of advice from our panelists’ when fundraising:

Come prepared – You must completely understand and follow the money: who owns the patient, who is getting the benefit, and who is paying for the benefit. You cannot just come with better patient outcomes. Once you reach a certain threshold, you need to come prepared with friends, such as clinical advisors and KOLs. Practice your pitch with people who you will never invest in you, then once you’ve mastered it, pitch to those who will actually invest in you.

Most importantly, tell a story – Cunningham describes (followed by applause), “For any of us, you have a few minutes to capture our attention. You must inspire vision and tell the story to get people to see the vision and follow it. I want to go on that journey with you.”

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