Next Phase Newsletter

By Dennis Ford, Founder & CEO, LSN 

In my opinion, you need to initially canvass investors that can fit into your indication or service and stage of development. LSN business development staff see over and over again entrepreneurs with beliefs about fundraising that really hinder their chances for success. Entrepreneurs are building walls that do not need to exist — “I can do my fundraise regionally; I only want to talk to family offices; I don’t need a 3-5 year plan because I will exit long before that; I know all the usual suspects so I will just go after them.” Every time you put down an assumption that is not true and then build a universe around that assumption, you waste valuable time going in the wrong direction. 

I steadfastly believe that one has to be completely open and nonjudgmental when raising capital. Make no assumptions other than “let’s go find a global list of investors that are a general reasonable fit”. Seriously, take a broad brush approach and find and aggregate as many reasonable fits as possible, and then canvass them with compelling emails and succinct phone calls over the course of a few months.

The market for capital is extremely competitive and a fundraising CEO who takes the time to package up their technology and company into a lucid message will rise above all the noise. Investors are evaluating you from the first second you surface, and their job is to weed out the CEOs that show they are not aware of how the game is played and thus not a fit for capital investment.

The days of 20-30 page PowerPoints and white papers are gone. Concise, adroit messaging is key. A sensible in-context logo; a tagline that captures the essence of what you do; an elevator pitch that nets out who you are and what you do in 4-5 sentences; a 2-page executive summary that tells a succinct and compelling story; a 10-12 slide PowerPoint that presents your value and advantage; a 3-minute video of your pitch that nets out why the investor ought to have an introductory chat with you; and last but not least, a website that hosts all the aforementioned material, plus enough content and data to allow the investor to make a cursory first pass on you and your team.

When your marketing message is in place, then you can begin to canvass your global investor list. Email marketing software will allow the targets to click on links if they want to learn more. You will get reports on what links the targets clicked and how many times, allowing you to gauge their interest and find the most engaged readers to contact.

So let’s say we create a list of 400-500 reasonable targets and start the outreach process through canvassing, and find that 100 that show some interest. Via further dialogue you can then vet those investors down to 50 good fits, then vet that down to 25 who are interested in a meeting, and may find that 12 are engaging in further dialogue and starting to develop a relationship with your company. That 12 will go down to 6 as time moves on, and eventually you will have 2-3 qualified investors that are the right fit, have a good relationship with you, and could invest.

Of course, there are many different iterations and configurations that can manifest in this process and the aforementioned is just a generic example. But the effort involved in getting those investors into your funnel through a canvassing process that highlights the fact that fundraising is strictly a numbers game and you need to set up that numbers game globally in order to succeed. A big part of the canvassing is getting your marketing messaging right and web presence pristine so that when investors get to your web site, there is a full pitch sitting front and center on the home page. This, in turn, makes it easy for them to decide to pick up the phone or answer an email and set up a meeting.

By Lucy Parkinson, Senior Research Manager, LSN

Cancer immunotherapy technologies frequently star in biotech news headlines. Scientists have pursued many approaches intended to enlist the immune system to fight tumors, including CAR-T therapies and checkpoint inhibitors. Cancer vaccine technology is one of the technologies under this broader immuno-oncologic umbrella. This approach entails using one or more immunogenic antigens to teach the immune system to attack tumors.

As a recent article in Xconomy highlighted, there are no approved products that use this approach to fighting cancer. However, using the LSN Company Platform we can identify many companies worldwide that are developing the cancer vaccines that could come into clinical use in the future.

The LSN Company Platform provides detailed profiles on early-stage life science companies and products under development worldwide. From this data, we took a sample of vaccine companies developing therapeutics for the oncology sector. This sample consisted of 69 companies. While a significant number of these companies are based in the USA, we also found information on companies developing cancer vaccines throughout Europe and the Asia-Pacific region.

Source: LSN Company Platform, Data as of Oct. 21, 2015

Only 5 cancer vaccine assets in this sample are currently undergoing Phase III trials. This affirms the perception that cancer vaccine technology is a field that is approaching maturity; the many early-stage assets identified by the LSN Company Platform show the field’s potential, but few cancer vaccine assets are likely to reach market in the near term. However, investors interested in early stage immuno-oncology assets will be closely watching the field’s progress.

Source: LSN Company Platform, Data as of Oct. 21, 2015

On the topic of investors, the LSN Investor Platform tracks investors both by indication area (such as cardiovascular, respiratory or cancer) and also by technology types of interest (such as small molecules, antibodies or vaccines); this means that we can use the platform to identify investors who are open to considering both vaccines and cancer. Our data set includes over 500 investors who are open to considering development-stage products in both of these two fields, thus representing a broad universe of potential investors for a cancer vaccine company. Much like the emerging companies in this field, these investors span the globe:

Source: LSN Investor Platform, Data as of Oct. 21, 2015

Multiple investor types are open to investing in cancer vaccines. Venture capital and private equity firms predominate, but we see significant potential interest from other types of investor, including large healthcare corporations and their venture arms.

Source: LSN Investor Platform, Data as of Oct. 21, 2015

With this level of global investor opportunity, cancer vaccine companies have many potential sources of capital to move their assets forward. LSN will look forward to seeing cancer vaccine technology mature and reach the marketplace in the years ahead.

By Christine A. Wu, Research Analyst, LSN

What kinds of companies are healthcare IT investors looking for, and what is the first question they ask in a meeting? Healthcare IT investors answered these questions and offered unique insights and valuable advice at LSN’s RESI Boston conference in September.

Moderated by Barbara Gamez Sims, Technology Licensing Manager, Mayo Clinic Ventures, our panelists include:

• Aaron Nelson, General Partner, dRx Capital
• Gabe Ling, Venture Partner, General Catalyst
• Hyuk-Jeen Suh, Head of East Coast Office, Samsung Ventures
• Michael Jin, Managing Partner, TEEC Angel Fund

“What’s in it for us to care?” This is the first question Hyuk-Jeen Suh of Samsung Ventures asks in a meeting. “Many start-up companies have not thought of that,” Suh clarified. Many entrepreneurs would highlight their ability to increase phone sales, but “that doesn’t mean anything to us.”

Gabe Ling of General Catalyst agreed – “What makes us different from other funds and how can we be helpful for you?” Yet most of all, Ling explained that investors are “always testing the quality of thinking behind any company.” As his first question, Ling asks, “Have you built something that is thoughtful?” All the questions around market and competition should be answered if the entrepreneur has put necessary time to think through all the relevant strategies behind his or her company.

Aaron Nelson of dRx Capital highlighted that not only do entrepreneurs need thoughtfulness, but they also need passion and trust from the very beginning. “If not, then the probability [of a good meeting] will be very low.”

Suh advised entrepreneurs to reveal a taste of their “secret sauce.” On one particular meeting, Suh asked how the company’s technology worked, in which the entrepreneur, rather than explaining, said to just trust in his technology. “He just couldn’t get over that hurdle.”

After a good meeting, the panelists focus on the management team. Along with developing trust, investors look at the quality of the entrepreneurs and their ability to work together in the field and plan a clear investment process. Michael Jin of TEEC Angel Fund builds the relationship to thoroughly evaluate how the team progresses the business of their company. Ling, on the other hand, does background checks. “You would be surprised with what some people hide!” he exclaimed.

Finally, each panelist provided a takeaway piece of advice for entrepreneurs:

1. Companies must thoroughly investigate their benefit to the investor.
2. Timing matters. “If you come to approach us a week before the round will close, we will have difficulty with that time frame because we have to check your IP.” Suh explained.
3. Have a good energy level! “I personally love working with high-energy people…If you have a great idea and a high-energy personality, that’s great,” Ling exclaims.
4. Have a fundamental understanding of your business. “Oil down what you’re doing into an understandable map,” Nelson explains, “If you can’t explain fairly quickly and easily without spreadsheets and excel models, that’s a big stretch for me.”
5. Focus on what you’re good at. Jin explains that this doesn’t mean to just look at your technology, but “sometimes you need outside help to build up your sustainable area.”

Reveal a taste of your “secret sauce.” A lot of entrepreneurs approach VCs, and especially CVCs and get nervous to sharing their mechanics. “I don’t need your nuance or source code, but be able to explain why is it that this works where the whole world has tried and you are the first to succeed?”