Fundraising- You’re Either In or Out

27 Jun

By Dennis Ford, Founder & CEO, Life Science Nation; Creator of RESI Conference Series

From my experience in the fundraising arena, there is a pervasive lack of understanding regarding what it actually takes to raise capital. Entrepreneurs underestimate the associated time and resource commitment needed for a successful fundraising campaign, and that exacerbates the capital-raise dilemma. Part of the overall challenge is how to raise awareness among entrepreneurs as to the true effort required for a fundraising campaign. The first issue is that a campaign should be treated as a full-time undertaking – one or two people in the company have to commit to this endeavor as their primary focus. You can try and do it part time or catch-as-catch-can, by attending a few conferences a year as many companies do, but this is much more likely to be ineffective and unsuccessful, especially if your company has a limited runway left.

The fact of the matter is, fundraising takes a full-time commitment. Of course, a CEO or CSO has to continue their supervisory roles and company tasks (that’s the other 40 hours), but make no mistake about it, the majority of the setting up, launching and then executing a campaign should be your “primary effort” if you want to see results. Consequently, the BD staff at LSN spend most of our time explaining this critical fundraising dynamic to fundraising CEOs. The LSN mantra is:

  • Fundraising is not a part-time proposition
  • Before starting your campaign, make sure your branding and messaging is lucid and cogent. Your marketing collateral should be able to garner investor interest on the first read – this involves really working on your story
  • Fundraising is a numbers game, and because it’s a numbers game you need to move from a regional to a global mindset to increase statistical probability – your local region may give you 50 investors that are a fit for your firm, where looking globally will give you 500 or more targets
  • Get a list of investors that are a fit for your stage of development and product, The Global Target List (GTL)
  • Set up a CRM to manage the list of 500 or so global investor targets
  • Canvass and work the GTL: Get a “people person” resource to canvass the targets through phone and email campaign. It is great when CEOs cold call but much more productive when a professional admin or BD staff canvass and set up the calls
  • You need to get out of the building and out in your turf. LSN has six global RESI events that can make meeting partners very efficient. Fundraising involves creating a dialogue that turns into a relationship and then, potentially, a capital allocation.
  • Follow up is a great challenge and also another universe unto itself. Following up (or neglecting to) makes or breaks a campaign on many levels.

Most entrepreneurs fail because they think a fundraising campaign is just a side project. Part-time fundraising doesn’t scale and elongates the effort, increasing the timeline. On average, it takes 9-18 months to raise capital, data LSN has aggregated from discussions with many fundraising CEOs and early-stage investors. I am always shocked when, during my fundraising boot camps, I ask the audience how long they think it takes, and the answer is 6-9 months. Some people do get funded in that timeframe, but it is the exception and not the rule.

LSN has been in the middle of the early-stage life science fundraising arena for the past seven years and I am happy to share what I have learned. My challenge is trying to help educate startup executives in what it takes to do a fundraising campaign. Fundraising is a universe unto itself and isn’t a kinda sorta part time thing. The most shocking realization that a fundraising CEO has to deal with is that if you want to raise capital, make it your main priority, or find someone in your company who will, to maximize your chance of success.

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