By Mimi Liu, Research Analyst, LSN

There’s a saying in the data industry that data comes in two states: out of date, and very out of date. At LSN, we therefore believe it’s important to embark on your fundraising campaign with the most current information possible.

Before reaching out to investors, fundraising entrepreneurs will generally gather information on investors from sources such as their personal network or Internet searches. Alternatively, an executive may consult an investment banker or another professional who maintains a Rolodex of investor contacts. However, the relevancy and the value of the data from those sources are hard to verify.

LSN research staff have been tracking life science investors for almost three years, and have discovered that the only way to maintain accurate information is to follow up regularly with investors to verify that they are still actively investing and that their mandate is still the same. It’s hard to track detailed investment strategies based on a website alone; keep up a dialogue with investors to be aware of changes in investment mandates.

What are the main reasons that investment mandates might change?

The Changing Investor Landscape

In the life science investment space, there are often old players dropping out and new players entering. In the private equity and VC world, fund life cycles often cause previously active investors to cease allocating temporarily while the firm raises a new fund. There are also several reasons an investor might cease to invest in life sciences entirely: investment failures, key staff with healthcare expertise leaving the firm, or a change in strategy to focus on a different industry. Simultaneously, other investors are entering the life sciences fray for the first time. Technology firms, family offices, and large healthcare organizations develop an interest in investing in the life sciences and start to funnel their capital into start-ups. New VC funds are being formed. Also, more and more international investors, especially Asia-based investors, are now looking for new opportunities around the globe. Additionally, existing life science investors, such as big pharma firms, may expand the scope of their investments and shift their focus to early  stage companies. Fundraising executives will want to keep an eye on new investors and add them to a list of potential targets.

Keeping Data Current

Your investor target list needs to be a living list. If the list you’ve gathered is based on old data, it’s due for an update. You may need to verify contact information, typical allocation sizes, and the firm’s investment focus. If a firm has raised a new fund, the fund may have a different mandate from previous funds; for example, one Boston-based investor that we’re in contact with  previously invested from a fund that focused on therapeutics and medical devices, but this investor has raised a new fund that will focus on healthcare IT opportunities. By maintaining a dialogue, you can get access to future-looking information on the firm’s investment plans  that goes beyond what is  available on their website.

Verifying Third-Party Data

Start-ups sometimes work with third parties that help them raise a financing round, such as investment banks or fundraising consultants. When working with third parties, life science executives should ask: How current is their network?  If you ask to see a target list of investors, you can then do your own research to check how up to date  that information is. An LSN case study found that an investment bank had provided a start-up with many contacts that were out of date or irrelevant.

Although there are unpredictable changes in the investment landscape, getting accurate information can help entrepreneurs make the right list of targets. Moreover, following up with investors and being aware of changes in their mandates can have a meaningful  impact on managing your target  list. Before collaborating with third parties in the fundraising process, check that their network  is up to date. For fundraising start-ups, accurate data is vital to constructing a target list of investors.

By Lucy Parkinson, Senior Research Manager, LSN 

Last month at RESI@TMCx, we gathered together a group of investors from large medical device manufacturers to discuss how they engage with early stage medtech companies. In this panel, investment staff from General Electric, Becton Dickinson, Johnson & Johnson, and Siemens answered wide-ranging questions about engaging with early stage companies, including: What mechanisms do you use to engage with startups? How do you work with accelerators and incubators? Are medtech strategics investing at an earlier stage than they did in the past? How do you approach breakthrough technologies that could disrupt your firm’s existing businesses?

To hear the answers to these questions and many more, watch this RESI video recap.

By Lucy Parkinson, Senior Research Manager, LSN 

The first Redefining Early Stage Investments (RESI) Conference took place on September 16, 2013, and two years later, following highly successful events in San Francisco and Houston, we return to Boston for the sixth RESI Conference. With new and returning sponsors including Johnson & Johnson Innovation JLABS, Charles River Laboratories, McDermott Will & Emory, and Wuxi AppTec, we expect this event to be the largest RESI so far, with more content and more meetings than ever.

The RESI Conference Series was founded with the goal of creating meetings based on a common fit. Our experience shows that starting with fit, and then finding a targeted alignment between entrepreneurs and investors, leads to compelling conversations; RESI’s mission is to provide a venue for those conversations to begin and develop. By connecting early stage life science fundraising executives with the right investors, RESI is where qualified fundraising relationships arise.

LSN’s CEO, Dennis Ford, says, “We want to inundate the attendees of RESI Boston with more amazing opportunities than they can handle, including one-on-one investor meetings, firsthand information from RESI’s early stage investor panels, and tactical guidance from fundraising workshops—because if we’re doing that, we’re doing our job. We want to provide a huge amount of relevant content to everyone, on one day. RESI’s goal is to give the fundraising CEOs and scientist entrepreneurs in this early stage investment world as much value as possible.”

RESI Boston offers entrepreneurs the opportunity to schedule up to 16 meetings with investors through the RESI Partnering Platform; and in addition to these face-to-face meetings, 20+ panels and workshops focused on various aspects of fundraising and investment will provide platforms for investors and industry veterans to share valuable insights with fundraising entrepreneurs.

If you’d like to be part of the largest RESI ever, you can register before 7/31/2015 at the Early Bird Rate here.

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

On the heels of last weeks Biotech Family Offices Panel Video from RESI @TMCX we bring you our Medtech Family offices video. Hear firsthand accounts from these family office investors in the medical device space regarding the types and stages of companies they are looking for and how to go about getting in touch with them.

Click on the video below to hear the views of these family office speakers for yourself.

 

By Dennis Ford, Founder & CEO, LSN 

The LSN mantra is that raising capital is a numbers game.  To succeed, you must find investors that are a fit for your product and stage of development, go global rather than restricting yourself to your local region, and target all ten categories of early stage life science investor rather than restricting your view to one source of capital.

Every few months it seems that someone in the investment world has an epiphany that they must create a global family office network. The idea always seems compelling and usually involves a plan to sponsor small, intimate conferences that target companies seeking investors. The network creators begin courting the venture community and healthcare CEOs with descriptions of the family offices that allegedly bought in and will attend these conferences — and the price to appear at them is often  a lot of money. The attending fundraising CEOs theoretically benefit from getting in front of the new hot category of investor, and it’s suggested that the family offices will participate in such a small meeting in return for the chance to trade strategies, tactics, and evaluations with other similar entities.  This model and concept is all about getting special access, which sounds almost too good to be true…right?

Having been involved in capital fundraising for decades, I have seen this model surface countless times. Many of these family office networks can provide examples of the allocations and partnerships their network has generated; the question is how many and how much?  This model has been called a “walled garden” because of the illusion it perpetuates of a bevy of family office players  banding together in a closed, almost secret network who can be accessed by paying a fee for a chance to connect with the  right contact. While these networks may include at least a handful of contacts with whom a dialogue can be established, I have yet to encounter a walled garden family office firm that employs any research staff to track what the family offices’ investing interests are. This is an absolute necessity for staying up to date on investment mandates, which are ever-changing—without accurate data and an understanding of the possible fit between your company and the investor, contact information has tenuous value.

Additionally, most family offices (institutions with over $1 billion in assets under management that form one of the categories of investors that LSN tracks) would rather not be a part of any organization that would compromise their anonymity; these firms are well known for a predilection for stealth mode and a preference for flying under the radar. Because they have access to large sums of capital they do not need to form syndicates, so have little to gain from the walled garden model.  As for the opportunity to share information and strategies behind a virtual secret wall, family offices already source from each other and don’t need third parties or service providers to facilitate this. Also, while syndication does occur regionally and within close networks of like-minded family offices, it doesn’t seem relevant on a global scale simply because of the low ratio of family offices to fundraising CEO’s. The larger Family Office conferences can be useful to fundraising executives, offering the possibility of contact with a handful of family office representatives, but these bigger venues  are primarily populated by family office service providers who are also being charged high fees to attend.

LSN tracks 970 family offices globally, has identified 180 as private life science investors, and has forged a deeper relationship with 70, which use LSN as a trusted sourcing vehicle. This is also true of the other nine categories of investors that we track. Many family offices see us as a trusted source that has proven our worth and provides a compelling and augmenting service offering that can be vetted quickly for no cost. But we recognize that focusing too much on one category of investors, especially a group like family offices, can be counterproductive, which is why over three years we have built up a true global network of over 5000 early stage investors covering ten categories.