By Michael Quigley, Director of Research, LSN

Back in January, at our RESI Conference, I gave a presentation describing the tools and methods used by LSN’s Research team to identify, profile, and initiate dialogue with investors in the life science space. The response was overwhelmingly positive, with attendees praising the tactical nature of the information, and Medmarc requested I host the presentation as a webinar for their monthly series. The entire webinar can be downloaded here, however with this article I wish to elucidate one simple tool that can be used immediately and will drastically improve your effectiveness when researching investors.

While Google remains the most common search engine in the world, many people underutilize it. The following two images feature a few Boolean operators that can be used in the Google Search bar as well as a screen shot of a sample search using them that shows how effective they can be.

Thanks to the use of Boolean operators, the search above yields only web pages that have “life science” in the title, include both “invest” and “early stage” somewhere in the text, and do not include the word “public.” As shown, this one simple search yields a number of early stage life science investors on just the first page of results. When using these operators for your own fundraising campaign, you should tailor the search to include keywords that describe the profile of your opportunity. These include your stage of development, indication, technology type, and any other information that can be associated with your company or product. You can also narrow your search based on the type of investor you are interested identifying. Whether you are seeking Family Offices, Corporate Venture Capital, Venture Philanthropy, Venture Capitalists (VC), or any other class of investor, you can focus on them by including the investor class in quotations in your search.

Experiment through multiple searches; you can go from very narrow to broad by varying the number of keywords and operators you use. Consider who might be interested in your opportunity from a number of angles, including geographic regions with government initiatives, people affected by the condition, potential strategic benefactors of your technology, as well as financially motivated investors looking strictly for a strong ROI. By doing this, you can build a strong target list of people to contact who may want to work with you directly or can refer you to someone else in their network who does.

For over two years, LSN has been using these methods to identify and profile capital providers in the life science space with outstanding results, both in finding new investors and successfully matching companies with investors. The webinar offers more information for those entering the capital fundraising landscape, including details on the different categories of investors that can be found, how to determine whether an investor is a good fit, and how to structure the initial outreach to increase the odds of a meaning dialogue. I hope you can use this information to better identify investor leads and I wish you all the best in your campaigns!

By Lucy Parkinson, Senior Research Manager, LSN

We’ve previously taken a dive into the LSN Company Platform and the LSN Investor Platform to assess the life science landscape in America’s Northeast and Southwest regions. This week, we will examine current product development and investor activity on the West Coast.

Using the LSN Company Platform, we took a sample of biotech and medtech assets being developed in West Coast states. While the bulk of these assets are in California, the state of Washington also makes a significant contribution to the data, and the LSN Company Platform also tracks several companies based in Oregon and Hawaii. In total, the sample drew from the pipelines of 493 companies, which collectively are developing 187 medtech products and 1529 biotech products. In the case of the biotech assets, we track the specific target indication in 1399 cases, as is shown in Figure 1:

While many of the assets under development on the West Coast are in the cancer sector, we also see significant numbers of pipeline assets in other fields. In addition, although the clinical areas with the most assets—oncology, diseases of the nervous system, and endocrine and metabolic diseases—also have solid pipelines nationwide, the numbers in other indication areas illuminate distinct regional differences. Compared to the Northeast, we see more innovation in blood and immune disorders, but less in the musculoskeletal field.

Beyond this top-level data, we can also look more specifically at the breadth of the assets in each indication area. If we look deeper into the field of oncology, we find that these West Coast-based companies are developing cures for a wide variety of cancers. Figure 2 shows the top 20 subtypes of cancer in terms of the number of assets in development. Several cancers that currently have very high mortality rates, such as pancreatic, lung, and ovarian cancers, are represented in this group. In these areas, scientists are advancing new products that could have a significant impact on patient outcomes in the future.

The West Coast is also a hotbed for life science investors. The LSN Investor Platform tracks investors throughout the region, and Figure 3 provides a breakdown of those that we have discovered have an interest in development stage life science companies:

In addition to the many life science venture capitalists based on the West Coast, LSN Research has found that there is a significant number of West Coast angel groups that are interested in life science companies. Corporate venture capital is also a major force in the region, with many VC arms of major West Coast tech companies looking for strategic opportunities in the healthcare field.

LSN’S RESI Conference series now includes regular annual stops in three regions of the U.S.: the Northeast, Southwest, and West Coast. All possess significant life science innovation ecosystems and a host of local investors interested in opportunities both locally and globally. As RESI tours these three corners of the U.S. life science universe, we welcome you to join us and connect face-to-face with like-minded individuals who are a match for your product, or for your investment criteria. Meet like-minded individuals who can work alongside you in bringing new cures to market.

By Natasha Eldridge, Marketing Manager, Life Science Nation

Angel investment often acts as springboard, supplying the capital required for life science companies to generate the data necessary to garner interest and secure funding from larger institutional players. This critical pool of capital should be on the radar for every fundraising entrepreneur in the space. In order to help Resi attendees in the biotech space better understand how to go about building relationship and securing an allocation from these groups LSN has assembles a panel of 5 representative from angel group with interest in the biotech therapeutics space. With representatives from groups based Texas, California, Pennsylvania, and Nova Scotia this panel is sure to bring some unique and diverse perspective on angel investment in the space.

Moderated by Bril Flint, Board Member, Central Texas Angel Network the audience will hear from:

Bernard Rudnick, Founding Member, Mid Atlantic Bio Angels

Brian Lowe, Co-Founder & Director, First Angel Network Association

Daryl Basham, Member, Houston Angel Network

Michael Jin, Managing Partner, TEEC Angel Fund

This session will help scientist entrepreneurs understand the perspective of an angel. Angels will explain their investment preferences, and those of their respective syndicates. What types of deals are most attractive to angels? How does an angel group filter, evaluate and parse the plethora of deals that surface? What do angels look for in the initial correspondence? If you are considering angel capital to help move your technology forward, you’re not going to want to miss this panel of experts.

By Lucy Parkinson, Senior Research Manager, LSN

Last night in Cambridge, LSN joined Women In Bio for a Shark Tank-style pitch event. The audience heard pitches from five life science entrepreneurs. Across the table from them were four experienced early stage life science investors playing the role of “sharks”.

So what did we learn from these life science innovators and from the sharks’ cutting responses to their pitches?

1. Where women’s health meets personalized healthcare, there are significant unmet needs that startups can target.

Personalized medicine was a significant theme of the event, and three of our innovators are targeting major problems in the current standard of care for women’s cancers. By using biomarker diagnostics, personalized monitoring devices, and nanotech drug delivery mechanisms, these entrepreneurs hope to offer earlier detection, personalized treatment options, and targeted treatment to women with ovarian and breast cancer.

2. Investors want to know how science is guiding a business.

While it’s important to deliver a business pitch, not an academic pitch, investors want explanations of how a company’s plan is backed up by research. How did the scientific research help you choose your lead asset, or your target indication? Has your research been published or patented?

3. While personalized medicine could revolutionize healthcare, the public first needs to be educated about the technology.

As one entrepreneur explained, a company providing a new personalized health product or service is entering a nascent marketplace, and will have to educate consumers on the benefits of adopting the new technology. Any product in this field requires a marketing plan that includes education and awareness, not just a traditional sales approach, and investors may be wary due to the difficulty of developing this new marketplace.

4. Data is central to personalized healthcare, so companies must take data science seriously.

The sharks pointed out a number of potential pitfalls for companies that are collecting and using personal health data. A startup has to demonstrate that they have the in-house expertise not only to use this data, but also to provide it to the user and to protect it adequately from unauthorized access. The ability to share data with physicians is another vital element of a data-driven healthcare product. Many startups in personalized healthcare are also considering how best to monetize their data; there is a high level of interest in partnering with pharma companies to provide data for research purposes, but it is vital to obtain full consent from patients before considering this path.

5. New healthcare technologies have to work with physicians.

As the sharks pointed out, no physician is going to order a biomarker test unless that physician is familiar with the biomarker and believes in the information it provides. Similarly, no physician will pay attention to the data generated by a personal monitoring device unless he or she trusts that the device is producing valid and medically actionable information. In the case of diagnostics that directly affect treatment decisions, such as a test to guide breast cancer treatment, physicians may be very concerned about false positives and false negatives; it’s important that physicians know what companies have done to reduce this possibility, and how a patient may be affected by a false result.

6. The ask is important. It has to be clear, and it has to be reasonable.

The sharks noted that this can be a difficult part of the pitch to get right, perhaps particularly for women entrepreneurs, who can often receive a negative response in the workplace when they initiate financial negotiations. However, the ask is a vital component of a pitch to investors. Investors need to know how much a company is raising, and where that money is going to take them. A sum that is out of line with expectations will raise a red flag. To help you estimate accurately, look at financing rounds for similar companies, and get a sense of the real costs of advancing an asset; if you plan to advance two lead candidates into the clinic, be realistic about the expense of moving two programs through an IND.

By Michael Quigley, Director of Research, LSN

Entrepreneurs we work with often ask us when they should start contacting investment firms. Almost invariably, our answer is as soon as possible. That doesn’t mean a company should feel rushed into sending out unfinished, sloppy, or overly cumbersome marketing materials. You should take the time to organize your brand, from logo to tagline to pitch deck and executive summary, so that you have a professional and concise package. Any upcoming data or potential partnerships or collaborations can be easily added into the materials as they come into fruition.

If a company is waiting for an event or to receive certain data before formally fundraising, outreach can be framed as an introduction to the company, rather than a direct solicitation for funds. In this case the purpose is simply to begin a relationship. As always when reaching out to investors, it is crucial that you contact people who have interest in your sector and technology, otherwise they are unlikely to be willing to engage in even an introductory conversation or be able to help you when you are formally seeking capital. Building investor relationships early allows companies to:

1. Establish a Communication Channel

At the very least, this practice gives companies the opportunity to cultivate an investor contact who knows who they are and what they are doing, and who will be significantly more responsive and upfront with feedback when the company formally starts to raise capital. This is the first step in developing any investor relationship, and gives fundraisers a head start on their process no matter where the company is in their development.

2. Demonstrate Growth/Progress

Reaching out and explaining a plan and future company goals and milestones gives an entrepreneur the opportunity to show potential investors progress and growth over time. This will increase their faith in your ability to manage the product, making the company a more worthy potential investment. Investors aren’t investing in a snapshot of a company at a given date and time; they are investing in the entire lifeline of development. By providing them with a real-time window into that process, you help make the picture more clear and understandable.

3. Build Trust

Trust is crucial in any relationship, especially when it involves financial capital. By speaking periodically, demonstrating growth, and, perhaps most significantly, explaining any hiccups that led to missed milestones or forecasts and what was learned from them, an entrepreneur can forge a strong bond with an investor. This level of trust can be invaluable, particularly when a company begins looking to secure a lead investor.

4. Create Pipeline for Future Rounds

Early stage entrepreneurs in the life science field will almost inevitably have to raise multiple rounds of financing, and there is also a good chance that each round will include different investors. By building relationships early with investors allocated at various stages, you can decrease not only the time required to raise your first round of financing, but also that of your future rounds. Having seen a company grow over a few years further strengthens the bond and level of trust an investor feels with that startup.

Waiting until you have limited runway in terms of capital on hand can be a death sentence for an early stage company. Since the average fundraising campaign takes between 9 and 18 months, entrepreneurs must do all they can to streamline and advance the process as early as possible. It is often apparent to investors when a company is running out of cash and time, and that can negatively affect their valuation. Over the years we at LSN have seen a number of companies fall into this trap, and you do not want to join that club. Get your materials together, identify targets, and start reaching out, getting feedback, and building relationships. You will be glad that you did.

By Nono Hu, Senior Manager, Branding & Messaging, LSN

The cardiovascular sector presents unique challenges both to entrepreneurs and investors.  The steep cost of Phase III trials and the strict regulatory standards applied to cardio drugs make investing in cardiovascular products a risky endeavour.  Investors who dare to take on this field are rewarded with access to large markets, including a growing need for new cardio solutions in emerging economies.  In addition to investors who take on cardio for the potential ROI, nonprofit funders see the potential for their dollars to make a significant global impact by backing early-stage companies.

For RESI @ TMCx, LSN has assembled a panel of veteran investors who are focused on meeting these challenges, Moderated by William Kohlbrenner, Consulting Scientist, Boston Innovation Capital & Scientist-in-Residence, Life Science Nation the audience will hear from:

• Ross Tonkens, Head of Science and Technology Accelerator, American Heart Association
• Jeffery Sheldon, General Partner & Managing Director, Citaretx
• Matt Crawford, Managing Director, PTV Healthcare Capital
• James Eadie, Principal, Sante Ventures

These investors will explain how they assess cardiovascular investment opportunities, what cardio entrepreneurs can do to differentiate themselves when seeking investment, and how to find investors who are interested in working with you in matters of the heart.

By Michael Quigley, Director of Research, LSN

Angels represent an extremely important pool of capital for a fundraising entrepreneur, especially since they have been increasingly syndicating and participating in larger financing rounds. To help entrepreneurs with a medical device or technology better understand how to receive an allocation from an angel, LSN has assembled a panel of angel investors with specific interested in medical technology.

• Ashok Rao, Member , GOOSE Society of Texas
• Chuck McCoy, Founder and Executive Director, North Texas Angel Network
• Philip Sanger, Managing Partner, Texo Ventures
• Robert Tucci, Co-Chair, Sciences and Life Sciences, Houston Angel Network

This session will help scientist entrepreneurs understand the perspective of an angel. Angels will explain their investment preferences, and those of their respective syndicates. What types of deals are most attractive to angels? How does an angel group filter, evaluate and parse the plethora of deals that surface? What do angels look for in the initial correspondence?

Other topics of discussion will include their criteria for management team, stage of technology, and whether there is a preference for regional or global firms. What is the difference in presenting to an angel group versus a traditional one-on-one investor meeting — and how does the vetting process work? If you’re looking for angel capital to move your technology forward, don’t miss this session of expert insight at RESI.