By Tom Crosby, RESI Conference Manager, LSN

As LSN prepares to bring the next Redefining Early Stage Investments Conference to San Francisco, we are proud to announce that emerging biotech and medical device companies are now invited to apply to showcase their technologies at the event. Over the course of the next two months, thirty innovative companies will be selected from the pool of applications for a highly sought-after presentation space during the week of the 33rd annual JP Morgan Healthcare Conference.

For its last two Boston events, RESI has employed a re-envisioned presentation model, called the RESI Innovation Challenge; rather than have CEOs pitch during a randomly allocated 10-15 minute time slot, RESI gives presenting executives a space in the exhibition hall for the full day of the conference. Typically, selected companies will use this space to present their executive summary or recent trial data on large poster boards spread throughout the hall. LSN has found that this model increases the number and frequency of investor interactions for presenting companies throughout the course of the day.

To add some friendly competition to the atmosphere of the conference, the RESI Innovation Challenge also invites all attendees to participate in a virtual investment contest between the 30 companies. At the start of the day, each attendee receives RESI Cash to allocate to the entrepreneurs whose technologies they find most influential. When all is said and done, the company receiving the most investor dollars is named the winner. In March, it was the Newton, MA-based Empiriko; September’s event crowned Boston’s ORIG3N. Who will take the top prize at RESI San Francisco? Apply to present now — it could be you!

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

At the third Redefining Early Stage Investments (RESI) Conference, LSN brought together successful life science entrepreneurs who were at various stages of their fundraising campaigns and asked them to share their experiences. The panel discussed what the early stage fundraising process was like for them and how others can build an outbound marketing campaign to raise money.

The panelists shared their insights on fundraising through the 4s framework: sourcing, screening, segmenting, and selling. Click on the video link below to hear the views of scientist-entrepreneurs in the life science industry.

 

Moderator:

Rick Berenson, CEO, Thermalin Diabetes

Panelists:

Barbara Fox, CEO, Avaxia Biologics

Fred Colen, President & CEO, BeneChill

Richard Gauthier, Head of Business Development, Microbiotix

Gabor Bethlendy, CCO & Founder, Parabase Genomics

Michael Tippie, CEO, TomegaVax

 

By Shaoyu Chang, Research Analyst, LSN

Health information technology (HIT) refers to a broad spectrum of technologies, ranging from personal health-monitoring applications to big data analytics. The venture capital firm Rock Health recently reported that venture capital funding in the HIT field reached $3 billion for 2014, well surpassing the $1.9 billion invested in the sector during 2013.[1] The LSN research team tracks investors in early stage life sciences, and we have noticed a growing interest in HIT as well.

The reason for increased interest is twofold. First, large IT corporations are diversifying their product lines and gaining exposure to the growing healthcare sector. Wireless implantable medical devices that enable remote monitoring of patients’ vital signs, smart bracelets that track an individual’s physical activity level, and algorithms that interpret genomic data are just some of the new products that corporations are hoping will reinvent how we look at healthcare. Corporate venture capital firms, such as Google Ventures and Verizon Ventures, are leveraging their expertise in electronic hardware, software, and wireless communication in order to tap into the growing number of relevant healthcare opportunities in these areas.

Second, traditional life science investors are being attracted to the HIT sector because of the lower risk, shorter development period, and rapid growth potential when compared with the traditional medical-device and pharmaceutical sectors. These investors are leveraging their life science expertise to capitalize on these opportunities when they can identify and comprehend the unmet needs these opportunities are solving. Of the hundreds of investors we interviewed, 88% of medical-device investors are either investing or seeking to invest in HIT, and 60% of biopharmaceutical therapeutic investors are doing so as well. Exhibit 1 shows the total composition of life science investors interested in HIT, as interviewed by the LSN team.

Investors’ enthusiasm is also supported in part by a favorable regulatory environment. The Affordable Care Act provides financial incentives for healthcare providers to use electronic medical records and make meaningful use of HIT systems.[2] Furthermore, in the eyes of regulatory authorities, HIT products differ significantly from medical devices and therapeutics in terms of risk profile. In its 2013 final guidance, the U.S. Food and Drug Administration made clear that it will take a hands-off approach on low-risk HIT technologies, making this field much more attractive to risk-adverse investors.[3]

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[1] Rock Health, Q3 funding update: Digital health rakes in $3B, October 2014, accessible from http://rockhealth.com/2014/10/q3-funding-update-digital-health-rakes-3b/.

[2] U.S. Department of Health and Human Services, New Affordable Care Act tools and payment models deliver $372 million in savings, improve care, September 2014, accessible from http://www.hhs.gov/news/press/2014pres/09/20140916a.html.

[3] U.S. Food and Drug Administration, Mobile Medical Applications: Guidance for Industry and Food and Drug Administration Staff, September 2013, accessible from http://www.fda.gov/downloads/MedicalDevices/DeviceRegulationandGuidance/GuidanceDocuments/UCM263366.pdf.

 

By Michael Quigley, Director of Research, LSN

Last week, we discussed some of the tactics and tips used by the LSN research team to identify potential investors in the life science space. Identification is a multistep process, however. After you have a created list of potential investors from your personal network, the conferences you’ve attended, the databases and websites that report on financing rounds, and LinkedIn, for example, you need to go through the names one by one to determine who is worth contacting given your particular opportunity. There are several criteria that potential investors should meet to make it into your pipeline.

They Should Be an Investor

This may sound obvious, however, it is important to consider. Many companies with names like ABC Ventures or XYZ Capital may seem as though they are investors when in reality they are consultants, service providers, and investment banks—none of which allocate capital. Spending time contacting these companies for an investment is not worthwhile, as they will look to offer you their services, not capital.

They Should Be Actively Deploying Capital

Many investors in the space have elaborate websites and massive portfolios, however, they do not currently have capital to invest. To determine if investors are active, the first data point you should look for is when they closed their most recent fund. The term closed signifies the end of the fundraising period for a fund and the start of the investment period. Funds that have closed recently (within one to two years) are ideal, as they still have significant cash reserves and can hold new investments for a longer period. Generally, any fund that is six years old or older will be making investments only into existing portfolio companies or companies from which they can exit relatively quickly, which makes them less than ideal targets. If fund information is not available, then you should look to previous investments to see how recently they allocated. If they haven’t made a new investment in more than a year, then more than likely they will not be a good fit. It is important to note that not all investors make their investments known, so it may take some digging to uncover previous investments—if they are online at all.

They Should Be a Good Fit for Your Opportunity

Determining if an investor might have interest in your type of technology and its stage of development can take a significant amount of up-front time, but it will save you from wasting hours down the road. Even with referrals, it is important to understand if you fit the mandate of the investor, otherwise the meeting will likely yield nothing. There are a number of factors to consider, and the first place to look is the investor’s website. Some investors clearly spell out their investment parameters, including indications, stages, and regions of interests, as well as current and past portfolio companies. Other investors, often hedge funds and family offices, provide virtually none of this information on their websites. In cases where such information is not readily available on the website, it is best to check various news sources for reported financings rounds in which that investor was involved. You should compare your opportunity to the deals the investor has previously participated in. Look at the size of the round, the country, the type of technology, the stage of development, and the target indication.

These are all factors to consider when screening potential investors. If an investor isn’t a fit with your opportunity, it is not worth your time to reach out. If an investor has invested in your type of technology but at a later stage, it is worth presenting your opportunity and getting on the radar for when you are looking to raise further financing. However, if an investor fits all your criteria and is active, you have found a strong lead for your campaign.

 

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

At the third Redefining Early Stage Investments (RESI) Conference, LSN brought together experts from six major corporate venture funds that are involved in the early stage life science arena. The speakers shared examples of their recent investments and detailed their investment interests. The panelists also answered a variety of questions, including: What is your take on the resurgence of early stage pharmaceutical investment? How should I approach a corporate VC investor? Do corporate venture funds outperform VC firms, large pharmas, and other sources of investment? What is your advice for scientist-entrepreneurs?

Click on the video link below to hear the views of major players in the life science industry

Moderator: Vikas Goyal, Senior Associate, SR One

Panelists:

• Marian Nakada, Vice President, Venture Investments, Johnson & Johnson Development Corporation
• Jason Hafler, Director of Investments, Sanofi-Genzyme BioVentures
• Mette Agger, Managing Partner, Lundbeckfond Ventures
• Stephen R. Padgette,Vice President, R&D Research Strategy, Monsanto
• Tetsuro Iwata, Senior Manager, MP Healthcare Venture Management

By Michael Quigley, Director of Research, LSN

The research team at Life Science Nation is constantly identifying, interviewing, and profiling investors in the life science space. From Boston to Hong Kong, we leave no stone unturned in our efforts to uncover a variety of investors. This article shares some sources and tactics that we use to initially identify life science investors across the globe.

Investment Conferences

A great way to begin a search is by scouring the lists of attendees and speakers for various life science investment conferences. Investors who recently attended these types of events tend to be actively seeking new opportunities and therefore are ideal prospects for your campaign. With life science investment and partnering conferences taking place year-round and worldwide, there are a lot of potential investors to be uncovered.

Historic Financing Rounds

After pulling names from conference lists for the past year or two, look through private life science financing rounds for lead investors and co-investors. This can also yield a significant number of prospects. At LSN, we use our proprietary financing-rounds database for this purpose. However, databases and reporting sites that focus on more general financing rounds can be used for this as well. Such sources also grant you some visibility into the size and types of funding rounds an investor has participated in, helping you to determine if a particular investor may be a good fit for your company.

Company Websites

Other great and often overlooked sources of investor leads are the websites of early stage life science companies. Many companies list their investors on their website or have one or more investors on the company’s board. By reading the biographies, you can see which investment firm an investor is associated with.

LinkedIn

Finally, LinkedIn, when used correctly, can be a great source for uncovering investor leads. By taking advantage of its filtering capabilities, you can search for individuals by industry, location, and keywords. Although you may not be able to find investors for specific technology types or development stages, LinkedIn is a good place to start. It has helped our research team connect with some investors who we wouldn’t have found otherwise.

 

To do all of these things—and to do them well—is a serious time commitment and is only the tip of the iceberg. When you have your investors identified, you should take steps to validate them to determine who would be a fit not only for a life science company but also for your specific technology and stage. Without proper validation, you will waste countless hours calling and emailing investors who have no real interest in your opportunity.

Next week, we share our insights and tactics for validating potential investors. Stay tuned.

 

By Lucy Parkinson, Senior Research Manager, LSN

At LSN, we track both life science companies and life science investors located all over the world. We frequently stress that if you’re seeking capital in the life science field, you will have more success if you reach out beyond your own backyard and market your opportunity to global investors. Nowhere is this more apparent than in Asia, where a history of concentrated R&D funding has resulted in the flowering of new biotech start-ups in the region.

The LSN Company Platform tracks thousands of life science companies across Asia. As shown in Exhibit 1, some of these are contract research organizations, suppliers, and other outsourcing partners, but many are companies developing innovative biotechnology or medical technology products.

As in the rest of the world, government investment in R&D has resulted in a great diversity of new discoveries. A deeper dive into the data reveals the breadth of technologies that these innovators are pursuing. As shown in Exhibit 2, many therapeutic start-ups in Asia are developing novel biologics.

Exhibit 3 shows the medtech sphere, where diagnostic devices, imaging, and hospital hardware predominate.

So which investors are interested in investing in Asia-based companies? As shown in Exhibit 4, the LSN Investor Platform has hundreds of investors who are looking at opportunities in Asia. Some of these investors have a specific Asia strategy; others are truly global investors who would consider a good opportunity no matter where a company is based.

While institutional private equity funds predominate, investors of every kind show an interest in life science opportunities in Asia, in keeping with what LSN has learned from working with start-ups in the US and Europe. Whether seeking to increase their ROI or to move science forward, investors are willing to look far afield for the right place to allocate, and start-ups are discovering that it’s best not to limit their horizons when seeking capital.