Next Phase Newsletter

By Dennis Ford, Founder & CEO, LSN

Life Science Nation was featured in the Nicole Fisher’s Forbes article  “Reinventing Investment: The Funding Landscape Of Life Science Shifts For Good” on Monday! This article offers some great insights on LSN’s mission in the early stage life science investment space, and how the Redefining Early Stage Investments Conference is filling the funding gap left by venture capital. I encourage you to take a look and welcome your feedback!

By Michael Quigley, Research Manager, LSN

As a research manager at LSN, I spend my time researching, calling and interviewing life science investors from around the globe to find out where the money is, and where investors are planning to direct their funding. It’s an ongoing learning experience, and it has given me the opportunity to identify some interesting patterns. Here are few things I’ve learned along the way:

New Investors Are Surfacing to Fill the Void Left by Venture Capital

Due to a shift in the investor landscape, new entities are emerging to fund science that has been left behind by the VCs. Having spoken with many of these new investors it becomes apparent that being new is one of their greatest hurdles. They do not have the draw of big pharma or top 10 VC names that every industry blog article seems to reiterate as if those few sources was all there was to the life science investment landscape. These investors are more under the radar and as a result are looking for targeted deal flow.  From service providers going direct to new virtual pharmas looking to in-license assets and nurse them through the clinic, to foundations and family funds, these investors want to hear about potential opportunities and tend to be much more responsive than their more institutional counterparts. Additionally these investors tend to be much more targeted in terms of types and stages of companies that they are looking to invest in, so is it important to determine who they are, and where their focus lies.

Investors Want Companies to Be Open to Pivoting

Having asked many investors what they look for in potential investments, one quality sought by many is flexibility or the ability to pivot. Many biotech entrepreneurs are overly headstrong in what their target indication is or what they envision for their company’s future. In many cases it may be advantageous to target an alternate indication with a less stringent regulatory pathway first, begin generating revenue, then look to repurpose the product to the original indication. This is applicable both for therapeutics and devices, and is a function of the industry as it currently stands. Investors of all types are interested in time to market and the difficulty of the regulatory pathway so if pivoting your product’s focus to begin generating revenue sooner is a possibility, investors are going to be more attracted to companies that realize this and take the lower hanging fruit before going big.  Across the globe, regulatory agencies define the life science marketplace and you are better off trying to work in alignment with them when possible rather than swimming against the tide.

The one commonality between all of these issues is change. Following old roadmaps for investing and fundraising in biotech can be a fatal mistake. The industry is maturing through natural selection and only those investors and companies that are able to adapt to the changing environment will be able to stay alive and prosper.

By Maximilian Klietmann, VP of Marketing, LSN

The Redefining Early Stage Investments (RESI) Conference is poised to launch on Monday. Getting this 400 person event together was no small feat: The RESI team relied heavily on a strict strategy on delivering quality content that was current, relevant, and compelling. The main tactic was to focus on early stage investment and really understand how that impacts emerging life science startups. When LSN embarked on the RESI Conference, there was a single mantra that drove the entire event organization process: Content is king. So many conferences recycle dry outdated content, and it’s the same old speakers with the same old content. This is precisely what LSN sought to change.

A brief glance at the RESI agenda shows that we succeeded: There are 16 panels covering topics such as family offices investing directly, non-profits adopting for-profit models, CROs investing into startups, the latest big pharma in-licensing activities, and other emerging trends in early stage life science investing. On top of that, there are workshops covering how to conduct a fundraising campaign, the legal landscape, and valuation.

So how exactly was LSN able to compile all of this content? Quite simply, it comes down to the fact that LSN’s primary business is working together with early stage companies raising capital, and profiling the investor landscape. LSN tracks over 5,000 active biotech and medtech investors around the world, and the LSN research team maintains an ongoing dialogue with them on a 90-day rolling basis. This gives LSN unequaled insight into the latest investor trends, but also fosters a relationship that allows for a higher ratio of active investors than any other major life science conference in the world.

The insights that LSN research compiles allow the RESI conference content to stay abreast of the industry. The RESI event’s content is designed to give perspectives on what’s happening now, who’s active, what’s hot, and what the future looks like on a tactical level. Moreover, because of LSN’s relationship with the senior staff at each of these investor entities, the content is delivered by the very people who are redefining early stage investments in the life science arena.

If you’re already a part of the RESI tribe, we look forward to seeing you all on March 24^th in Boston. If you’re not part of the tribe yet, it’s not too late, but time is running short. Come see what everyone’s talking about!

By Tom Crosby, RESI Conference Manager, LSN

Next Monday, March 24^th will mark the date for Life Science Nation’s second Redefining Early Stage Investments Conference in Boston’s State Room. Nearly 400 active early stage life science investors, biotech and medtech innovators, and senior executives from all segments of the industry will converge 33 floors above the city for a full day.

LSN’s motivation to create the RESI conference is based on a simple concept: while the world of early stage life science investments has fundamentally changed, many fundraising executives are still operating under the assumption that the old process for raising capital is still applicable. In light of this, LSN conceived the concept of a forum of entrepreneurs and active early stage investors not only to discuss the new marketplace, but also to initiate dialogues that would eventually lead to allocations. This is accomplished by a combination of top-tier investor panels, workshops, and a full-day partnering pavilion.

Ultimately, the key differentiator for RESI is that it is a targeted event seeking to connecting early stage technologies with investors – therapeutics, diagnostics, medtech, healthcare IT, and investors from 10 categories are all represented. It’s not indication specific, it’s not just for biotech, and it’s not just for medtech; it is the only conference that focuses on bridging the funding void that traditional investors have left.

So, what does RESI look like this time around? Let’s take a look at the numbers:

·         Total Attendees: 390 attendees from 377 organizations

·         Countries Represented:  12 different countries, and representation from across the US

Moreover, the ratio of investors to companies seeking capital is close to 1:1, which outperforms any other meeting on this scale of which LSN is aware. As a company – and as an conference – LSN and the RESI Conference continue to fill gaps in the market, create disruptive events, and ultimately, be an advocate for early stage companies seeking to move science forward.

By Dennis Ford, Founder & CEO, LSN

I created the RESI conference as a result of canvassing all the “investor” conferences worldwide and finding few actual investors participating. The Redefining Early Stage Investments Conference is a full day conference targeted at moving early stage biotech and medtech companies forward by fostering dialogue between innovators and active investors from around the world. With more than 400 attendees and over 500 partnering meetings already scheduled for next Monday, March 24th, the RESI conference is poised to be “the” investor partnering conference this year. Moreover, there is nearly a 1:1 ratio of early stage fundraising companies and active investors at RESI, suggesting that it will be unparalleled in terms of fundraising opportunity.

RESI has partnered with Meeting Mojo, an emerging partnering portal based in the UK. Together RESI and Meeting Mojo have created a customized solution based on providing in depth, meta tagged, profiles that can be searched by conference attendees for a specific fit for their firm and product. In addition, by leveraging LSN’s Investor Platform we were able to provide added depth by importing current investment mandate data directly into the investor profiles. This has provided the foundation for a great partnering experience based on current investor mandates matching up with emerging biotech and medtech startups that fit the investment criteria.

One of the most compelling facts is that more than half the meetings already scheduled are between biotech/medtech companies and investors. This equates to 263 discussions taking place in under 10 hours. LSN’s analysis shows interesting trends in the charts provided. For example, the third biggest category of meetings is among investors meeting with other investors. This makes sense, as a good amount of investors are looking for co-investors and partners for their portfolio companies. Another emerging trend is that service providers are eager to meet with investors. One explanation for this is that service providers are now funding promising startups and seeking to partner with investors as part of the new paradigm thus becoming a new deal sourcing channel.

The Redefining Early Stage Investment conference continues to evolve as partnering takes on a life of its own. There are 700 potential meetings at RESI, and there are bound to be some fascinating results.

By Dennis Ford, CEO, LSN

After the launch of an outbound fundraising campaign, sooner or later a number of dialogues begin to take for with various investors. Meetings take place and relationships form. This is one of the most exciting parts of the fundraising process, and everything seems to be off to a great start.  Unfortunately, this is also where many life science funding executives lead themselves astray.

Let’s face it; life science fundraising executives are beholden to a board, and they often feel pressure to put something on their forecast.  Because they are anxious to turn a target into a prospect, they often begin to see things that aren’t there, try to force a fit, or use every skill they have to push along a relationship that isn’t going anywhere.  It’s an easy trap to fall into, and can lead to a lot of unnecessary churn, eventually slowing down the fundraising process. You need to be equally focused on getting prospects on the plate and getting them off the plate. So how do you avoid being caught in this situation? Two easy rules can help you significantly.

Be direct: This is often a very hard thing for a fundraising executive to do, but it is a fundamental requirement in getting non-fits off the plate. Many entrepreneurs are so excited at the prospect of someone being interested in them that they are afraid to ask a question that could stop the dialogue. However, the alternative is wasting time on a non-fit. Always check in to see if the investor is actually interested in making an allocation, and ask what would prevent them from doing so. This will get every question answered faster and will get non-fits out of the conversation faster. This saves everyone time.

Listen to your gut.  Opportunities can change direction, be postponed, stumble and fall off a cliff, and flat-out die.  They are very tricky creatures. They prey upon your optimistic nature. They can get you in a fix. The importance of listening to your gut cannot be overstated. When in doubt, your gut will tell you what to do.

It’s imperative to concentrate on the good prospects and move on from investors who aren’t, pronto! It is also the reason to set everyone’s expectations at the outset of the process.  Let those in your company know that a potential investor is ready for the forecast list only when you’ve made it halfway through the allocation process with them.  A forecast list is composed of investors you have qualified who have also qualified your firm, and who may give you money. Stay focused, direct, and honest (with yourself). These are the key elements to efficiently navigating your way to an allocation.

By Lucy Parkinson, Research Manager, LSN

Every day at LSN, our research team is confronted with a vast amount of information about investment activity in the life science sector; this comes in the form of investor interviews, analysis of headline news, as well as conversations with partners and clients. LSN spends a lot of time in dialogue with the marketplace, and parsing this overwhelming amount of data is what we do for a living.

News stories often focus on the big names in the sector on both sides of the table – revolutionary disruptive technologies and the early-stage investors who were backing them in their seed rounds.  But these are the superstars of the industry; they’re not representative of the tens of thousands of biotech and medtech startups out there, or of the thousands of active investors in the sector. We’ve touched on the principle of parsing technology before, and how important it is to understand where you fit in terms of disruptive, breakthrough and iterative technology. However, rarely do companies follow through and select the right investors that fit their technologies.

When you’re looking for investors to support your emerging life science company, you need to turn over every stone.  It’s possible to start your fundraising campaign by working your own network, exploring local options such as your region’s government programs or angel groups, and sending proposals to big-name VCs – but where do you turn once those options have been exhausted? This strategy tends to waste time, and results in unproductive meetings that don’t move forward. The key is identifying fits and creating a global target list that is targeted with an institutional style outbound campaign. This should be done from the onset, to maximize campaign efficiency and win an allocation as quickly as possible.

There are a lot of investors out there who don’t have top-flight, headline-making funds.  They might even be deliberately flying under the radar, or maybe they’re across the world from you.  That doesn’t mean they aren’t actively looking for opportunities in your field, in your location.  Indeed, it’s in this long tail of potential investors – including investors that weren’t formerly known for backing startups, such as family offices and big pharma – where the equally long tail of biotech startups will find the investors who are a perfect fit for what they’re offering.  What we’ve found at LSN Research is that the only way to know for sure if an investor is currently actively seeking new life science opportunities is to make a phone call or write an email, and ask them.