By Michael Quigley, Director of Research, LSN

Few people, if any, have stronger motivations for the advancement of innovative and effective new therapies than the affected patients and their families and friends. Patient groups are established as a way for these individuals to band together around a particular indication or branch of medicine to help move science forward. Formed by patients and for patients, these groups are looking to improve the standard of care by pooling their capital, scientific resources, and networks to aid in both academic and commercial-stage research.

The upcoming RESI Conference will host a patients group panel moderated by Steve Perrin of the ALS Therapy Development Institute. The panel will include the following speakers:

Joe Camaratta, Board Member, Founders Affiliate, American Heart Association

Annette Bakker, President & CSO, Children’s Tumor Foundation

Steven Young, President & COO, Addario Lung Cancer Medical Institute

Monica Gow, Executive Director, Wake Up Narcolepsy

How do these organizations help bridge the gap between the early discovery interests of academia and the late-stage clinical development expertise required by the pharmaceutical industry? How do these groups support high-risk programs and, at the same time, de-risk opportunities so that they become tractable commercial assets for partnership? What strategies do these organizations use to finance translational research through IND-enabling studies and POC clinical trials, and what do they expect in return from potential partners downstream?

Learn the answers to these questions and others by attending this panel at the RESI Conference next week.

By Michael Quigley, Director of Research, LSN

In recent years, family offices and private wealth investors have become an increasingly important pool of capital for fundraising entrepreneurs in the life science space. Unlike angels or high-net-worth individuals who generally have up to $100 million in capital and opportunistic investment mandates, family offices and private wealth groups represent families and individuals who have $100 million to $1 billion or more in total assets and who use a more institutional investment approach.

The amount of capital these groups manage enables them to have a dedicated staff for screening, due diligence, deal selection, and portfolio management. Many family offices have taken a keen interest in the financial returns and the potential social impact that investments in the life science sector can bring.

This panel aims to spotlight six family offices and investor groups, many of which have historically remained very quiet about their activity in the space. Moderated by Bill Brah, Founder & Executive Director of UMASS Venture Development Center, the panel includes the following speakers:

John Nelson, Managing Director, Genrich Inc.

Melissa Krauth, Principal, Claria Bioscience

Meredith Fisher, Director and Partner Investments, Private Investment Office

Chris DeSouza, Director, Broadview Ventures

Alejandra Paredones, CEO and Founder, BSI Capital Group

Todd Holmes, Director, Gurnet Point Capital

What are their particular motivations to invest in the space? How are deals generally structured, and how do they differ from terms of other investor classes? What, in addition to capital, can these groups bring to the table for an early stage company? How does an entrepreneur find a family office and get in touch, and what information do they look for in the initial correspondence? All these questions and more will be answered on September 17^th.

By Lucy Parkinson, Senior Research Manager, LSN

At LSN, we meet many life science entrepreneurs seeking capital, and they are generally aware of some of the options they have for funding. In fact, they may already be approaching venture capital firms, the licensing arms of pharmaceutical companies, or nonprofits that give grants in their field. Yet many entrepreneurs are surprised to learn that family offices are investing in the early stage life science space—and in significant numbers.

Why have so many family offices moved into this space? There are many motivations, but in talking to family offices, we’ve found that the following five reasons are the most common:

• Sophisticated Investment Strategies. As institutional investors with significant assets under management, family offices use a variety of strategies to conserve and grow their wealth. The risks and rewards of early stage life science investments can contribute to a balanced, diversified portfolio of family assets. In some cases, these investors were formerly limited partners in venture capital funds but returned to managing their own investments because they received poor returns in spite of paying high management fees to VCs. These family offices typically have a similar buy low, sell high approach to private equity funds.

• Impact Investing. Traditionally, family offices have a philanthropic mandate in addition to an investment mandate; wealthy families often care about having a positive social impact. But philanthropy has itself been evolving. In recent years, the concept of impact investing has become more popular; family offices can put their long-term investment capital towards goals they care about, such as improving public health or advancing science, and achieve something meaningful in addition to ROI.

• A Personal Connection. This is a more close-to-home variant on the reason above. Some family investment funds are focused on investing in a specific indication area that has affected the family. Perhaps a family member has a serious disease, and the family hopes to get a new drug to market as fast as possible. Or, perhaps the family founder died of a certain disease and the rest of the family has decided to devote part of their wealth towards treating that disease. The family may also have come into contact with top researchers because of their personal interest and may have access to scientific advisors who can help them target their investments wisely.

• Expertise and Resources. The founders of family offices made their wealth in many industries. In some cases, that wealth was earned from entrepreneurial success in the healthcare sector. Warren Buffett once said, “Never invest in a business you cannot understand.” These families agree. They have a great deal of expertise and many personal connections in the healthcare field and are confident that they can find the best opportunities. In some cases, these families still have ownership in a healthcare or life science business and are therefore also interested in strategic synergies with their existing holdings.

• Truly Patient Capital. Investors often tell us how long they intend to remain invested in a company after making an initial commitment: 24 months is common; a forward-thinking venture fund may plan to stay invested for three to five years. Recently, a family office investor told me that he had been backing a life science company in his portfolio since 2003. Because a family office’s investment horizons can run into the decades, family offices have to be aware of long-term trends that are going to affect their wealth, including demographic and social changes.  It makes sense for them to place some long-term strategic bets on trends favorable to the healthcare industry, such as aging populations and rising rates of chronic disease.

For all these reasons and more, life science entrepreneurs may find that their interests align with family offices. Although these investors are typically more under the radar than others, building a relationship with them isn’t a hugely dissimilar process. If you have reason to believe you’re a good fit for the mandate of a family office, the process starts with you sending your pitch and following up with a phone call.

 

By Jack Fuller, Director of Business Development, LSN

LSN has developed the Life Science Fundraising Boot Camp, a training workshop that we present around the world. I recently had the opportunity to travel to a number of life science organizations throughout the southern and western U.S. to teach entrepreneurs about the changing investor landscape. After traveling to four cities in as many days, and presenting to companies with assets and technologies in various stages from discovery through clinical, I was struck by the deep need for information about tactical skills for fundraising. A VC can pontificate about the current regulatory environment and speak in broad terms about developing a strategic plan for a company; however, virtually no one is willing to tell the life science community that fundraising can require making up to 30 phone calls a day for 9 to 18 months.

If you’re looking at that number in disbelief, ask the most successful fundraising executive you know what it took to get funding. On every team there is a person, be it the CEO or an intern, who has to make the calls and send the emails to build the relationships that will eventually lead to allocations.

By demonstrating the power of a sophisticated outbound investor campaign to companies, LSN is working to bring a professional fundraising approach to a segment of the community comprised of mainly scientist-entrepreneurs. These folks are often new to the experience of raising financing or out of touch with current best practices and, therefore, unaware of the enormous power of outbound marketing and canvassing to build relationships with potential investors.

The Fundraising Boot Camp breaks the fundraising process into six major components:

• Differentiating between the historic and the current investor landscape and players
• Debunking the major myths around fundraising (see “The Top 10 Most Common Fundraising Misconceptions), understanding the difference between a “referral” and a “fit,” and realizing that fundraising is a numbers game
• Breaking down the various types and components of investor mandates
• Positioning and creating marketing collateral
• Creating a global target list (GTL) of interested investors
• Organizing and executing an outbound fundraising campaign

With additional material from LSN’s new book, The Life Science Executive’s Fundraising Manifesto, and from our CEO Dennis Ford’s graduate-level course at UMass Boston on Entrepreneurship Sales and Marketing, LSN’s Fundraising Boot Camp teaches life science entrepreneurs the tactical fundraising skills required to raise capital for early stage companies.