By Max Klietmann, VP of Marketing, LSN
LSN spends a lot of time speaking with both investors and early stage life science executives. One of the constant themes in our experience is the disconnect between what investors want to see when evaluating companies, and the way in which early stage executives present themselves. Though there is a broad spectrum of elements that influence an investor’s decision to allocate, there is only a handful of factors that can make or break an investor dialogue early on. If you, as an early stage entrepreneur, understand how to address these points up front, you are likely to see significantly higher success in your fundraising efforts:
- Competent Management – A racecar is only as good as its driver. Similarly, a technology without excellent management is dead in the water. Savvy investors invest in people, and the ones that have been around the block are able to see if a CEO has what it takes. Take a look at yourself and your team – the scientific acumen is undoubtedly there, but take a hard look at the business acumen and sales ability of your management team – do they have what it takes? If not, find someone who can drive, while you engineer.
- Technology – This is a big one, whether your technology is a disruptive innovation or an iterative improvement to existing technology. Learn to explain your product succinctly, and be able to tell an investor exactly how it fills a demonstrated market need. Show investors the nature of your technology – showcase it, and explain why the competition doesn’t stand a chance in your slice of the marketplace.
- Focused Approach – It’s easy to get caught up in the potential applications of your technology, but this can be a pitfall. Many CEO’s are eager to show all of the diseases that could be addressable by their small molecule, but it translates to a lack of focus from an investor standpoint. Don’t get me wrong – having backup plans in your back pocket is always a good thing, but pick one product, one indication, and show your investor prospect that you have the laser focus to get it done.
- The right target population – We’ve spoken about knowing your marketplace at length. Do your research, and make sure you are targeting the right population from your investor audience’s standpoint. Are you a solution for a broad indication with lots of prospective customers, or are you better suited for the shortened regulatory path around a niche orphan disease? Choose one and be able to explain why your product is the hottest thing to hit this area.
- A clear path to market – Have a roadmap for your regulatory path and key partners to help you move forward. Nothing is ever set in stone, and things will constantly change, but it means a great deal to an investor that you aren’t only thinking of stepping from A to B, but C, D & E are also being considered in your present decision making.
At the end of the day, you need to sell each prospective investor on these points. There will always be further criteria to discuss and deal terms to navigate, but in order to have the ability to choose investors, you need to have a relationship with several. Meet these key points, and you should be well on your way to raising a round on terms that fit your company’s needs.
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