Tag Archives: Therapeutics

Hot Life Science Investor Mandate 1: Family Office Seeking Life Science Investments Globally

17 Jul

A family office founded by a successful medical device entrepreneur can make investments ranging from approximately $500,000 to $100 million into companies and due to its funding structure has no requirements for holding period or capital structure. The firm makes investments in the forms of equity, controlling interest, in-licensing, MBO/LBO, growth capital and is also willing to co-invest. The firm is looking for companies located around the globe and makes around 5-15 investments in a given year.

The firm is looking for companies in sectors of Biotech Therapeutics and Diagnostics, Medtech, Heathcare IT, R&D Services, and Biotech Other. The firm is willing to consider all indications including orphan diseases, though they have some additional interest/experience in areas of Women’s Health, GI, Oncology, Cardiovascular, and Personalized Medicine including Proteomics and Genomics. The firm is most interested in companies that are in Phase II or later, nearing commercialization where the firm is capable of utilizing its operating company to scale up the company’s sales, marketing and distribution. That being said the firm has made earlier stage investments in the past and is open to considering highly innovative and compelling early stage companies. The firm is also interested in companies developing consumables/reagents, service providers, food and nutraceuticals.

The firm looks to work with management teams with experience and grit and generally looks to take a board seat although it is not a requirement. The firm looks to leverage the use of its operating company to assist the company’s sales marketing and distribution efforts as well as providing assistance in operations management.

If you are interested in more information about this investor and other investors tracked by LSN, please email mandates@lifesciencenation.com

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Hot Life Science Investor Mandate 3: Global VC Firm Seeking Investments for Multiple Funds

17 Jul

A Venture Capital firm, with offices in the Eastern US and Europe, currently manages three active funds, two focused on private equities and one focused on public equities. The firm is currently in the process of raising a private equity fund that it plans to have its first close in Sept/Oct 2014. The firm’s private equity funds make investments in the form of preferred equity; the public equity fund invests in the form of PIPEs and public market placements. The size of the firm’s investments is highly varied, as the firm pursues a great variety of opportunities with investments falling anywhere in the €2-€15 million range. The firm is actively seeking new investments in the life science sector, and will consider potential opportunities in Europe and North America.

The firm’s new fund plans to invest broadly in the life sciences across sectors of therapeutics, diagnostics, devices and healthcare IT. The fund is very open across stage, indication and technology types with a slight preference for companies working with platform technologies. The firm also manages a fund that focuses on medical devices, diagnostics and healthcare IT companies with products on the market or close to commercialization. With this fund the firm specifically looks for opportunities that are both increasing quality and reducing the cost of care.

The firm places a considerable focus on technology when vetting deals; the partners of the firm are MDs, PhDs or both. In addition to strong technology the firm prefers to invest in management teams with strong track records and deep domain expertise, preferably with prior experience of achieving success in a venture-backed life science company. The firm generally looks to take a board seat following investment.

If you are interested in more information about this investor and other investors tracked by LSN, please email mandates@lifesciencenation.com

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Hot Life Science Investor Mandate 2: Australian VC Looking Overseas for Life Science Opportunities

3 Jul

A venture capital firm headquartered in Melbourne, Australia is looking to make makes equity investments from $3M-5M. The firm anticipates about 6 new investments this year and looks to invest invests globally.

The firm will invest in companies across the life science space, including therapeutics, diagnostics and medical technology. The group does not invest in service providers. The firm considers all subsectors and indications, including orphan indications. The group will consider technology either in or prepared for human clinical trials and is open to all classes of devices. The firm seeks investments in novel technology and is not looking to gain share of an existing market.

The firm is open to co-investments and considers public or private companies. The group will only consider companies with granted patents or a clear patent strategy. Companies of interest must have a remote connection with Australia or the Pacific Region. This may include a facility or a partner located in the region.

If you are interested in more information about this investor and other investors tracked by LSN, please email mandates@lifesciencenation.com

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Hot Life Science Investor Mandate 3: Single Family Office Looking to Catalyze Larger Funding Rounds

3 Jul

A Family Office based in the Eastern United States is looking to make equity investments into early stage companies in the life science space that can be used to catalyze larger rounds from other institutional investors. The firm’s typical allocation size is between $200,000-$500,000. The firm is currently looking for companies around the US. The firm is looking to make approximately 4 investments over the next 6-9 months.

The firm is currently looking for companies developing therapeutics and is open to both small molecules and biologics. The firm is generally open to all indications within these areas including orphan indications. The firm is willing to invest in both pre-clinical and clinical stage companies with a preference for those with some in-human data.

The firm is looking for privately held companies with experienced management teams. The firm’s main mission is to help companies catalyze larger rounds by helping attract other more large scale investors. The firm looks to take a board seat on a case by case basis.

If you are interested in more information about this investor and other investors tracked by LSN, please email mandates@lifesciencenation.com

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Hot Life Science Investor Mandate 1: Private Investment Company is Flexible in Allocation Strategy

12 Dec

A private investment company established by a single high net worth individual is looking to make direct investments in the therapeutics space. Based in the Eastern US, the firm manages an evergreen structure, allowing it to have a very large range for investment size, capital structure, and holding period. The firm has no set number of allocations that it plans to make over the next 6-9 months and will evaluate all relevant opportunities on a case by case basis.

The firm is currently looking for US based companies companies in the therapeutics space and is open to considering both Biologics and Small Molecules. Companies with assets in phase II or later are of high interest, and companies in phase I that have some human efficacy data are also open to consideration. The firm is not interested in therapeutics areas with subjective endpoints such as pain and mental disorders.

The firm is looking for both private and micro-cap publicly held companies, and evaluates management on a case by case basis. Taking a board seat is not a requirement for the firm and their involvement in the management of the firm varies based on the needs of the company. The firm is interested in both leading as well as co-investing in investment rounds.

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Validating the Family Office Life Science Investment Strategy

22 Jan

By Max Klietmann, VP of Research, LSN

Anyone following my articles on investor trends in the life sciences arena knows that I am particularly interested in the emerging trend of family offices investing direct in life sciences companies. My interest in this space is that while family offices have a reputation of being very private and opaque, they compose an extremely important investor category. Aside from the findings aggregated by my research time via intensive web research and phone interviews, I try as often as possible to sit with wealth advisors and consultants to family offices to discuss trends we see and compare notes.

I recently had the opportunity to spend some time speaking with a managing director at a multi-billion dollar global wealth management firm focused exclusively on advisory services for family offices and ultra-high net worth private clients. We had a lengthy and involved conversation about the fundamental dynamics that are driving family offices to invest directly in companies, and in particular, life sciences. I wanted to validate two important trends that we have been following at LSN: That family offices are recruiting top wall-street talent and internalizing the due diligence process with institutional operations quality, and that family offices are moving heavily towards making direct placements into private companies, especially in life sciences. We reached a few conclusions based on trends we’ve seen in the market that shed some light on how this category of investors is behaving in the space today.

The trend of family offices broadly beginning to make direct investments began to really accelerate in the wake of the recession; investors became disillusioned with highly non-transparent alternatives funds losing substantial amounts of capital, while still taking a hefty management fee. My conversation partner mentioned that he began to see a heavy trend in recent years of family offices withdrawing their allocations to these asset classes. However, this is not happening because family offices don’t believe in private investment; rather, they want the ability to transparently control allocations. In order to do this in a sophisticated way, they need the operational diligence that was traditionally only reserved for large funds and banks. In recent years, however, it has certainly become a trend that a larger family office will bring this expertise in-house by recruiting top talent (at a premium in terms of wall-street compensation, but for a bargain relative to the fees charged by fund managers).

According to my conversation partner, he has seen a trend of family offices recruiting top-notch institutional operations talent and due diligence capabilities from Wall Street. This allows them to make placements directly in companies in order to have consistent insight and a more compelling return profile. It is primarily the large family offices with total assets above $100 million that are able to justify this sort of institutional approach to allocating their own capital on a consistent basis. This is a key demarcation line, as it is really only above this threshold that a family office can afford to consistently allocate capital on a regular basis towards investments in a substantial way (above angel-sized contributions).

This type of activity has recently seen a substantial increase in several industries, but especially in the life sciences sector. What makes this investor class so appealing to CEOs in the space is that the way in which family offices operate is very much unlike other private investment categories; typically, family offices seek to fulfill a philanthropic mission alongside their efforts towards capital-preservation. This makes direct investment in life sciences a particularly compelling opportunity, because it offers family offices the ability to make a targeted allocation with substantial financial and philanthropic upside.

More importantly, for CEO’s looking to raise capital, family office allocations in life sciences are often heavily motivated by a connection to a particular indication, meaning that they are strategic investors with an emotional motivation to help a therapeutic succeed in coming to market. This attitude was confirmed by our discussion, and it is likely that in a macro-sense this will be an increasingly important piece of family offices’ investment focus, as chronic diseases linked to old age become more prevalent in the coming years. These are not exit-oriented investments by any means, and it is typically the success of the therapeutic that constitutes the most important aspect of the investment.

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Investor Series: Selecting the Right Kind of PE Partner for your Life Science Firm – Part 2: Growth Capital

22 Jan

By Danielle Silva, Director of Research, LSN

Life science firms may often times find it difficult to select the right kind of private equity fund to partner with during their fundraising process. In order to pinpoint the right private equity group (PEG) to work with, the individuals tasked with fundraising at a life science firm must first gain an understanding of each private equity strategy. Last week, LSN offered an in-depth profile on buyout funds. This week, we shift the focus of our investor series, and take a deep dive into growth equity funds.

Growth equity funds, as their name suggests, supply an injection of capital into firms who are looking to expand or grow their businesses. Life science companies may be seeking this kind of capital in order to finance a major merger & acquisition, partner with a firm that has operational expertise, reduce personal guarantees on loans, or enter into new markets.

So why would a life sciences firm partner with a growth equity fund? Usually, because their business plans have been halted due to lack of available capital. As an added benefit, growth equity funds provide guidance at the board level. This means that one or more members of the private equity group will sit on the management board of their portfolio companies. Furthermore, growth capital funds usually take a non-controlling minority stake in firms, taking up to a 40% equity stake in a firm. This is because they prefer that the current management team continues to run the business.

Growth capital firms sometimes act like venture capital by providing companies with capital that helps them to accelerate the firm’s growth. However, unlike venture capital funds, growth equity funds only invest in established companies that have recurring, predictable revenue streams. For this reason, growth equity funds will not invest in an early stage, pre-revenue company. In the life sciences space, for example, a growth equity fund would invest in a medtech firm that already has one or more devices on the market. On the other hand, they would not invest in a medtech company, for instance, who has a prototype of their product, but does not have any products on the market.

Growth equity funds also vary greatly from buyout funds. Buyout PEGs typically generate revenue through restructuring a business, while growth capital investors hope to achieve returns by growing the business. Buyout funds also sometimes fully buyout a business owner, and thus do not prefer to keep the majority of the management team, whereas growth equity funds typically prefer that the current manager does stay with the firm and run the company.

Growth equity funds also have a much shorter-term holding period for their portfolio companies than both buyout and venture capital funds. Typically, growth equity funds will only hold a portfolio company long enough for their growth plans to be executed, and will then sell the business shortly after this expansion starts generating revenue.

Conversely, private equity funds typically hold businesses for longer time periods because it frequently takes longer for cost-cutting or restructuring measures to make firms increase their profitability. A venture capital fund typically has a longer time horizon than a growth fund because the firm is investing in an early stage company, and it tends to take a long period of time for these firms to become cash-flow positive, especially in the case of firms that are investing in pre-revenue companies.

Growth capital funds often focus due diligence efforts on forecasting the feasibility of the expansion that they are financing, rather than looking at the long-term attractiveness of the company as a whole. The expectation is that profits will be generated through the expansion of the company, and these profits will be used to return the capital that was provided by the fund.

When profits from the company’s expansion are not able to cover the capital that was provided by the growth equity fund, growth equity funds will employ an add-on strategy (similar to buyout funds) which will involve the acquisition of a smaller company, thus making the firm a larger player in their respective industry, with a larger market share. The cash flow that is generated from the company that is acquired can then either be used to increase the percentage of the fund’s equity stake in the parent company, or can be used to return capital to the fund.

Growth capital funds typically exit a company through a merger, or through an initial public offering (IPO). Therefore, because these funds seek to make exits through M&A or through an IPO, they typically work with larger and more established firms. Growth equity funds in the life science sector then, for example, would work with a biotech therapeutics company that currently has at least one product on the market, but would most likely not invest in a company that only has one product that is going through the clinical development process. Growth capital funds, consequently, can be very valuable partners for life science companies that are seeking to retain their current management team and are cash-flow-positive, providing these firms with the capital necessary to grow and expand their operations.

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