Life Science Entrepreneurs' Forum
Preparing Your Company for Outside Funding
Sponsored by Keypoint Credit Union
FountainBlue's March 19 event was on the topic of Preparing Your Life Science Company for Outside Funding.
Last month, we had a conversation about corporate investments in life science companies, and stimulated thinking and discussion about how corporate entities are partnering with investors and entrepreneurs to support their corporate R&D strategies. This month, we will continue that conversation and talk about how to position your life science company for outside funding. Our conversation will feature entrepreneurs who have successfully received outside funding from investors, from corporations, etc., Our panelists will share their challenges, their successes and their advice on how to best position your company for outside funding.
- Facilitator Geetha Rao
- Panelist Brian Boyer, Perkins Coie LLP
- Panelist John Cornwell, Sand Hill Angels, and Life Science Angels
- Panelist Ken Martin, Onset Ventures
- Panelist David Miller Founder, InnoSpine
- Panelist Don Ross, Life Science Angels
During this session, we helped life science entrepreneurs to better understand how to partner with investors and corporate partners and to better manage and grow their life science concepts and organizations.
Below is advice for preparing your life science company for funding:
- Ensure that there is a big market opportunity, more than 500 million, and have a clear understanding of the market, the competition, your unique value.
- Focus on developing a fully integrated business plan, explaining the business and describing the team, as well as the product/technology. (Many entrepreneurs are so enamored of the technology, they don't explain the business opportunity when many funders look for the business and team information as much as the technology/IP.)
- Build relationships with angels, VCs and other funders as they will be your advocate for funding, and also can coach you, make introductions for you.
- Build relationships with others who could introduce you to funders - like start-up lawyers.
- Network with people who can make the connections for you.
- The angel funding process is similar to the VC funding process, only the due diligence is not as vigorous. The due diligence helps to address the risks investors may face with an investment. Minimizing those risks prior to seeking funding will increase the likelihood of a funding event.
- Adopt the perspective of the funder - does it make sense to fund your company, and if so, why? What is the strength, potential, market opportunity for the company?
- Select a funder you are willing to work closely with as it will be a very close relationship, and not always easy.
- The founder must be prepared to give up leadership of the company as it approaches a later, more advance stage, which may require a different skill set.
- Consider the exit early, as it forces strategic thinking and execution.
After a funding event:
- An organization is forced to be more focused. The funded company will be held accountable to more people, who may not be as receptive to their ideas.
- There may be more operational formality, particularly if there are regulatory requirements.
- Funders may now have board members who are more likely to 'hold your feet to the fire'.
- Management team may change.
- Patent strategies may be more proactive.
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