9 Tips for Securing Funding in the Life Sciences
By Jordan Warshafsky, Partner, Ashton Tweed
Funding is one of the first steps for all start-ups and entrepreneurial ventures. How and where to get funding is a hurdle that every company must face in order to be successful. In fact, finding a way to fund your life sciences business or research isn’t a single step, but an ongoing strategy that needs to be developed carefully and updated when necessary. Here are some tips to consider when looking for funding for your life sciences venture:
- Research your investor audience and familiarize yourself with who you are talking to. Decide early on if your company is appropriate for angel or VC investment. Make sure to target specific investors with an eye towards which ones can help your company not only in terms of funding but also strategy, connectivity, resources, etc. Remember that investors can be beneficial in more ways than one.
- Be able to concisely describe your venture and how it is different from your competition. It is critical to express your “value proposition” in a way that everyone can understand. Keep in mind that many investors may not be technically savvy about the product you are offering, so provide a real-world example or story that the investor can relate to.
- When you present to investors, know that they initially invest in management teams. Be prepared to convince them that your team has the ability to succeed and why. A great idea can only go as far as the people behind it, so prove that you are in fact the right team to get the job done.
- Explain the business model in a clear and concise way. It is also important to make clear the unmet need your technology answers. However, a more detailed explanation of the technology can come later in subsequent meetings.
- It’s important to address the risk involved and how you strategically plan to reduce risk for investors. You can start by outlining what segments make up your market and how big they are (total and addressable – those to whom you can sell). Also address your barriers to entry. Discuss IP, regulatory, reimbursement, etc.
- Be realistic in your valuation estimations. Do research and gather as much advice as you can before relaying your expectations to investors. Make sure you can back up your estimations as well – you should be able to show how you got the numbers you gave them.
- Discuss your current funding needs and your projected use of funds. Investors are interested in how their money is going to be used. Also project what you expect your future funding needs to be so that investors can get an idea of the big picture long-term.
- On that same note, make sure to have a long-term business plan that is realistic and flexible to present to investors. This should clearly address an exit strategy.
- Be passionate about your product/technology and its benefits. In the life sciences, our products improve the health, care, and quality of life of people worldwide – what’s not to be excited about? Get your investors excited too.
With a lifetime of experience within the life sciences industry, and having worked with many client companies in the funding stage, I have witnessed both mistakes and successes. Once you finally land an introduction or meeting with the investor you want, it’s critical to be prepared and to give it your best shot. Keep in mind that the sole purpose of a first meeting with an investor is to get that second meeting. At the second meeting you will have the opportunity to delve into the details of all of the above points and more. Unfortunately, there are rarely second chances. There are currently hundreds of opportunities to invest in the life sciences – make sure it’s clear why yours is worth their time and money.
In need of top talent with funding experience? Contact me today to discuss your team’s needs.
Share your insights! Contact jamesrudman@ashtontweed.com to contribute your life sciences article as a guest writer.
