Positioning Your Life Science Company for Outside Funding

FountainBlue's March 19 event was on the topic of Positioning 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.

Corporate Investments in High Tech Companies

The theme for FountainBlue's March 12 High Tech Entrepreneurs' Forum was on Corporate Investments in High Tech Companies

Converging factors are leading to an increase in corporate investments in high tech companies:

• The marked decline in IPOs
• The rapid product development cycles, and the corresponding pressure to innovate quickly and well
• The increasing costs of internal corporate R&D efforts
• And other factors.

We invited several corporate executives to tell us about their internal R&D strategies and how they partner with early stage start-ups to support their overall corporate strategy.

• Facilitator, Antony Awaida from StartLeap Corporation, is a corporate executive and serial entrepreneur.
• Panelist Lisa Lambert, Managing Director, Intel Capital, Software and Solutions Group
• Panelist Cliff Reeves, Emerging Business Team at Microsoft
• Panelist Ray Wu, is Director, Strategy and Corporate Development at HP

Entrepreneurs in attendance better understood what it would take to partner with corporate executives in support of their strategic development efforts.

Corporate investors can provide start-ups with:

• Access to their presence in local markets around the world.
• Creating a broader, more global insights into emerging markets.
• Introductions to their larger-company customers, which may be customers to the start-up.
• Connections to VC partners.
• Grow an ecosystem for development or for technology customers. Example: Microsoft's investment in China.
• Strategic investments to accelerate product development, market penetration, etc.,

Start-ups can provide companies with:

• Great partnership/M&A opportunities - because of technology, business model, customer base.
• Different view/perspective on technologies and business models.
• Opportunity to move into new vertical markets, particularly useful when the new markets are a logical extension of existing ones.

Entrepreneurs may find it easier in some ways and more difficult in other ways to launch a business:

• It's no longer necessary to spend a million dollar on hardware and software infrastructure before launching a company and producing a product. With Intel software, open source technologies, and other modern solutions, an investment of 10s of thousands may now be sufficient.
• Although there are less financial barriers to launching a business, the marketing and customer acquisition challenges are more severe - no more 'if you build it they will come' philosophy.
• Although advanced technology tools make it easier for entrepreneurs to produce new solutions, customers are also more demanding about having quality, integrated products and packaging, delivery etc., become more important.
• There are more investment monies, more experienced investors, and less hype.
• There are more experienced entrepreneurs to partner with, but choose your partners carefully.

Government Policies and Investments in Clean Energy Companies

Our March 5 forum was on the topic of Government Policies and Investments in Clean Energy Companies

Since the dawn of the industrial revolution, governments have been keenly aware of the strategic importance of energy to national interests. But it took the oil embargo of the 70’s to catalyze non-OPEC governments into action. Since the 1970’s, more regulations, government agencies, oversight and direct intervention has taken place then ever before. This involvement encompasses the entire value chain in the sector from safety rules regarding extraction and production all the way to government labeling of products through programs such as "Energy Star".

In FountainBlue's March 5 Clean Energy Entrepreneurs' Forum, we had a conversation about the role of government policies including clean energy research, incentives to promote product adoption and distribution, and how best to navigate that process. The session helped clean energy entrepreneurs understand the objectives of local, state and national authorities and the related policy objectives as they build their clean energy efforts.

• Our facilitator Brian Reidy, Partner of Growth Process Group framed our discussion by covering how governments have been working with clean energy companies through all of recorded history.
• Panelist Steve Churchwell, Partner, DLA Piper provided his perspective on the types of clean energy companies out there and how each has different challenges.
• Panelist Kelly Fergusson, Mayor, City of Menlo Park, brought her perspective from a civil engineering/community leader background, sharing her plans for making Menlo Park a hot-bed for clean energy companies.
• Panelist Judith Ikle, Program/Branch Manager Procurement, Renewables & Climate Strategy Branch from California Public Utility Commission, brought her perspective both from the national and now the state regulatory angle.

Below are links to additional information about each of these organizations.

• California Public Utilities Commission http://www.cpuc.ca.gov
• DLA Piper's Energy: Government Affairs and Regulatory Practice http://www.dlapiper.com/energy_gov_affairs/ and Steven Churchwell's bio: http://www.dlapiper.com/steve_churchwell/
• Solar City to host a 3/11 and 3/17 event in Menlo Park
  

Other information of interest: NREL's clean energy investor's directory http://www.nrel.gov/technologytransfer/entrepreneurs/directory.html