SBP hosts top life-science VC firm to learn the secrets of getting funded
There’s no way around it: Developing medicine is costly. The average drug takes about $2.6 billion to develop through FDA approval, according to the Tufts Center for the Study of Drug Development. With a price tag that high, securing venture capital (VC) funding is critical for turning a scientist’s discovery into reality.
This month, Kirsten Leute of Osage University Partners (OUP), a top life-science VC firm, spoke to SBP scientists about best practices and common pitfalls when making a VC pitch.
Anjali Gupta, a graduate student in the laboratory of Karen Ocorr, Ph.D., assistant professor at SBP, attended the presentation and explained why the insights are so valuable.
“Drug discovery is a complex and expensive process. It’s important to understand how bench science can be translated into successful products—in this case, potentially life-saving medicines,” says Gupta. “At SBP, scientists are investigating the underlying causes of rare, debilitating diseases and looking for cures for cancer, heart failure, Alzheimer’s disease and more by discovering novel therapeutic targets, signaling pathways, and mechanisms. By knowing the funding options and strategies available, we can make more informed decisions about our discoveries and increase the probability of developing our research into medicines for patients who need these treatments.”
Below are seven tips Leute shared to help scientists navigate building a start-up and getting it funded.
- It's all about the team. VC firms look for an investable management team. Is this the leadership team’s first start-up? Or are they serial entrepreneurs? What skills do they have, and which do they lack? Being a novice entrepreneur isn’t a funding deal breaker—but you may want to consider supplementing your team with experienced partners.
- Pick your partners wisely. The most important relationship decision you make in your life is choosing your significant other. The second most important? Finding your business partners. Many founders bring in colleagues who work down the hall—or even neighbors. But it’s most important to know how you work with one another. Can you argue respectfully? Do you trust that you all have the company’s best interest in mind?
- Do your homework. Before you approach a VC firm, make sure you know its investment focus. Does it specialize in pre-clinical or late-stage assets? Does it lead investments or follow on? In recent years, we’ve seen more crossover investing: firms that invest in a company prior to an initial public offering (IPO). A firm’s focus may shift over time, so make sure to stay up to speed.
- Contact the right person. At most firms, each individual has a specialty, such as immunotherapy. So, if you have an immunotherapy product, make sure you’re contacting the individual who works in that area—and not the person who focuses on robotics, for example.
- Mind your budget. VC firms see a lot of pitches. They can spot it if you haven’t budgeted enough—or are budgeting too much—for an activity. If you’re a first-time entrepreneur, it’s best to hire a consultant or find a mentor who can help (see the resources below).
- Ask for advice. VC firms love giving advice, which can help strengthen your ultimate pitch for funding. This will also stimulate their interest in your company. Your institute’s technology transfer office may also have helpful resources and connections.
- Show all your cards—even the negative ones. VC firms hate surprises. Make sure you address any concerns or risks up front. The truth always comes out eventually.
Ready to get your discovery funded? Below are additional resources and reading materials.
- Life Sci VC: blog about all things biotech venture capital by scientist turned early-stage venture capitalist Bruce Booth
- The Long Run: veteran biotech reporter Luke Timmerman conducts in-depth interviews with biotech newsmakers
- Nature’s bioentrepreneur: practical advance and guidance for starting a biotech company
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