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Efi Cohen Arazi What Are Early Stage Biomed V Cs Looking For

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Financing Early Stage Ventures …

Financing Early Stage Ventures
Wednesday, February 20, 2008

Published in: Economy & Finance, Business

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  • 1. What Are Early Stage Biomed VC’s Looking For? Efi Cohen Arazi February 2008 Rainbow Medical - Confidential 1 PDF created with pdfFactory trial version www.pdffactory.com
  • 2. Topics • Rainbow Medical overview • Financing/capital sources • Trends in venture investments • Key investment review criteria • Investors and valuation • 10 Success factors Rainbow Medical - Confidential 2 PDF created with pdfFactory trial version www.pdffactory.com
  • 3. Rainbow Medical Mission A private investment company aimed at seeding and growing Medtech companies, based on technologies invented by Yossi Gross Rainbow Medical - Confidential 3 PDF created with pdfFactory trial version www.pdffactory.com
  • 4. Considerations for raising capital Rainbow Medical - Confidential 4 PDF created with pdfFactory trial version www.pdffactory.com
  • 5. Biomedical Venture Philanthropy: Financing Drug Discovery Basic Target/Lead Discovery Preclinical Approval Clinical Research & Validation Development Development & Marketing Traditional Risk Philanthropy Venture Philanthropy Angels Venture Financing Gap Capital Private Equity Public Markets Grants Corporate Rainbow Medical - Confidential Venture 5 PDF created with pdfFactory trial version www.pdffactory.com
  • 6. Trends in Biomed venture investment • More money seeks less exciting opportunities • More money is needed to exit • No more “technology” IPO’s”, just proven businesses • M&A’s of ventures w/o sales / FDA approval – usually at less than $100M • VCs going upstream (seed or even feasibility or trenching) Rainbow Medical - Confidential 6 PDF created with pdfFactory trial version www.pdffactory.com
  • 7. Some current VC statements • We focus on revolutionary, next-generation technology • Need to look for business not a technology platform • Do fewer deals well – sell one to do one • Experience counts more than brilliance • Focus more energy and capital on the winners • Creative exits Rainbow Medical - Confidential 7 PDF created with pdfFactory trial version www.pdffactory.com
  • 8. Investment review criteria ü Technology / ü Data innovation ü Operational plan ü Market ü Regulatory plan ü Team ü Exit, valuation, ü IP investment model Rainbow Medical - Confidential 8 PDF created with pdfFactory trial version www.pdffactory.com
  • 9. Technology & Innovation • How creative is your approach – depth • Competitive advantage - barriers • Product vs. technology • Disruptive vs. sustaining technology • Developmentbility • Benefit to users • Need for user education Rainbow Medical - Confidential 9 PDF created with pdfFactory trial version www.pdffactory.com
  • 10. Market • Easy to look around; important to look ahead - Look for needs of growing markets • Big market is a double edge sward but is the opportunity • Be ready to discuss TAM, PAM, RAM • Start with one product in one segment (AKA – focus) • Existing reimbursement practices • Avoid “technology in search of market” Rainbow Medical - Confidential 10 PDF created with pdfFactory trial version www.pdffactory.com
  • 11. Team – Key positions • Experienced, mixed team, with knowledge, competence & track record • Founder’s role in the company • Team’s level of commitment • Adaptability/flexibility – changing environment • A kingdom vs. completely virtual • Advisors, Investors • Excitement in the eyes Rainbow Medical - Confidential 11 PDF created with pdfFactory trial version www.pdffactory.com
  • 12. Intellectual property • Strong IP formulation – core claim • FTO analysis • Trade secrets/ know-how • Remaining life of key claim • Ongoing IP development based on a competitive IP map • Geographic scope of filing • IP strategy plan Rainbow Medical - Confidential 12 PDF created with pdfFactory trial version www.pdffactory.com
  • 13. Data • Does it work? • Proof-of-concept - Feasibility data • Can it be developed at a justifiable cost • Prototype or comparables • Literature review - Reference data source when relevant • External review + self criticism Rainbow Medical - Confidential 13 PDF created with pdfFactory trial version www.pdffactory.com
  • 14. Operational plan • Legal structure of the company • Goals and objectives - Detailed work plan with clear milestones • Time to first-in-man • Resource plan (people, capital) • Short term detailed budget • 5 year P&L - Cash flow • Scalability considerations Rainbow Medical - Confidential 14 PDF created with pdfFactory trial version www.pdffactory.com
  • 15. Regulatory plan • Show you understand regulatory requirements • A clear regulatory pathway/strategy • Use predicate information • Use of regulatory consultant with record in the field • Focus on consideration around things never done before when relevant Rainbow Medical - Confidential 15 PDF created with pdfFactory trial version www.pdffactory.com
  • 16. Valuation – valuating your IP • Should allow future company funding requirements • Should not be a deal breaker • The concept of a Full Diluted Basis • Allocate sufficient amount of ESOP • Find comparables for the above • Prepare IRR analysis • Leave valuation discussion to the end Rainbow Medical - Confidential 16 PDF created with pdfFactory trial version www.pdffactory.com
  • 17. 10 Key success factors 1. Innovative, breakthrough solution – data driven 2. Address real market need 3. Team – experience, knowledge, competence 4. Realistic plan – focus on near term 5. Raise when and as much as you can (min 24 mo) 6. Valuation should be the last of your worries 7. Use grants as much as possible 8. Be ready for due diligence (documents…) 9. Always have “Plan B” 10. Stay optimistic and have fun Rainbow Medical - Confidential 17 PDF created with pdfFactory trial version www.pdffactory.com
  • 18. Yossi Gross, +972-54-439-4909, yossi@rainbowmedical.co.il Efi Cohen Arazi, +972-54-746-0995, efi@rainbowmedical.co.il Thank you! Rainbow Medical - Confidential 18 PDF created with pdfFactory trial version www.pdffactory.com
  • 19. Potential capital sources • Private -- Friends & family • Private -- Angels • Grants • Venture funds • Corporate venture funds Rainbow Medical - Confidential 19 PDF created with pdfFactory trial version www.pdffactory.com
  • 20. Potential financing sources Basic Target/Lead Discovery Preclinical Approval Clinical Research & Validation Development Development & Marketing Traditional Risk Philanthropy Venture Philanthropy Angels Venture Financing Gap Capital Private Equity Public Markets Rainbow Medical - Confidential 20 PDF created with pdfFactory trial version www.pdffactory.com