Frank Gleeson


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Frank Gleeson

  1. 1. What Investors are Looking For? … and what it means to you Medical Technology Innovation London, June 10, 2011
  2. 2. Easy – three things <ul><li>Make money </li></ul><ul><li>Make more money </li></ul><ul><li>Make still more money </li></ul>
  3. 3. Today’s environment <ul><li>Private sector capital available to biomedical sector is shrinking </li></ul><ul><li>Industry productivity is declining and under enormous pressure </li></ul><ul><li>New models of open collaboration are being developed </li></ul><ul><li>Unclear how the industry itself and financial models will evolve </li></ul>
  4. 4. How to respond <ul><li>Be brutally honest about opportunity and laser-focused on meeting needs </li></ul><ul><li>Create and stress-test financing roadmap to increase likelihood of success </li></ul><ul><li>Concentrate on capital efficient models to minimize ask and prolong runway </li></ul><ul><li>Peruse open collaboration and public sector support to minimize needs </li></ul><ul><li>Align at each stage of value creation with appropriate investors </li></ul>
  5. 5. Types of investors … and how to differentiate
  6. 6. Three broad categories <ul><li>Angel investors/Entrepreneurs </li></ul><ul><ul><li>High net worth (HNW) individuals </li></ul></ul><ul><ul><li>Successful life science players </li></ul></ul><ul><li>Private equity investors </li></ul><ul><ul><li>Venture capitalists (VCs) </li></ul></ul><ul><ul><li>Institutional funds </li></ul></ul><ul><li>Stock market investors </li></ul><ul><ul><li>Retail investors </li></ul></ul><ul><ul><li>Institutional funds </li></ul></ul>
  7. 7. Common linkages <ul><li>Make a return commensurate with perception of risk, n.b.: </li></ul><ul><ul><li>Tied to their cost of capital </li></ul></ul><ul><ul><li>Different by category </li></ul></ul><ul><li>Satisfy a psychic need or fulfill an organizational mandate, e.g.: </li></ul><ul><ul><li>Altruism </li></ul></ul><ul><ul><li>Stage of development </li></ul></ul><ul><li>Provide means to monetize: </li></ul><ul><ul><li>Exit within their time horizon </li></ul></ul>
  8. 8. Each has a unique profile <ul><li>VC’s </li></ul><ul><ul><li>Domain expert, professional life science investors </li></ul></ul><ul><ul><li>Strict criteria, defined models, 3-7 year horizons </li></ul></ul><ul><li>Private equity funds </li></ul><ul><ul><li>Less expert, professional investors with interest in life sciences </li></ul></ul><ul><ul><li>Shorter time horizons (<3 years) </li></ul></ul><ul><li>Angel Investors </li></ul><ul><ul><li>Business professionals with or without life science domain expertise </li></ul></ul><ul><ul><li>Variable interests, motivations and time horizons </li></ul></ul><ul><li>Retail investors </li></ul><ul><ul><li>Least expert with negligible time horizons </li></ul></ul>
  9. 9. What VCs look for <ul><li>Alignment with fund’s mandate: </li></ul><ul><ul><li>Type of technology, stage, etc. </li></ul></ul><ul><ul><li>Product, disease area, platform, etc. </li></ul></ul><ul><li>Quality of opportunity: </li></ul><ul><ul><li>Compelling differentiation meeting a need </li></ul></ul><ul><ul><li>Terrific, adaptable people with track record </li></ul></ul><ul><li>Path to market and monetization: </li></ul><ul><ul><li>Clear potential to create 3 rd party value </li></ul></ul><ul><ul><li>Exceptional ability to execute with urgency </li></ul></ul><ul><li>Intangibles: </li></ul><ul><ul><li>Supportive network or ecosystem </li></ul></ul><ul><ul><li>Ability to have some fun </li></ul></ul>
  10. 10. What angels look for <ul><li>Fascinating technology </li></ul><ul><li>Remarkable inventors/scientists </li></ul><ul><li>Opportunity to make a difference </li></ul><ul><li>Their next BIG opportunity </li></ul><ul><li>Something novel to build </li></ul><ul><li>Solution to truly unmet need </li></ul>
  11. 11. What does this mean to you? … and what should you do
  12. 12. Understand the opportunity <ul><li>What’s the problem you solve and how are you unique in addressing it </li></ul><ul><li>How big is the opportunity using truly reasonable assumptions </li></ul><ul><li>What needs to be demonstrated to validate the solution </li></ul><ul><li>What’s the realistic path to clinical approval and market introduction </li></ul><ul><li>How long will this sensibly take and what kind of money is required </li></ul>
  13. 13. Make a plan <ul><li>Test your assumptions: </li></ul><ul><ul><li>do some market reconnaissance </li></ul></ul><ul><ul><li>seek advice from people that have been where you want to go </li></ul></ul><ul><li>Map out the key milestones which: </li></ul><ul><ul><li>demonstrate proof of concept </li></ul></ul><ul><ul><li>show commercially relevant progress </li></ul></ul><ul><ul><li>tangibly increase value or reduce risk </li></ul></ul><ul><li>Sketch out a minimalist plan with: </li></ul><ul><ul><li>Progressive development/market path </li></ul></ul><ul><ul><li>Staged financing requirement </li></ul></ul>
  14. 14. Execute the plan <ul><li>Prepare a ‘pitch deck’ that aligns capital needs with stepwise value creation </li></ul><ul><li>Maximize public funds to minimize/leverage investor capital at each stage </li></ul><ul><li>Exploit open collaboration to accelerate progress by broadening resource pool </li></ul><ul><li>Be as virtual as possible to optimize capital efficiency and prolong runway </li></ul><ul><li>Match stepwise increments to type of investor best suited at each stage </li></ul>
  15. 15. One entrepreneur’s model <ul><li>Truly differentiated product/technology </li></ul><ul><ul><li>meets definable need(s) in sizable market(s) </li></ul></ul><ul><li>Pragmatic, tractable development path </li></ul><ul><ul><li>measurable, value-creating milestones </li></ul></ul><ul><li>Believable monetization route </li></ul><ul><ul><li>exit (M&A, partner, revenue) in 3-5 years </li></ul></ul><ul><li>Financing required is obtainable </li></ul><ul><ul><li>map out a stepwise progression </li></ul></ul><ul><li>Can be executed with virtual, open model </li></ul><ul><ul><li>small project team, limited infrastructure </li></ul></ul><ul><ul><li>amenable to open collaboration </li></ul></ul>
  16. 16. Closing comments <ul><li>Today’s environment is brutal so brutal honest about the opportunity is vital </li></ul><ul><li>No room for error so creating and stress testing a robust roadmap will increase likelihood of success </li></ul><ul><li>Capital efficiency, open collaborations and public support will keep capital needs to a minimum and accelerate progress </li></ul><ul><li>Alignment at each stage of value creation is critical as not all investors alike </li></ul>
  17. 17. What Investors are Looking For? … and what it means to you Medical Technology Innovation London, June 10, 2011