For those new to the fundraising process, it can be hard to gauge how well a financing process is going before an initial term sheet is received. There can be robust investor interest in first meetings, and even multiple IC presentations, and yet still no lead may emerge. 1/14 ...Sometimes continued, vigorous work can occur even when an investor is losing conviction (“going sideways”), something hard to distinguish from the type of work that leads up to a TS submission. I’m going to write a few posts over the next week on how to think about...2/14

There is often a gulf between how entrepreneurs conceptualize the ideal pitch and how VCs do. Management teams sometimes take the “story” element of a pitch too literally, and try to slowly and suspensefully build up to the key elements of the investment thesis. They may...1/11 ...wax poetic on their founders and run through a lot of basic science before even saying what their lead program is (much less discussing the financing round). The instinct, perhaps, is to hook investors with the science – thinking that then everything else will fall into...2/11

Good news for entrepreneurs: a lot of pitch meetings took place at the JPM conference! Bad news: VCs often have trouble internalizing info presented at these mtg's, especially when hearing a story for the first time. Why? Investors often don’t pre-read decks at JPM nor do...1/8 ...they always have the benefit of having a deck directly in front of them; meetings are often shorter & with a subset of the team; people often take handwritten notes which they never get around to reviewing later; & there is so much follow-up post JPM that an interesting...2/8

When it comes to commercial projections in investor pitches, biotechs are caught between a rock and a hard place. On the one hand, they know that investors will inevitably haircut whatever assumptions they put forth; thus they are incentivized to be relatively aggressive. 1/11 ...On the other hand, unreasonable assumptions can hurt their credibility. Like all people, VCs use certain heuristics that can be faulty or overly rigid; for some, any indication that a team is “unrealistic” is a yellow flag. There are a few things companies can do to...2/11

This is a “messy” market – hard to predict financing timelines (but longer than they were 2-3 years ago) and very lopsided. Definitely a story around the “haves” and “have nots” – if you’re in a hot space, with a highly credentialed team and a strong existing syndicate, you...1/5 ...may be well over-subscribed, once a credible lead steps up. Others can find themselves left out in the cold as VCs slow deployment into new investments and preserve more capital for existing portfolio companies. “Signals” – whether of “quality” or “red flags” – have...2/5

When pitching to VCs, don’t “bury the lede” by waiting until partway through your deck to mention the details of your financing round. Describe upfront – within the first couple of slides – the following: 1) what round of financing you’re raising (e.g., you’ve raised an...1/11 ...A – is this a B? An A extension? Do you want to characterize it as a crossover round?); 2) your financing goal (it’s okay if this is a range; might want to mention tranching if it’s going to be an obvious component of the round); 3) use of proceeds / milestones to be...2/11

Be thoughtful when pitching VCs about how you describe your BD strategy. Investors rarely see partnering activity as truly “non-dilutive”. If you are licensing out rights to a valuable program, geography, or therapeutic area, there is less substrate for future value...1/12 ...creation within the company. If a partnering deal is in an area where the company does not anticipate playing in the future, this is more favorable; however, it’s worth noting that strategic imperatives often change over time. Lack of traction in one therapeutic area,...2/12

An underrated way to impress investors: know the competitive landscape cold. Avoid these common mistakes around discussing competition: 1) focusing on your own program / science to the exclusion of evaluating the overall landscape (both operationally and in your pitch);...1/16 ...2) assuming too much knowledge on the part of investors about your space / target indications; 3) bad-mouthing competitors or understating the strength of their data; 4) failing to recognize / communicate how others’ successes in the space can actually be a tailwind;...2/16

A key theme for me in 2023 (and one which I think is critical for anyone in biotech): honesty. A psychologist friend of mine was pointing out how we sometimes choose guilt as a crutch. When things in our lives are challenging, it can be easier to believe it’s all our fault...1/11 ...because that gives us the illusion of control. Believing we *could* have been perfect implies certain powers to be perfect in the future. It can be easier to beat ourselves up than to acknowledge certain limitations (physical, emotional, situational) in our lives. 2/11

In today’s fundraising environment, it’s more helpful than ever for biotechs to be able to tell a “tight” story. This means that the value proposition is easy to communicate, understand and diligence. E.g., a “tight” story could be built around a single asset for a large...1/13 ...market with an obvious unmet need (with little competition), clearly differentiated science, strong preclinical data, a well-elucidated path to approval, and an experienced team. As elements grow in complexity – competition, regulatory risk, IP risk, multiple programs,...2/13

For most financing processes, in most marketing environments, it’s important to “let the market speak.” This means not pre-emptively stating the valuation at which you plan to raise money. Why is this? And when are there exceptions? Well first – if you definitely need...1/10 ...capital – you don’t want to turn anyone off based on the valuation. Nor do you want to undercut yourselves by stating something that’s too low. Much better to get a set of strong investors interested, and then let a competitive process play out. Second, companies that...2/10

Offering investors an update on your financing process can sometimes be a way to get some momentum going. It can be a way to reach all those investors who are interested in doing more work, but stretched a little thin. It activates a bit of FOMO, which can move your deal up...1/7 ...on their list of priorities. Of course, you’d want to have something to communicate. High-relevance info includes a term sheet received or coming; it can also be worthy of an update call if you’ve established a likely timeline for close & can describe groups of investors...2/7

For companies between fundraises, it can pay to keep your next financing (and investors’ diligence requirements) in mind. This applies to organization of study reports, papers, regulatory correspondence, etc.; but also applies to memorializing your learnings along the way. 1/9 ...E.g., if you’re conducting doc calls on the unmet need / market opportunity, you may want to spend a little time putting these in a format that can be shared with investors later (best is to get into good note-taking habits – e.g., using a lot of headings & sub-bullets...2/9

An area where many private biopharma companies tend to lose credibility is in describing the commercial landscape. In particular, rare diseases and really crowded indications are both places where the commercial potential for a new program might be fuzzy. Key questions for...1/11 ...investors: what is the size of the addressable population, *by geography*? Beware of clumping all geographies together on your slides or suggesting an “average global price”. Many investors will start with estimating the US market, will then estimate EU (with lower...2/11

As a VC, one of the most helpful things you can do for your greener management teams is to provide them with some great pitch decks from other portfolio companies (obviously, don’t share confidential decks without permission). Point to what is especially strong in each...1/6 ...deck – the investment highlights slide, layout of the data set, competitive landscape, etc. (And if the particular deck falls short in some areas, worth tactfully communicating that too.) Pitch decks from companies in related spaces are especially useful. They can help...2/6

If you’re a biopharma co. pitching to VCs, make sure you explicate all the relevant biology around your targets – especially if they’re new, but even (perhaps more in brief / in an appendix) if they’re validated. Don’t assume that every investor knows every target...1/11 ...intimately. Key q’s to answer: 1) what is the role of this target normally?; 2) what is its role in pathologic processes?; 3) is your approach specific to a subset of patients (e.g., a tumor antigen expressed on a certain % of tumors in various histologies; a...2/11

Platform companies, especially those working in crowded or precedent areas, always need to define what their “secret sauce” is. What about the technology, assays, tools, etc. is uniquely enabling? What evidence of these capabilities have you accumulated? How does the...1/5 ...platform dovetail with and differ from other efforts in the space? E.g., if you have a platform for finding new targets in a particular space, does it spit out the known, validated targets in addition to new ones? How much of the approach has been published? What is...2/5

An occasional criticism of exec’s coming out of pitches: “they were defensive”. What does this mean and how do teams avoid it? Being “defensive” usually refers to someone responding angrily to a particular question or comment. Sometimes it also means deflecting the...1/13 ...feedback and responding in a long-winded way about a Q that wasn’t asked. Execs can also imply that the question or concern is not relevant. If responses are given calmly, politely, and with adequate supporting evidence (“this isn’t an issue for us for the following...2/13

Heard from an orthopedic surgeon regarding joint surgeries during a diligence call: “I can tell right away which patients are going to do well post-surgery”. He said this judgment is based not on their disease characteristics, but on their attitude toward life, as well as...1/6 ...their support network. It made me think deeply about how our framing of adversity can have profound implications on how we weather challenges – even the physical ones. On the one hand, optimism can push us to make small decisions that can snowball (e.g., extra effort...2/6

When pitching a biopharma company, don’t think of your pitch like a novel (slow wind up, suspense, and then a dramatic conclusion), but more like a legal brief. The more clearly you present the thesis at the start (and then build on that), the less likely you are to lose...1/5 ...people or run out of time before getting across your main points. At the outset, state the main conclusions / investment highlights – think about the key arguments an investor would potentially present to their team and lay them out in brief. Also give some historical /...2/5

One thing management team members sometimes leave out of their intros during pitches: how long they’ve been with the company. This is important context for how the team is growing / changing. Don’t assume that if a key team member has recently joined that’s a bad thing – ...1/6 ...investors may think, “they’re a little light on their work around ____ thus far, but the recent addition of this new person could fix that.” Other things to include: 1) your title; 2) a few relevant roles (don’t need to go through every one) – key info can include # of...2/6