With venture capital becoming more and more of a bygone dream for early-stage medtech and life science companies, many startups want to turn to angel funding to raise capital but don’t know where to start. At the Angel Investment Forum at Advamed 2013, Allan May, the founder and chairman of Life Science Angels, had the following advice.
What to think about before raising capital:
“The strength of an exit is directly proportional to the strength of your intellectual property.”
“VCs are paid money managers. They get paid to manage investments. We invest out of our kids college funds. . . . That inherently means that angels and founders are perfectly aligned in today’s investment world.”
“Just getting money is not the actual objective.” (Get smart money “from the people that will help you spend the money wisely.”)
“The difference between dumb money and smart money is showing up much more than before, particularly in the life sciences. . . . Investor alignment is a really big deal. We won’t get in a deal where we don’t know the other investors. . . . You’ve gotta have alignment on the board and in the investor pool.”
What he looks for in an entrepreneur:
“This isn’t about picking technologies, it’s about picking people.”
How much should you raise:
“The amount of money you should raise is the smallest amount of money that can have the biggest impact on your valuation in the shortest period of time.” (Plus a little more, fellow panelist Jeffrey Arnold joked.)
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
On approaching angels:
“Don’t you take your business plan to (the potential investors), get someone who knows them to take the business plan to them. Your problem is not getting to angel investors, it’s getting to the top of the pile. . . . Getting into the pile is not a success.”
