Here’s the problem with nerds: You ask them the time, they tell you the history of clock making.
Or so says Richard Koffler, a life sciences investor with the California-based angel network Tech Coast Angels.
His core bit of advice? Keep it simple, stupid.
This has been an underlying theme at this week’s Redefining Early Stage Investments conference in Houston.
But this simplicity rarely happens. Life sciences companies in particular are guilty of getting deep in the weeds when explaining their technology to the angels – and wind up alienating potential investors as a result.
“Scientists have a knack for making simplicity complex,” Koffler said. “But you have to simplify things one step at a time so investors can get it.”
Entrepreneurs often say that, if they just had enough time, they’d be able to convey what a great opportunity their technology presents, said Casey Cunningham at Santé Ventures. But you need to keep it tight. Educate the investor on what the opportunity is in the framework of an elevator pitch.
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.
Presenting a realistic market to investors and making sure your data’s sufficiently validated before approaching an investor – well that’s key, too.
“While you may not get to an inflection point in an elevator pitch, we want to hear the exit,” Cunningham said. “You really do have to boil it down to what the value proposition is, and lead with that.”
Because when life sciences startups present their terms in a convoluted fashion – as they often do – they get dropped quickly. The competition is just that fierce.
“There’s a lot of deal flow,” said Robert Tucci, co-chair of sciences and life sciences at the Houston Angel Network. “The challenge for us is to triage it very quickly so we can get to the things that really fit our target.”
A lot of early stage efforts look like grant applications or scientific papers, said John Westwick, the entrepreneur-in-residence at Mercury Fund. Investors can generally trust clearly presented science. So it’s more important to map out a clear path to an inflection point.
“You make it hard on the angels by making it unnecessarily complicated,” said Philip Sanger, managing partner of Texo Ventures.
So that’s that. The life sciences are hard. Simplicity matters.
Photo: Stock.xchng user cozgrl05
