At a recent FundingPost event gathering together investors and entrepreneurs in Philadelphia, crowdfunding, provisions in the JOBS Act, and angel and venture investment trends were on attendee minds.
It’s an interesting time to talk about funding opportunities for startups, particularly in Pennsylvania. Gov. Tom Corbett signed a bill last week for a tax credit program that will make $75 million available for technology investments and effectively restores funding to pre-recession levels for the state’s economic development arm Ben Franklin Technology Partners. That was particularly good news for Emerald Stage2 Ventures, which counts Ben Franklin as its largest investor.
Drexel University recently announced it’s started a venture arm, Philadelphia launched a $6 million startup seed fund managed by First Round Capital, and the Philadelphia Industrial Development Corp gave $500,000 to University City Science Center’s QED program. Angel and venture investor David Freschman, who runs Early Stage East in Philadelphia, announced the launch of FPAngels.com, a national angel investor group that takes an innovative approach to angel investing.
Angel and venture capital investors and entrepreneurs shared their insights and anxieties about the funding environment at the event at shared workspace Benjamin’s Desk.
Lots of new angel investment syndicates popping up As most venture investment has moved upstream, startups are becoming more interested in angel investors as a source of early stage funding. Angel investment groups for accredited investors are sprouting. A few of them, such as Healthfundr and VentureHealth, are focused on healthcare startups and at least a couple, HealthiosXchange, and Mid Atlantic Bio Angels are interested in life science companies including biotech, diagnostic and medical device businesses. It’s also giving rise to non traditional formats like FPAngels, a national angel investment group to move angel networks beyond the East and West Coasts.
There’s going to be a lot of noise The Securities and Exchange Commission’s move to lift the 80 year old ban on general solicitation as part of the JOBS Act will mean that entrepreneurs and venture firms can disclose they are raising money. And while that’s good news, especially for small venture firms who find it more challenging to raise funds, it’s likely to create a lot of noise that companies will have to cut through to get their message across.
Don’t expect an outpouring of investment Companies will still have to work hard to get money One of the loudest messages from entrepreneurs and investors is that entrepreneurs will still need to work hard to get funding. They will need to actively demonstrate why investors should be interested in them. That includes being realistic about the market opportunity for their product or service. Entrepreneurs should work as hard to get new customers as they do to raise money.
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.
Know your management teams Crowdfunding has been lauded as a way to democratize investing. But although in some situations that may result in some investors getting some good returns they are also vulnerable to failure as well. It will be incumbent upon accredited investors to meet the management teams of the startups that interest them so they can do their own due diligence. Otherwise they risk losing big. That was one message underscored by Mentor Tech Ventures Managing Director Brett Topche. The firm focuses on early stage and seed stage investments in companies associated with University of Pennsylvania. “In the early stages, you have to meet the team.”
[Photo from Flickr user vic15]
