Tuesday, June 10, 2014

Raising the Dough: Entrepreneurs Gather to Discuss How to Raise Funds in Today’s Life Science Landscape

On June 3rd and 5th, life sciences investors and entrepreneurs gathered at RTP’s NC Biotechnology Center for CED’s Raising the Dough Series.  The focus of this program, sponsored by Hutchinson PLLC and Hughes Pittman and Gupton LLP, was to expose members of early-stage companies in medical devices, therapeutics and biopharma to investors’ perspectives as well as educate them on best practices for raising capital for their ventures.  Attendees had the opportunity to network, listen to presentations from Advanced Animal Diagnostics, SBDTC, and the NC Biotech Center, plus ask questions as part of an investor panel.

Speakers and panelists generously shared their unique perspectives not only on how to fund early-stage companies but also how to build a successful, meaningful and lasting business.    

Patience and Flexibility 
A poll of the audience revealed that nearly all of the 30 early-stage companies in attendance had only been around for 1-2 years or less.  The five panelists applauded these entrepreneurs for seeking out opportunities to learn at events such as Raising the Dough early on but also assured them of the potentially long road ahead in reaching their developmental and financial goals.  During his presentation, Preston Linn of Advanced Animal Diagnostics recounted the years of hard work and waiting it took the company’s CEO Rudy Rodriguez before substantial capital started flowing in to the company.  Founded in 2001, this life sciences technology firm did not generate revenue until 2013.  

Advice for start-ups? Be diligent and determined in business development but patient when it comes to acquisition of funding.  Panelist Brian Carney of Harbert Venture Partners noted how his firm often maintains relationships with entrepreneurs for upwards of a year or two before a deal is even drawn up.  The other panelists chimed in about similar experiences and agreed that while the process of obtaining a grant can be lengthy, the reward is well worth the wait.   

Additionally, the panelists and presenters spoke on the importance of flexibility in reaching business goals.  While distinct end goals are crucial, entrepreneurs in early-stage companies must be willing to explore multiple avenues and keep an open mind when determining where and how to raise money.  

The Power of Networking 
As exemplified by the flurry of business card exchange during breaks throughout the program, everyone in attendance was well aware of how crucial networking is in building a successful business.  Panelists and speakers stressed the importance of persistent and aggressive networking when it comes to securing VC and other donations.

Lookout Capital’s Walt Clarke reassured any nervous members of the audience that as much as they are pursuing investors, investors are pursuing them as well.  Firms are eager to find innovative and profitable ideas and are very willing to listen to pitches.  In fact, some investment firms hold free events where entrepreneurs are invited to share their ideas and business plans. Clarke also recommended that all entrepreneurs have their concise elevator pitches ready at any moment, as an opportunity to make new connections could be waiting at every corner.  

Maintaining relationships with investors proves valuable in many nontangible ways, as well.  Pappas Ventures’ Scott Weiner reminded the audience how critical connections with investment firms can be even if they don’t end with venture capital or angel investments.  All panelists expressed that they strive to help entrepreneurs who come to them by providing advice and guidance in the right direction even if no formal deal is made.  Jimmy Rosen urged audience members to see interactions with investors not just as a chance to get money but as a resource for company and product improvement, noting that sound advice is just as beneficial as capital.  

Know Your Product, Know Your Market  
In their presentation “Getting the Grant,” Mike Carnes and Nick Trotta laid out several key points that entrepreneurs must consider when navigating the complex ecosystem of life science funding.   Foremost, they warned entrepreneurs not to judge an agency’s name when considering grant sources.  “Don’t rule out the Department of Defense or NASA,” Carnes noted as an example of how a company never knows who could be interested in its product.  Panelist Jimmy Rosen suggested that companies view their product on a broader scale, which could lead to discovery of new applications and uses.  Greater product utility attracts more investors.

Panelists also advised attendees to be realistic about the market they are entering.  Entrepreneurs must make sure that their ventures are scientifically, commercially, and externally validated before bothering to secure grant money.  The life science field is constantly adapting and expanding; thus entrepreneurs need to be aware of the funding landscape in order to utilize all resources around them. 

Overall, the speakers and panelists urged audience members to believe in their product and its potential.  Nick Trotta emphasized that his advice was strictly directed towards entrepreneurs who seek real solutions to unmet problems, not just people interested in funding a cool idea. 

If you were unable to attend Raising the Dough, contact CED’s Jane Royall (jroyall@cednc.org) to learn more and get connected.

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