Lots of great advice exists for tech entrepreneurs trying to pitch to VCs, but very little for the aspiring life science entrepreneur, especially for therapeutics startups. Since that’s the type of deal we invest a good portion of our fund at Atlas, I thought I share a few thoughts.
While some of this is probably helpful for approaching any venture firm, I can’t claim that they all are. Every firm, and every partner in every firm, is different – and so the “best pitch” likely to get them interested will certainly be different.
Lets start with how to get a meeting. Like most VCs, we are inundated with proposals for startups and requests for funding. Don’t send your ‘business plan’ in over the transom or even by just guessing our email addresses. Reality is a cold-call-style email into a venture firm is a surefire way to the recycle bin. I don’t think we’ve ever funded a business that came in via that route. Find a person who can refer you to someone at the fund. Work your network, or be proactive about reaching out to an entrepreneur who has or is working in the fund’s portfolio. A little research goes a long way. A qualified referral usually attracts our interest, even if just out of courtesy to the colleague that referred it.
Make sure the substance of your pitch fits what we do. Its amazing how many business plans come to us that are just so far off from what we do (e.g., PIPES into pink sheet companies selling OTC lotions). Here’s the quick summary of what Atlas (and most early stage VCs) are looking for in new therapeutics deals:
- Stage: We focus our time on venture creation (seed-stage, idea-stage) and early rounds of companies, rather than later stage “older” deals. If you’re a Series C/D/E, you’re unlikely to turn heads. We like to help shape the DNA of the companies we back, and that can really only be done if we help co-create them.
- Science: We like to start with great science and great medicine. World-class founding science, big unmet needs, high-end innovation, and breakthroughs with an application focus. Don’t bother pitching us on a reformulated generic product for an unimportant condition. “Late stage, low-risk, specialty pharma” hasn’t actually turned out to be low risk when adjusted for the high burn rates. In any case, its just not our bailiwick.
- Strategy: We are disciples of strategic capital efficiency. We don’t like deals that require lots of equity capital. Big rounds, like a $40M+ Series A, aren’t our thing. We want to see lean organizations, scaled appropriately for their strategy (i.e., many platforms require internal labs, many asset-centric plays don’t). Evidence that the team knows how to outsource selectively and aggressively, and leverage non-dilutive sources of capital is good to hear.
So now we’re on to the Pitch. Here are six bits of advice about how to have a great initial meeting with us:
- Know your audience. I very much like quote from Deming: “in god we trust, all others must bring data”. Like many early stage Life Science teams, we’re all scientists or clinicians at Atlas. We like to engage on a cool scientific hypothesis, a hot new target, next generation scaffolds, novel modalities, creative clinical strategies, robust drug packages, etc… We get into the science. We really want to see data. Please don’t come expecting to gloss over the scientific substance, or to focus on banalities like the high level difference between T-cells and B-cells. We’ll get bored or frustrated, or both. We’ll want to see real substance on the specifics.
- Leave general market stuff to generalists. Related to the first point, but warrants it own delineation. Its annoying when an entrepreneur touting a discovery-stage cancer program has multiple slides on how big the market is for cancer drugs, what the sales of Avastin were last year, what the annual incidence of the big four cancers are, etc… These slides give me a huge urge to reach for my blackberry. We know cancer is huge. Unless you’ve got a particular angle on a disease or market that’s unique or unappreciated, don’t bother wasting time on the macro metrics of these diseases, especially when you’re in drug discovery.
- Celebrate the strength of the team, but do it succinctly. A great way to throw cold water on a deal is to take the first 20 minutes of an hour-long pitch to describe each of the awesome founding team members, every scientific advisor, every Board member… We know a great biotech team when we see one, and it usually has some folks with serious scar tissue from prior drug development failures. The overwhelming youthful optimism common in social media tech startups today isn’t a great thing in a biotech startup, frankly.
- Share the hope, forget the hype. We’re in this sector to do well by doing good. But we are also sector that’s been plagued by over-promoting and over-promising. The Human Genome Project was supposed to have helped us cure most diseases by now. We like entrepreneurs who can paint the success story for us, especially the impact on patients potentially helped by the product, but don’t respond well to even the whiff of ‘hype’ and ‘snake oil’ (which may still have medical uses). Hand-waving miraculous data without the substance to back it up classifies as hype as well.
- Close with realistic exit scenarios. Be prepared to discuss how much equity capital you think it will take to bring this deal to a liquidity event (almost certainly an M&A with Pharma). Unless you are really convinced you have a special story that Wall Street will love, please don’t use that three-letter word synonymous with so much value destruction: I-P-O.
- Manage the meeting’s agenda and time. Don’t think we’re managing the clock, because we don’t. And don’t guess at how much time you have, ask explicitly for how much time has been alloted. Plan to save time at the end for discussion. For a one-hour meeting, plan to talk for no more than 30 minutes. If its interesting, we’ll easily be pushing an hour. ..
Hope that’s helpful. Looking forward to hearing about your startup.