- an all-star management team
- an appropriate valuation for the company
- a realistic understanding of the risk involved
- a well-conceived and fully-developed business plan, including:
- a comprehensive characterization of the competition
- a justifiable list of potential acquirers (a.k.a. – an exit strategy)
Investors expect to know what competition a product will face to better assess their risk. Thus, start-ups need to define the strengths and unmet needs of all competitor products (both in-line and developmental) vis-a-vis the (better) solution that a startup’s product provides...
And the competition spans products currently on the market, as well as those racing toward approval.
Depending on when a start-up’s product is expected to hit the market, this picture can change dramatically with competitors’ successes, failures, delays, patent extensions, etc. Thus, monitoring the competitive landscape must be considered a constant work in progress.
Investors also expect start-ups to have fully developed their exit strategy, with a list of potential acquirers; indeed, they want to see evidence that these companies are strongly interested in a product.
Potential acquirers can run the gamut from small to mid-size companies with an intent to grow in a specific therapy or disease area, to big pharmas with a long tradition in a particular space. However, companies
reassess their portfolio strategies every year, so it’s critical to conduct due diligence on which companies truly intend to grow in the right areas for a new product to fit now, and for the foreseeable future.
It is important to know what strategy signals to detect from potential acquirers and where to find information that is accurate, timely and comprehensive, in order to give investors confidence
to award a start-up the capital it needs.
If you are a biotech start-up, power up your pitch with research that commands the attention and the respect of those investors and you will have the partners you need to take your biotech from start-up to corporation.
Published in the Life Sciences Executive Network "Biotech Bulletin" Winter 2015.