Building Biotech Businesses - Lesson 5: Finance and Fundraising

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Please make sure you download the workbook for this masterclass before beginning the lessons.
Immerse yourself in the wisdom of accomplished entrepreneurs who have conquered global markets out of Switzerland. The first masterclass, Building Biotech Businesses, is useful for anyone in biotech or life sciences, for students and entrepreneurs already active in these fields, and anyone with an interest in building a successful biotech company. The host of this masterclass is Ulf Grawunder, a highly successful biotech entrepreneur.
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Lesson 5: Finance and Fundraising
“What you’re selling to investors is often an immature concept where you don’t have the data yet because you need funds to create the data for the technology. Each time you go to the investors, you get a lot of input, questions and feedback.”
Introductions to investors are best made by people who already have a connection to them. It is unlikely that a venture capital fund will respond to your cold call or email containing your pitch deck. Ulf mentioned before how helpful it can be to have an experienced mentor or co-founder with a network bigger than yours. In Ulf’s first company 4-Antibody, his co-founder, Professor Melchers, and Ulf himself had the same contacts at a venture fund, so they got invited to show their deck. Once you have one investor convinced, then it’s very likely that other investors from the network become interested as well. This is how Ulf got his first syndicate of venture capital investors together at 4-Antibody, providing the first seed financing of several million Swiss francs.
In fundraising, the personal connection is everything. Two of the investors who later invested in his first company were former fellow students of Ulf’s during his PhD studies. They know each other for a couple of years already. From these contacts, there was word of mouth that other investors approached Ulf. With these connections, Ulf did not have to send a fixed business plan to investors or approach them in a systematic way, he just entertained the personal contacts that they had. From there the message spread, and investment companies approached them on their own. Additionally, investors also want to make sure that founders have skin in the game. The co-founders should put some real money and commitment on the table so that it’s evident that they believe in the project.
Most early presentations are too scientific and technical, in Ulf’s experience. He therefore advises that you pitch your story to some non-scientists to see if they get the message. Instead of the science, investors want to know the business side of the project, when they will see a return on investment, and so on. Ulf had to learn that in his first pitches.
However, at the end of the day, Ulf believes venture capital investors look for three things that they want to invest in: the team, the team, and the team. The team is very critical, probably more important than the project and value proposition that you’re putting forward itself. Investors are looking ideally for scientific excellence, technical excellence, and that there’s a little bit experience initially in business. If that is not yet in the team very often investors have their own people in the network. They are called entrepreneurs in residence who have experience in running businesses, and they can join a project to take over an operational part, either as a CEO or as a financial officer or an operation officer.
Highlights of this lesson:
- Don’t cold-contact investors and VC funds, better use personal connections.
- A co-founder with great credibility helps in early fundraising.
- Co-founders need to commit at least some time and money - skin in the game.
- Investors want to know more about the business than a deep dive on the tech.
- The most important slide in a pitch deck is the team slide.
- Be open to operational talent from the investors’ networks to bolster your team.
- Investment partnerships are multi-company journeys.
- Find the right time to alert investors of challenges - not too early, not too late.
Ask yourself:
- What connections to investors do you and your co-founders already have?
- If an investor looks for “skin in the game”, which examples would you provide in your company?
- Does your pitch deck entail the business side and the scientific and technical side of your company evenly?
- Is your team slide prominent enough in the deck? Does the team show complementary skills?
- Can you improve the communication with your investors as stakeholders, informing them at the right time about potential challenges?
This masterclass is made possible with the support of the Gebert-Rüf Stiftung.
Concept and production: 8GR8 Films | Manuel Stagars 2024.