Preparing Your Company for Outside Investors

As entrepreneurs advance past the idea stage, and into the friends-and-family funding stage, questions arise about how and whether to prepare for outside investors. On October 16, 2006, FountainBlue convened a life science entrepreneurs' roundtable to cover that question.

Our facilitators were Ken Macrae, senior executive for a series of small and large lifescience corporations, Geetha Rao, former CEO of Norgren Systems and partnerwith venture catalyst, AuxoGlobal http://www.AuxoGlobal.com, and SergioGarcia, Life Science Co-Chair for Fenwick & West http://www.fenwick.com/attorneys/4.2.1.asp?aid=617. Ken, Geetha and Sergio shared their extensive experience working with life sciencee ntrepreneurs and companies in preparing them for outside funding. The discussion at the meeting focused on what entrepreneurs need to do to optimize your chances of being successfulin closing the next round.

Below is a Summary of Notes and Advice on Preparing Your Company for Outside Investors provided by the facilitators and the audience in general.

Know and Articulate Your Message and Strategy: Think through your business plan

• What do you do for whom, value proposition over competition? Etc.,
• What is your exit strategy and how will it affect the different threads of development?
• Create documents which concisely and compellingly communicate what you do
• Envision, describe the value of your organization; Present a picture of real success for your business in concrete terms

The importance of team

• It's inadvisable to hire senior people who are friends too early in the company development. It can lead to unnecessary growth pains as you grow, cause barriers to growth, and damage a relationship
• Hire experienced executives for your team, board, scientific advisory board, etc., Proven people will not only draw on their experience as they plan and execute, but will also have the connections to the right people to get the stakeholder support you need, be it in funding, in customer sales, in partnerships, in getting new board/team members, etc.,

Validate your business, your plan and your market

• Validate your business with your plan - market size, product/IP, team, etc.,
• Customer validations are important. Even if they are only non-paying beta users, from customers, you can get testimonials, feedback, data, suggestions for improvement, QA support, etc.,

Create an operational plan: Bridge the overall business plan and the operational plan -

• What is the process and timeframe for getting from where you are to where you would like to be for: Team building, market penetration, patent/IP protection, board/leadership development, etc.,?
• How will the individual strands be intertwined?
• What are the implications for your funding, product delivery, team-building needs?
• This will show investors how, when, why, where their money will be leveraged with what anticipated results

Why are investors charging a premium for investment in life science companies?

• It generally takes a longer development time to reap benefits of an investment, due to longer development cycles, heavily and more rigidly enforced regulation, etc., (Average time to get a patent is about 14 years.)
• There are fewer life science entrepreneurs as many of them have post-graduate degrees and deep experience in research (for example).

Other Topics Covered

• Employment in Life Science Companies
• This is a good time for experienced, credentialed entrepreneurs to seek positions in early-stage companies where they can make a big impact. Be passionate, stay the course.

For more information, visit http://www.FountainBlue.biz.