Life Science Agenda

TCN on Air: Breaking Down Strategic Investment for Life Science

There are many routes to funding your life science startup. One way to get to the next step in the early stages is through strategic investments with industry partners. In this online interactive Google hangout, we will look at how a strategic investment differs from regular financial investments such as angels or VCs, and how this can both negatively and positively impact your company. It will also discuss who potential strategics are, their motivation, as well as the recent trends in strategic investment.

If you are looking for alternative routes to funding, this is the hangout for you!
Expert:

Ryan Sansom – Goodwin Procter

Check out the video here:

Follow along with the slides here:

Critical Non-Dilutive Resources for NE Life Science Companies

Smart life science entrepreneurs in Greater Boston will find and use the resources of the vast ecosystem that has developed for their benefit. While this is not only an opportunity for high value and low cost growth, it is also a bit of a litmus test for those seeking equity capital. Investors demand capital efficiency and greatly value scrappy entrepreneurs who proactively seek out non-dilutive resources.

Earlier this year, real estate firm Jones Lang LaSalle ranked Greater Boston as the number one life science supercluster in the United States. The report ranked clusters on reportable jobs, venture funding and grant dollars. The concentration of “top-notch universities, innovation centers, research hospitals, venture capital firms, [and] a strong labor force” was cited as a key driver of such growth metrics.
However, the report did not include the presence or impact of non-profit, quasi-governmental and trade organizations that provide the necessary critical mass of infrastructure to support entrepreneurial growth in a region. Such “ecosystem players” generate key benefits for early stage life science companies. These include not just affordable and flexible lab space (the focus of the report), but also:
• grant capital
• loan capital
• coaching & mentoring
• matchmaking for co-founders, boards and SABs
• business development forums and support
• regulatory pathway consulting
• fundraising pitch events
• community events that drive employment opportunities
• product showcase events
• prototyping and manufacturing support for MedTech
• education around product development, entrepreneurship and fundraising

The area’s largest effort, the billion dollar Massachusetts Life Science Center (MLSC) is an example of quasi-governmental economic development support efforts. MLSC, using its incredible network of industry veterans, provides key grant and loan funding for early stage companies in various forms. This often complements early stage equity raises and provides substantial additional product development runway for early stage companies. Susan Windham-Bannister, CEO of MLSC commented, “the Center’s Accelerator Loan Program fills a critical gap in the life cycle of promising early-stage companies with a high potential for technology commercialization, rapid growth and access to private equity financing. Through this program the Massachusetts Life Sciences Center provides an endorsement of promising young companies, promotes their visibility and creates leverage for subsequent investors who can further help move these companies forward.”

Other efforts, like MassChallenge, are non-profit accelerators designed to provide extensive coaching and mentoring experiences along with free office space and an opportunity to compete for substantial cash and non-cash awards. A core benefit of such accelerators is the ability to quickly surround entrepreneurs with other highly motivated and impact focused teams. John Harthorne, CEO of MassChallenge noted, “aggregating this critical mass of vision, talent and drive leads to peer-to-peer learning and a wellspring of inspiration for entrepreneurs.”

Donna Brezinski, CEO of Little Sparrows, a medical device finalist in MassChallenge, credited the accelerator with “moving the Company forward much more rapidly than otherwise would have been possible. They connected us to industry experts, thought leaders and business mentors in both the life sciences and social impact spaces.” Matt Racki, Co-Founder of Gweepi Medical, a Health IT finalist, said “everyone in the MassChallenge community was dedicated to making the companies succeed.”
Other life science startups rely on organizations like University of Massachusetts Lowell’s Massachusetts Medical Device Development Center (M2D2) to help translate technology into prototypes. Still others, at even an earlier stage, utilize the coaching, “Platform Sessions,” investor conferences and events produced by the Massachusetts Technology Transfer Center (MTTC), which is charged with commercializing technology developed at Massachusetts universities and research institutions whether public or private.

Many life science entrepreneurs find that they immediately need to fill in a missing piece of their education around finding and transacting with angel and venture investors. The best entrepreneurs, however, leverage existing ecosystem resources to rapidly obtain education directly from investors. Samantha Hammar, Executive of The Capital Network, a Boston based non-profit, says of their day long Life Sci Fast Track Boot Camp “it is amazing to see 30-50 investors and mentors donate high value time to educate the next generation of entrepreneurs about the perils and thrills of building a high growth life science company.”

In addition to the not-for-profit organizations, there are for-profit but low cost incubators, co-working spaces and shared lab facilities. Each of these uses a different model to help new ventures execute their plans with maximum capital efficiency.

Entrepreneurs seeking high growth capital also should have leveraged the resources of their legal, accounting, banking and similar relationships. “Top tier firms can’t just deliver excellence in their core competencies. They also need to deliver their network, their business acumen, and value add services,” said Michelle Basil, Chair of the Life Sciences Practice Group at Nutter, McClennen & Fish LLP.

All life science companies face the extraordinary challenge of accelerating their research and development, investment and product commercialization processes. While entrepreneurs are the most self-reliant people on the planet, they would be well served to think of themselves as part of a larger environment and about the existing resources they can tap into in the surrounding life science ecosystem. Greater Boston’s most important competitive advantage is its incredible density and diversity of high value non-dilutive resources that facilitate the growth of life science companies.

Jeremy Halpern is a Partner and Director of Business Development – Emerging Companies Group for Nutter McClennen & Fish LLP. He will be participating at the upcoming Acceleration2013 Conference on December 9th.