‘Sorry, we’re going to pass.’ As a start-up leader, you’ve likely heard this hundreds of times… Every time, get your hopes up and fight your way through a nerve-wracking presentation only to have your hopes dashed. Funding is one of the most difficult, stressful, and time-consuming activities for founders and leaders of pre-public companies. Even at the best of funding cycles, convincing investors to choose your company as part of their portfolio is challenging. But in these lean times following the life science funding peak of the COVID pandemic, the precipitous drop in venture capital funding has led to fewer and smaller deals that are driving good technologies out of business. To be one of the survivors, your pitch needs to be even more compelling than ever.
You must be able to translate your good technology into an investible idea.
Life Science Venture Capitalist
When trying to perfect their pitch, most people focus on their deck. How do I make it look better? How can I show that I’ll be the next unicorn? But an impactful pitch goes beyond the deck to the story and data underneath. Technical VCs are savvy and intelligent. They understand the market and technology because they have heard hundreds of pitches and worked directly with numerous companies in the industry. Especially in technical fields, like the life sciences, the amount of capital required to purchase equipment, space, and brainpower to move your science forward relies on seasoned investors. Without a cohesive story that includes supporting data highlighting the true potential of your market and technology, you will not be able to convince them that you, as a leader, will be able to achieve the growth they need for a profitable return on investment (ROI). Taking the time to develop your story and save the deck building until the end will give you the best shot at convincing investors or partners to invest in you.
Identify the right target
Before you start to build your story, you need to understand what your audience cares about. Are you targeting industry-specific VCs that are technically savvy and prefer specific company phenotypes (i.e. stage, medical indication, type)? Or are you instead targeting pitch competitions where you have only a few minutes to cast a wide net? Is it a strategic partnership with a company that can help move your development forward? In each of these cases, you may need vastly different stories. For the VCs, you need to provide more specifics about the technical advantage. Whereas in wide pitches, you need to focus more on overall revenue potential. For strategic partners, you need to explain how your technology can benefit their business.
By targeting your pitch to your audience, you will spark interest in a more compelling and effective way. Unfortunately, this also means that you need to build out tailored pitches for each target phenotype. So, choose your audience carefully. While casting a wide net may seem like it gives you the best odds of success, you’ll find more success by being strategic. Focusing on building a better story for an audience that aligns with your company story will save you time while generating more interest.
Find your unique story
People respond to stories that are told in a clear way. This is not new advice, but many new entrepreneurs don’t quite understand what is meant by a story. They take this to mean they should tell their own story and the details of the company’s founding. While interesting, this is generally only relevant in the angel and seed investing rounds. In these early rounds, you need to focus on team credentials, the passion you have for the problem that you are solving, and the potential of the technology to solve that problem. While you also need some projections and scientific support for your idea, your audience will expect that it is more theoretical than actual.
We see many young companies continue to use these same story tactics to pitch in later rounds because it worked for them in the past. Then, they are astounded that it is not garnering interest in series A and beyond. Remember that in the seed stage, the ask is generally much lower in value such that the risk profile is much lower for investors. As the stakes get higher with bigger asks, the investors will expect to see that you have effectively used your early rounds and that you have matured into a leader who has a true grasp on the business and operational aspects needed for success. At this stage, you will need to restructure your pitch to focus on achievements to this point, revenue potential based on actual market size, and a realistic, achievable path to reach company milestones.
Build an impressive roadmap
A top priority for any investor or strategic partner is a clear path of where you plan to take your company and product. This is more than picking a launch date and assuming you can generate revenues immediately. The roadmap demonstrates that you know ‘how’ to get to that target with a clear view of potential barriers. When you generate a timeline with distinct milestones, you are showing that you understand the full product lifecycle and the expectations of customers when you launch.
Many leaders feel that they should only talk about the best case and show an idealized view of their plan. Investors know that there are risks and that young companies have constant challenges. Therefore, they want to see that you understand the potential risks and are preemptively taking strategic steps to mitigate your largest potential pitfalls. We tell our clients that they will appear less naïve and more prepared when they discuss these honestly yet optimistically.
Develop a convincing data narrative
You need more data. Trust us. We have yet to work with someone who didn’t need to fill information gaps for their pitch. This may mean scientific proof-of-concept data, commercially relevant product data, or market analysis data. Often our clients will be heavy on one of these and light on the others depending on the backgrounds of their team. In the words of one VC, “You must be able to translate your good technology into an investible idea.”
Commercially-relevant product data is by far the most under-utilized in our experience. Many life science founders come from academic backgrounds focused on understanding underlying mechanisms and constantly finding the next innovation. Undoubtedly, important work. Commercially interesting data – or what we like to call the -ibilities – is more focused on whether the result can be repeated and in what circumstances (i.e. reproducibility, repeatability, stability, etc.). It’s also focused on getting a result that the customer needs. For instance, a technology that can make a large impact on a model system is exciting, but customers often don’t use model systems. So commercially, it is important to back that up with positive and repeatable data in conditions that a customer would actually use. When investors see that you have a customer-minded focus, they are more confident that your product will be able to generate revenues and give them a positive ROI.
And finally, design a beautiful deck
Once you have built a compelling story around significant data, you are ready to put it into a deck. This sounds easy, but it is difficult to distill so much relevant information into a few slides. Focusing on easy-to-read charts and graphs with supporting references, including links, will allow you to communicate your message without overwhelming your audience. Working with someone experienced in not only graphics but also communication design can help you simplify your graphics while not losing important details. And practicing in front of experienced people at varying levels of knowledge ensures that your message is clear.
Many people get caught up in designing a pretty deck, but a powerful pitch goes well beyond that. Taking the time to build an impactful and impressive story with trustworthy data will help you stand out from the crowd and make investors take notice. And you’ll have a better chance of ending your pitch meetings with “Tell me more.”
