Life Science Investing is Different than Software Tech Angel/VC Deals.
Companies seeking early stage investment in their biotech, life science, medical device or digital healthcare companies face al
l the hurdles that software tech companies face – and then some more. Many of the hurdles have to do with misconceptions that people have about life science investing, and others have to do with the real differences that exist in this market. Companies raising money in the life sciences have to go through all of the things that tech companies do, plus more, in able to successfully raise funding.
Life Science companies should consider attending the RVC/CBSA BioScience HyperAccelerator to help them through the process. We guarantee participants will be amazed with the quality and usefulness of this unique content that can be found nowhere else!
What BioScience Companies Need to Know
Time-Lines – there are a lot of investors who think that all life science deals take ten years or more because of the huge regulatory hurdles that have to be overcome, and that the capital requirements could be in the hundreds of millions before the company gets to an exit. These investors are missing out on lots of great opportunities. What they don’t realize is that companies rarely move all the way down the regulatory pathway before achieving exits if they’re developing a novel drug, for example. Usually the hurdle is Phase 1 Clinical Trials before a company is acquired, so the pathway can actually be shorter than for some tech investments. Also, many companies are working on repurposing existing drugs for new uses. In this case, all they need to prove is efficacy for the new use which can be a relatively short process. Devices, in contrast to drugs, can achieve FDA approval in just months in some case.
FDA Regulatory Risk – many investors who don’t understand the biotech space have heard horror stories about the capricious, costly and time consuming process of FDA approvals. While these fears are not totally unfounded, most companies pass through the process in a relatively short time and at low cost. We budget about $50,000 and six months for a 510K approval process in some cases. Angel investors have special opportunities to invest in pre-FDA approved companies because valuations typically double or triple after FDA approval, resulting in good returns for investors.
Liquidity Events (Exits) are more obvious for many biotech, medical and life science companies because there is a clear playing field with companies that are regularly acquiring companies as a part of their innovation strategies. There are enough players that companies who are intentional about crafting the best exit can create a situation with multiple bidders to result in the highest exit valuation. Even if the exit pathway seems clear to founders, their presentations should include a clear description of their exit strategy in order to bring the most investors on board.
Intellectual Property is Critical – while most tech and software companies have dropped patent filing altogether, IP is the core to creating value in the life science and medical space. Granted patents are always best, but at least having patents pending with a strong defensive strategy is critical for success. Companies will also need to be able to demonstrate that they’re not infringing on the patents of others. We’ve seen companies who we’ve found to be infringing on patents which made them uninvestable. This is something that companies should research well and be able to demonstrate instead of doing a lot of work, only to have investors find that the project is dead on arrival after several years of effort.
Team Considerations – tech companies often suffer because they have a bunch of coders who’ve been working for years to come up with a product, but they don’t anyone on marketing, finance, or business strategy. Life Sciences can have these problems when they’re staffed with teams of smart PhDs who don’t have the experience or track record to be able to raise funds, transform from a research organization to a marketing organization, or to understand value creation for acquirers. Make sure your company has the appropriate finance and marketing team members on board before raising money.
Market Fluctuations – it seems like biotech is always way up or way down and the current market position may influence investors’ desire to jump on-board with these companies. Founders should be prepared to talk about trends in the industry and why their company will be providing value that either transcends the current market situations, or that the investment cycle is expected to be long enough to stretch beyond any current market challenges.
Marketing Strategies for life science companies are going to be significantly different than for tech or other physical product companies. Some life science companies build an expensive and time consuming strategy that involves hiring and training a sales force who then try to forge relationships with doctors and hospitals in competition with some of the largest and well funded companies in the world. If the company survives that process and gets to an exit, then the first thing that the acquiring company is going to do is to fire all those salespeople and add the company’s product line to their own and get their own sales people up to speed on marketing it. So, life science companies should think about how they add value to their acquirers. Is their value primarily the product itself, the team, the market share, the sales organization, research under way, or something else? Make sure that you’re not pouring resources into something that won’t create value for your acquirers. With that being said, companies will need to establish a market presence in order to validate that the product is of interest to customers and will be a success in the market. This benchmark may be achieved with as few as one thousand sales. These can be achieved through forging partnerships with sales organizations rather than starting from scratch.
Valuation for life science companies seems to have a significant spread which may be caused by inexperience on the founders’ side, or by the uncertainties in the market. Companies that want to raise funds quickly should price their shares competitively with other startups and keep in mind that not every startup ends up with a five hundred million dollar exit.
Life Science founders have a lot of opportunity in front of them if they understand their market and how to take advantage of it. Founders should be prepared to dispel myths and to focus on the clear strategy they have for product development, regulatory strategy, marketing and exit. These will lead to most investor interest and fastest pathway to funding. Life science and medical investments currently comprise about 30% of venture capital investment which shows that investors recognize the opportunities that this space brings. Founders and investors alike should have a clear understanding of the differences between life science and software/technology investments and how to take advantage of them.
All companies raising capital should be well versed not only in the specifics of their industry, but should also prepare solid strategies and complete the following steps before starting their fund-raising activities.
Ten Steps for LifeScience Companies to Prepare for Venture Capital
- Exit Strategy Canvas – identify comparable transactions in the market for both dollar amount and multiples of revenue. Identify early, mid and late stage values the company presents to acquirers. Identify who the acquirers are at each stage of the company’s development.
- Business Model Canvas – this is the core business strategy document that allows a company to understand their unique value proposition, their customer, the channels used to reach customers, core metrics, partners, and how they spend and make money. This one-pager is key to understanding the key concepts behind any company.
- Strategic Plan – Not your grandpa’s strategic plan, but a two-page document that provides a roadmap from where the company is today through its growth. This is the difference between success and failure during Q&A with investors and for the company overall! Research shows that companies with written strategic plans outperform those without plans by 65%.
- Go to Market Plan – people take this for granted when they’re heads-down in the science or tech development, but this is the key risk companies face – getting customers to actually buy the product. Without a strong go to market plan, you’re out of luck with investors who are always concerned about this key risk.
- Proforma – you need more than a great idea to raise money, you’ll need to model out your use of funds, needs for capital, revenues and expenses. A good detailed proforma that is well researched and validated is a must for planning your business and for determining your capital needs and valuation.
- Finance Plan – you need to know how much to raise now (this is harder than you think) as well as your future raises between now an exit. You’ll need to know this to help model your cumulative dilution and to understand what the major milestones are that you’ll need to achieve at each level of funding.
- Valuation – let’s make this simple. You can’t raise money without knowing your valuation, regardless of whether you’re using equity or convertible debt. Go through five valuation models and play them off of eachother to have a defensible position when it comes time for negotiation.
- Term Sheet – this is the key document used in negotiating the deal. Make sure that you’ve got a term sheet in your pocket before you meet with investors so you have a solid understanding of the key terms and how they’re used in venture deals.
- Executive Summary – When investors ask for information, they’ll want a two-page executive summary and pitch deck. The executive summary has all the core elements of your company in a concise format that investors can use to determine their interest in moving forward.
- Pitch Deck – when you get in front of investors you’ll need a pitch deck to present your information. Get this done professionally so that you can communicate effectively in a highly competitive capital market.
Life science companies can get templates, education and mentor assistance in creating all of these in a two-day BioScience HyperAccelerator hosted by Rockies Venture Club and the Colorado BioScience Association. The two day workshop is $995.00 per company and includes a one-year membership in the Rockies Venture Club for the primary participant and a free subscription to the IdeaJam platform to help companies securely get feedback and input on their Provisional Patent Application. Companies using the IdeaJam platform can file patent applications in a fraction of the time and cost of using patent attorneys.
Apply to Join the BioScience HyperAccelerator here ===> https://rockiesventureclub.wildapricot.org/event-2614776
The Next Session is August 29-30th in Denver. Apply by August 22 for preferred admission.
Tuesday February 10th, RVC is hosting the 4th Annual Colorado Life Sciences Night at the Denver Metro SBDC building in partnership with the Colorado Bio-Sciences Association. Read more
Denver Startup Week was huge for the Denver entrepreneurial scene! It was vibrant with a ton of activities and wide participation from the Denver area. Also in Denver during the same week was the Rocky Mountain Life Science Investor and Partnering Conference, put on by the Colorado BioScience Association. For a bio nerd and startup junkie like myself, it was a very rewarding week. I enjoyed both events, I’m thankful to have been able to participate, and I’d go back next time they come around. CNBC even covered both here and here. My perspective is on the intersection of the events – or more accurately, the lack thereof.
I’m beginning to obsess over this idea. How do we connect the parallel universes of Colorado startup industries? Life Science/Biotech isn’t the only silo, but outside of tech it’s the only one I’m immersed in. Brad Feld talks about the issue in his book Startup Communities, and specifically highlights an unsuccessful interaction with a Boulder biotech group. I won’t say that any person or any group is to blame for the current split – only that we’re here now, and it needs to get better.
Denver Startup Week has been successful twice in two years, and grew significantly from 2012 to 2013. It was not quite, as their signs suggested, a “celebration of everything entrepreneurial in Denver” but it’s getting there, and I only expect the event to grow and become better. It is led by inclusive entrepreneurs, so there is significant community support.
The Colorado BioScience Association’s conference also stands on multiple years of success. Launched in 2009 as a biennial (every 2 years) conference, it brings startups from 5 states: Colorado, Utah, New Mexico, Arizona, and Montana. The 1-day event featured 30 big investors from Colorado, both coasts, and in between: VC’s, public company venture arms, and Angel investors. 30 startups also presented, pitching for everything from angel rounds to getting ready for an IPO. InnovatioNews has a great review of the day here.
Within their own communities, both events were huge. However, almost everyone I talked to at DSW about the biotech conference had no idea it was going on, and many at CBSA’s only found out DSW was going on from the signs on 16th St, since Basecamp was only 4 blocks away. It was close enough that I walked over from the Ritz during a networking break.
There are bright spots in the gap, however. Rockies Venture Club leadership, volunteers, and a few of their top Angels were all over both events. The fact that RVC was founded in 1985 and serves a variety of industries probably helps in that area. There are other people building connections and bridges between the parallel universes, and we need to encourage and cultivate that. This year DSW added a manufacturing track, and I have every reason to believe they’ll keep growing the events. Denver did have a broader focus than Boulder Startup Week, in comparison. BSW was also a great event this year, albeit primarily focused on software and internet. I attended and loved it, and I’ll proudly wear the BSW t-shirt with the 1’s and 0’s logo, even though I can’t write a single line of code.
The noble idea that brings entrepreneurs, creators, artists, and (good) investors together is the belief that we can always make things better by creating value. Startup communities grow organically and tend to be messy, and that breeds collaboration and innovation. I have no doubt this chasm will be bridged; entrepreneurs will lead the way, and the process will add value to anyone involved. The Boulder and Denver startup communities were once pretty segregated, and we’ve seen incredible progress there. Connecting the parallel universes within the Denver/Boulder area is a positive sum game and must be seen that way. It will not be an easy or quick process, but it is worth the effort.
Tim is a regular contributor to the Rockies Venture Club blog and a Master’s of Engineering Management student at CU-Boulder. He holds a bachelor’s in cognitive neuroscience from the University of Denver, and has worked for startups since he left his corporate life as a licensed investment advisor.
Health care companies are receiving a lot of attention from VCs this year and the trend appears to be increasing. In the first two quarters of 2013 there were 272 deals completed in health care compared with 163 for the totality of 2012.
These trends in VC investment are a good harbinger for angel investors in health care who often rely on VCs to take on the next Series A round of funding. When VCs are funding lots of health care deals it reduces risk for angels and provides additional opportunities for growth.
A lot of the growth is in areas that will be presented in RVC’s upcoming “Investing in Health Care” event (Monday, September 9th 5:00-7:30pm) will be in the hot industry sectors including wearable devices, patient engagement, patient-to-physician, provider to provider and other technologies. RVC is also presenting non-IT based companies including a new approach to curing breast cancer and is currently in due diligence on a break-through cardiac product that reduces some heart surgeries by as much as 80%.
An interesting trend in this growth is that consumer focused investments are growing at an even faster rate with consumer-focused technologies representing 112 deals for a total of $416 million – about double from last year while practice-focused technologies represented 56 deals totaling $202 million for the quarter.
Health Information Management companies received the most VC funding at $212 million while mobile health came in at $158 million.
According to a report on Q2 Venture Capital activity in health care funding by Mercom Capital Group llc, Consumer-focused companies specializing in apps, wearable devices & sensors, remote monitoring, patient engagement, rating/shopping, and social health networks for physician-to-physician, physician-to-patient and patient-to-patient were all involved in multiple funding deals this quarter, whereas medical imaging, data analytics and EHR/EMR companies were among the practice-focused technologies that received most of the attention this quarter.”
To see some of Colorado’s most promising angel-stage companies present for investment and to hear about some of the leading trends in health care, be sure to put Rockies Venture Club’s “Investing in Health Care” event on your calendar. Click here for more information and to register.
Angel investors put their money into all kinds of early stage companies with the goal of helping entrepreneurs and getting great financial returns. There are misconceptions out there that angels shy away from health care investments, but nothing could be farther from the truth.
Health care investments can carry the traditional market and execution risks that any company has, but they can also have extraordinary regulatory risk if FDA approval for a product is required. The FDA process can take years and millions of dollars to complete.
Most health care investments that Rockies Venture Club Angels look at don’t have FDA risk, or if they do, the process is minimal and takes only two years or less from the date of the investment. All FDA approvals are not the same and as a group we’re learning about the kind of FDA processes that we can accept as a part of an angel risk profile and those that are better left to large Venture Capital funds who have both the money to get through the process and the time to wait it out.
Angels typically like investments that can exit within five years or less. There are a lot of Health Care companies that fit this profile. One trend we’ve seen is that companies can exit earlier now since they are no longer required to build a sales channel as part of their proof of concept. Once they can show that their innovation works and that people will buy it or that FDA Phase 1 trials are successful, they are ready for exit.
Smart founders will have a target list of acquisition targets identified before they even raise their first angel round. By the time their concept is validated, they should already have relationships established with the major acquirers in their industry and be ready to negotiate a deal.
To see four examples of companies that can have profitable exits with 10x investor return in five or fewer years, check out the pitch presenters at this year’s “Investing in Health Care” event put on by Rockies Venture Club.
- RXAssurance, Bob Goodman, provides a platform for patients and providers to keep each other informed about whether medications are being taken and that they are effectively treating the patient.
- Six One Solutions, Ginny Orndorf, an innovative targeted method for blocking breast cancer.
- LeoTech, Steve Adams, a wearable system to detect and report hydration in patients, athletes or others for whom hydration is important (ie. Everyone)
- ExchangeMeds, Anand Shukla, rovides better ways for pharmacies to manage their inventories by sharing with others across a network.
To learn more about these companies and trends in investing in health care, you may want to consider attending the RVC “Investing in Health Care” event, Monday September 9 5:00-7:30 in Golden. For more information, or to register for the event, please Click Here.
Entrepreneurs John Slump and Jared Garfield have gotten it right. They founded their company for the right reasons and are holding fast to those principles. Many medical device companies have technologies that come out of the lab and go in search of a problem. Not these two. They identified a large clinical need and built their company to solve it. As the company evolved through a tough economy, changing investor environment, and development challenges, they maintained the focus of their efforts. Corvida Medical is dedicated to enabling the safer, more efficient, and user-friendly preparation, delivery, and disposal of hazardous pharmaceuticals. As John and Jared told me, “We are passionately committed to making cancer care safe for healthcare workers”.
Like many entrepreneurial stories, this one starts out with a personal ordeal and the persistence to do something about it. John’s sister who lives in Denver was diagnosed with melanoma, and he saw first- hand how dangerous the administering of chemotherapy drugs was to hospital staff. And like many entrepreneurs, John and Jared were not encouraged to create the company necessary to address this clinical need. They wrote their first business plan as students at the University of Iowa, receiving a B+ and “not viable”. Undaunted, they pressed on with business plan competitions from around Iowa and then nationally. John told me, “The one thing you have to understand about us is that the best way to get us to do something is to tell us we can’t do it”. They researched the clinical need further, they talked to clinicians and hospital staff, they dug into the market opportunity, and they refined their business plan, which culminated in several awards totaling $100,000.
Here is where they realized they might have something. But it’s a huge step from there to start a company. Around that time, they held a focus group at a clinical pharmacology conference with the leading cancer treatment clinicians in attendance. The feedback was so positive and so unequivocal they took the plunge. They knew if they got the clinical need right, then the solution would follow. To get started, they secured funding from friends and family, the state of Iowa, and angel investors. That is no small accomplishment for two students with no experience but what is really unique is that they submitted a grant to the National Cancer Institute (NCI, http://www.cancer.gov/) under the SBIR program (http://sbir.cancer.gov/funding/omnibus) only about a year after starting the company. NCI doesn’t care about what the business opportunity is, it cares about solving real clinical problems and sees small business as a way to develop innovative solutions to those problems. They contracted an experienced grant writer, a pharmacologist to be their Principal Investigator, and built a scientific advisory board to assist them in preparing the application, but like most start-ups the majority of the work fell on them. “One of the most pivot events for us was being awarded the NCI grant. It validated the clinical need, and as the title of the grant indicates, it validated we had an innovative device to improve the safe administration of chemotherapy”. Two years later, Corvida Medical was awarded the Phase 2 grant.
With the Phase 1 grant and subsequent additional Series A funding, the two entrepreneurs built a team, further developed the device, and engaged many of the leading cancer centers in the US to test their device. Since then they have brought onboard Kent Smith in 2012, a very experienced medical device executive as President & CEO, they have been granted 5 patents, and they are working on their FDA 510k submittal. But they continue to focus their efforts on getting the device optimized in the clinic. Asked what they are looking forward to in the near future, they said looking forward to the Phase 3 bridge award to complete their clinical studies. Like I said, they got it right, and it looks like they continue to get it right.
ABOUT THE AUTHOR
Bob Luzzi is an experienced medical device R&D executive and entrepreneur. He currently is working on his own early stage venture, and consults for medical device companies in new product and intellectual property development.
Jon Weston is convinced that his company’s product can help take away pain, help the body heal twice as fast in some cases, and even save lives. It is particularly interesting to see a former pharmaceutical executive get so excited about a non-drug, non-invasive therapy that helps people use less medication. After I saw him pitch, I had to find out more.
I was first introduced to BioCare’s product when Jon presented at the Angel Capital Summit in Denver earlier this year. He showed the LumiWave, a powerful and safe near-infrared light therapy used to relieve pain and promote healing in many tissues in our bodies. The device uses rectangular pods of LEDs a couple of inches wide to emit a frequency of light, which provides pain relief, increased blood flow, and even the growth of new blood vessels when applied to an injured area. This means that in addition to relieving chronic pain like arthritis, it can cut healing time by more than 50% in some injuries – and in other cases can re-start healing where the body has been stagnant in an injured state for years. The science is fascinating, but too involved to go into on this site – check out my explanation here. (coming soon)
I had heard of (and played with) infrared light therapy before, since my father, a MD in Michigan, had been using another device in his practice for the better part of the last year. He’s been finding profound and sometimes unexpected success, especially in curbing or curing a variety of chronic ailments for patients who weren’t responding effectively to traditional medicine. My mom tried it on her arthritic hands, and the pain all but disappeared after a few weeks of sessions. My dad calls pretty frequently to talk about the latest treatment or a cool new medical device, but it meant more to hear my mom talk about how a light therapy took away pain that has invaded her life for years.
While that device certainly helped people heal well, they have some limitations. They’re not as easy to use, and not cheap, either – the units he’s purchased have cost over $2,000 per light. BioCare’s product was entirely different from the other infrared treatment devices I’ve seen (and dramatically less expensive) so I had to take a closer look.
I gave Jon a call to hear about it in more detail, and we were able to grab coffee by DU, where he got his MBA, and I got my bachelor’s degree. He is a molecular biologist by training; a former pharmaceutical executive who spent years bringing products from R&D to market for companies like Searle (now Pfizer) and Gambro. While some of these medications went on to do very well, he’s convinced that infrared can be safer and more effective than traditional drugs for some problems. A number of years ago he met BioCare co-founder and Chairman Sherry Fox, who worked with her late husband (a biomedical engineer with 15 patents) to develop the initial technology for the LumiWave. Jon came on board as COO in 2005, and stepped into the CEO role in 2009.
It’s no secret that medical device companies need a longer runway than other startups due to the intensive R&D process. Techstars CEO David Cohen joked at a Silicon Flatirons event this week about a “17 year accelerator” if they were to have one in the biotech industry. Many investors aren’t comfortable with or don’t understand the R&D process, so thankfully BioCare has been able to bootstrap the company so far. Before opening it up to investors, they wanted to make sure the biggest risks were taken care of – the technology was sound, real units were selling and being used extensively, and strategic partnerships were in place. They’ve also had the chance to acquire patents, an over-the-counter FDA clearance, and they’re sailing toward the next approval level. Their patents and years of progress in these areas provide particularly high barriers to entry for even large medical device companies.
While IP is great, it doesn’t make money… well, until it actually makes money. That’s why it’s so valuable to have product sales and revenue while rounding out the R&D process. Aligning with lean startup practices, they signed high value, paying customers (who generated real market feedback) as early as they could. They’ve made some pivots, and their open-mindedness has allowed them to find some of the fastest growing sectors of their potential market.
It can be both a blessing and a curse to have a product that can be used so widely. Pinpointing not just the largest markets, but the ones most motivated to act on their literal pain points was of key importance. Perhaps the most common use of infrared light therapy is for the treatment of osteoarthritis or other types of chronic pain, like my mom had, so that was BioCare’s first major application. While the chronic pain segment may have the largest number of people and dollars in it, Jon saw early on that the only way to really make a difference there is with widespread adoption by the health insurance companies, not known for moving quickly and fairly preoccupied with legislative items at the moment.
While the insurance companies are still moving toward adopting infrared, he wasn’t going to wait for permission. The sports medicine and physical therapy industry was another reasonable market choice, and once they tried, he saw considerable traction here. This segment is especially motivated to pay for faster healing times, especially at the highest levels of competition, where there is also often significant pain with injuries. Thankfully for BioCare, the U.S. Olympic Training Center in Colorado Springs was only a short drive from Denver, and the Olympians took to it very quickly. The effects were so dramatic and positive that the Manager of Sports Medicine and Training for the US Olympic Centers offered to be on BioCare’s advisory board. She’s joined on the board with others who have volunteered after seeing the device in action – a few top orthopedic surgeons, three professors of medicine, and a trainer for the US Naval Academy, among others.
While sports medicine seems to have done very well for BioCare, they’ve kept an eye out for other substantial markets on the horizon. The most exciting and revolutionary development recently is the treatment of injuries that are less obvious and often more damaging – traumatic brain injury. As a neuroscience nerd, this was particularly riveting for me. More of the science here (coming soon)
For the treatment of traumatic brain injury (TBI) BioCare is partnering with Cerescan, an industry leading, Denver-based brain imaging company. I was able to tour Cerescan with CEO John Kelley, who told me they have tested literally a team’s worth of NFL players for the diagnosis of TBI, some after suicide attempts. There is another group terribly affected by TBI – our nation’s military. BioCare and Cerescan joined with the Tug McGraw Foundation for the Invisible Brain Injury Project to study just that. This project will continue remarkable pilot testing they’ve done with veterans so far.
The military experience often adds a dangerous element to a volatile situation in the brain – the high prevalence of PTSD upon returning from service. The number of deaths from combat is horrifying and significant – and the increasing number of veterans who take their own life is a sad, and unfortunately frequent tragedy. It is made worse by being poorly understood, with few effective treatments and no real cures available – so far. In the initial round of testing, they’ve seen remarkable success with every patient they’ve tried it on. One particularly moving story involved a vet with TBI, PTSD, and a few recent suicide attempts. After a brain scan confirmed his neurological issues, and then a number of weeks in treatment, he was off all of his psychiatric medications. He had a follow-up scan, and then went back to work for the first time in a year and a half. Other participants have had similar stories, and while this treatment still needs to be validated in a study with a larger sample size, all signs are pointing in the right direction.
If these treatments continue to work so effectively, how much value will someone place on getting their life back? What will the family think as they watch a loved one go from nearly dead to “feeling like their old self again”?
I see a fair number of startup pitches. Most have at least pretty good ideas, and nearly every entrepreneur projects a hockey stick-shaped growth. A few have the chance for real traction, and it’s rare to find a company that claims such a big impact on the real quality of life for its customers. Biotech is hard to launch, but when it works, it can return big. It will certainly be interesting to follow BioCare as they attempt to change the world by healing the people in it.
Guest Post Article by Joni Kripal, Healthcare Consultant and Co-founder of Ji Smart Stuff
This success story about a Colorado company called VetDC shows that funding for lifescience companies can come from angel investors. Further, VetDC dispels a widely-held myth that funding for life science companies can only be found in funds or angel groups dedicated to life science ventures.
VetDC, a private veterinary biotech company, was founded on the principle that companion animals should have greater access to novel, innovative medical treatments. Working closely with Colorado State University‘s world-renowned Animal Cancer Center and Veterinary Teaching Hospital, VetDC “reverse-engineers” promising new human technologies specifically for development in companion animal markets to address serious veterinary medical conditions.
VetDC was launched in 2010 and licensed its first molecule in early 2011 (learn more about the company, their purpose, and their pipeline at www.vet-dc.com). The quest for capital was on! Steven Roy, President & CEO, described their journey to successfully closing $1.5 million a few weeks ago. It’s a lesson in perseverance and possibilities, so entrepreneurs take heart!
After securing seed funding from CID4in 2011, the team initially went down the venture capital path, believing that the amount of funding needed was beyond the scope of a typical angel raise. They soon learned that it was also smaller than most VC funds preferred. In addition, there were few active life science funds in Colorado, so they needed to concentrate their efforts out of state. Unfortunately, most life science funds are not set up to invest in veterinary opportunities and doing so would require going back to their limited partners for approval to pursue an opportunity like VetDC. A step that few, if any, were willing to take. While meeting with these firms did not ultimately yield the money sought, it provided confirmation that VetDC’s business concept was valid and may ultimately provide a channel of new pipeline prospects from VC portfolio companies. So, there was somewhat of a silver lining associated with taking this path.
Fast forward to the Angel Capital Summit (ACS) last March. Steven considered participation in an angel pitch event a long shot but remained hopeful that he could attract the attention of local investors. And he did! After the ACS, he was on the Rockies Venture Clubradar and made several pitches to RVC investors. Encouraged by RVC’s interest, Steven decided to redirect his efforts toward angel investors. VetDC finally gained major traction when Steve Warnecke, a long time angel investor and entrepreneur who has taken several companies public, joined the cause and assumed the lead angel role. Negotiations ensued, investors were brought into the fold and the $1.5 million round was closed in early November.
Of course, the team at VetDC is energized by the infusion of capital to fund the next steps. They are absolutely delighted that they were able to access the needed capital right here in Colorado. “Keeping it local is a real plus. We look forward to accessing the tremendous expertise our angel investors bring to the table. It’s an exciting time at VetDC!” says Steven Roy.
VetDC has moved into full execution mode preparing for the manufacturing of VDC-1101 and filing for FDA approval in canine lymphoma. They are now well on their way to making the launch of this life saving therapy a reality for dog lovers across the country. Their goal is to be ready for commercial launch in late 2014.
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