BIO Venture Capitalist Panel - California lessons for Canada's Life Sciences Industry co-hosted by TOHealth! and Montreal InVivo

The BIO International Convention - is an annual conference hosted by the Biotechnology Innovation Organization. It is the largest biotech conference in the world, with the 2017 convention breaking its own attendance record of more than 16, 000 attendees who represented 74 countries. In addition, the convention welcomed more than 3500 participating organizations and 1800 exhibitors.

The BIO Venture Capitalist Panel - California lessons for Canada's Life Sciences Industry co-hosted by TOHealth! and Montreal InVivo served as a forum to for Canadian investors and entrepreneurs to learn lessons from successful California counterparts about attracting funding and investment in the biotech sector.

The panel was opened by keynotes from Hon. Min Reza Moridi. He highlighted Ontario’s strong support of the life science sector and discussed recent funding administered to 15 health science startups via the HTF program.

He was followed by Mayor Linda Jeffery of Brampton, who was making her first visit to BIO. Mayor Jeffrey spoke about the city’s new focus on life sciences and preventative care, recently announcing a new state of the art hospital, Peel Memorial and Wellness Center, as well as an extension of Ryerson University.

Panel Members

Moderator: Cedric Bisson – Teralys Capital

Here, we've outlined the panelists' key thoughts on some guiding questions.

How early is early?

Early means risk. An investor's aim is to 'de-risk' the asset as much as they can to make informed decisions and intelligent investments. To succeed in early stage venture capitalist financing, you need a de-risking strategy. An investor can let the technology develop and mature before deciding when and whether to invest. Alternatively, if an investor would like to invest earlier, one may find partners within academia who can serve as research links to exciting technology. For example, Domain typically invests 18 months before an IND, and will partner with universities 12 months before the investment.

The preferred model depends on what makes the most sense for the firm in question. Each venture capitalist has a speciality and any investment opportunities that are vetted must align with the goals and specialties of the firm.

It is essential that the model of a venture capitalist aligns with needs of the entrepreneur. As such, a tip for entrepreneurs is to understand the investor’s models and assess whether there is a tactical fit before pitching.

How do you deliver tough love?

Jay Lichter shares that Avalon selects around 1% of opportunities they are pitched - a lot of people must a hear a 'no.' Delivering this news can - and should! - be done in a constructive way. It is important for investors to explain what was wrong with the pitch and why it was not a good fit (e.g. amount of money available to invest would not bring the project to fruition). This allows an entrepreneur the opportunity to adjust and amend their pitch - perhaps into something the investor might become interested in.

What can Canadians do better?

Canadian science is constantly growing, evolving, and developing - the obstacle is packaging the science into attractive investments. Think bigger. Investors do not differentiate between Canadian and US technologies; with competition at its peak, Canadian academics would benefit from early on advice about commercialization. Entrepreneurs need to be at the right level of development for investment, one where investors can envision building a company.

What is your preferred exit strategy and what is the timeframe?

The preferred exit method is to secure a large cash payment from a pharmaceutical company, but this is often too lengthy and tedious a process (e.g. an IPO can be reached in 4-5 months, while pharma deals can take upwards to a year.

The commercialization strategy is very hands on - how do you work with founders?

The working relationship is usually dependent on whether the founder has an academic or entrepreneurial background. For academics, the interest and interaction in nurturing this relationship often fades as the product is developed. On the other hand, a research entrepreneur typically brings a high level of energy and a better understanding of the business market for the health sector in question. A key message for entrepreneurs: do not be afraid of dilution, it ensures the money needed to develop an idea.

As an entrepreneur, how do you choose an investor?

It's all a manner of fit: does your path match the investor's model and specialty?