Everyone seems to have a different idea about how to introduce a business to investors. Scientists want to deliver full detail about the science as well as their products Most others just want to describe their products in some detail. But what is it investors want?
We asked three investors at a recent meeting about life sciences companies, and they made clear that they’re evaluating investment value – not the product, not the business, the investment potential. Here’s what they said:
Investor No. 1:
I want to know five things about a new company:
- What is the novel invention? What’s different?
- What is the need for this?
- What is the rationale why your technology will work for this purpose?
- What is the regulatory pathway?
- What’s the ask amount and what is the next value inflection point?
Note: The same investor also asked for the net income/loss figure instead of EBITDA. “You have no history, no track record, to justify EBITDA” was the explanation. To this I would add that EBITDA is a measure of profits and hardly appropriate when there are none.
Investor No. 2:
Five minutes is better than twenty minutes. Two minutes is ideal. You can raise money in an elevator! Think of this as being like a resume, which you write to get a meeting. A one-page executive summary is the most investors will read. Staff members do the rest. Get them excited about investing in your company.
Hit things home without talking to doctors – “if you invest, you’ll make a lot of money” – that’s what I want to know.
Get the investor’s interest right away and then keep their interest. You’re talking to guys that have seen hundreds of business plans.
The growth rate needs to increase for the first three years.
How much will they need altogether? I’m not looking to get my money back right away, and I don’t want them to be always raising money. I want to triple my money in six to nine months and then another triple in six months. I want to get in and out at the right price.
Two things matter to me: the potential to grow big – so I can make 10X to 100X – and management.
I’m in the business to make a killing.
Investor No. 3
- A big market
- What’s the basis for their competing – their differentiation and competitive advantage?
- The financials – what’s the inflection point? How effectively are they controlling expenses? How can they avoid a down round?
- What’s the exit plan? Who will the strategics be? Why? How long will it take? What will it cost to get there? What are the comparables?