Using partneringONE to Brew a Strong Cash Runway
2023 was a challenging year for biotech companies looking to raise money. Many companies will be hoping 2024 is better. But hope is not a strategy. When you are actively looking for cash from new investors, partneringONE can help you raise investment to extend your cash runway. How? Read on.
A brewer can brew up thirst-quenching beer in its shiny fermenters, slap an eye-catching label on a crate of bottles, and sell them in pubs to generate cash, transforming water into gold. It can calculate how many ‘doses’ it can shift at certain price points each month and accurately predict its revenue over the year and ensure a tidy profit to reinvest, grow the business, and offer a worthwhile return to its investors. In Barcelona, there are many successful brewers that have been going for well over a century doing just that, including Estrella Damm, whose beautiful brewery, running since 1876, is open to visitors.
Whilst we may believe we are living in difficult times history tells us times have frequently been difficult. August Kuentzmann Damm emigrated from Alsace fleeing the Franco-Prussian War, to pursue his brewing dream. But a biotech company brewing up novel medicines in its fermenters usually has nothing material to sell, unless and until it has completed clinical trials and the regulatory (FDA, EMA) steps to market a new drug. That takes years, and most biotech companies never make it that far, usually being acquired lock, stock, and barrel by a bigger entity. So they need to ‘sell the dream’ and be clever about how they secure the finances to fuel their thirsty journey as they progress to the next value inflexion point on the way to market.
Biotech management attending BIO-Europe events are typically seeking money from a variety of organisations active on partneringONE and will be busy ‘shaking the money trees’ across the full forest of angels, family offices, VCs, international grant giving bodies, strategic investors and many more, to raise finance and extend their cash runway. Runways of under a year can make boards, investors, and employees, twitchy as that gives the management a bad hand when negotiating for new investment and starting big-spend projects such as GMP manufacturing for clinical trials.
“But what is the money for, exactly?” journalists always ask, often followed with the tricky, ‘How long’s your cash runway?”. Often, an early stage, Series A, biotech company will need to raise money to recruit a skilled CFO, part of whose job it becomes to raise money for the next round.
Top tip: Barcelona has a real wealth of life sciences talent, which you can read more about here.
If recruitment is not your focus right now, but could be in ’24 or ‘25, why not plan for success and talk to some of the recruiters active on partneringONE and line up a few you would enjoy working with. A 30-minute intro meeting could save you a tonne of time later as you scramble to recruit a CMO to start your clinical trials, a COO to keep the business on track, and a VP marketing to direct your communications agency about growing your company’s reputation.
What was that about money trees? In the same way that not all beers taste the same, not all investors are to everyone’s tastes. There are also undiscovered brews to discover that are delightfully refreshing. Brewers innovate too, and alcohol-free beers have become popular in a more health-conscious age, such as Estrella Damm’s ‘FreeDamm’ line (see what they did there with the branding? Neat!). Pay close attention to the different ‘flavours’ of investors available to you for meetings through partneringONE and ensure that you’re not missing any.
If you are a European company, have you checked out all that is on offer from the European Investment Bank? Many European biotech companies have secured valuable support from the EIB.
Family offices may also provide refreshment. These are the investing arm of wealthy families, often with a very specific industry focus related to how the family made its fortune. There may be a philanthropic element, but that’s more common with the big-name families who have become ‘Foundation’ brands of their own e.g. Gates and Musk. The big win is that a non-dilutive grant from these can be highlighted to potential investors as a powerful ‘validation point’ that the company is worth investing in. If Elon gets it, let’s get in too! Do you know any family offices, or Foundations, who invest in life sciences? Maybe it’s time to investigate that.
Don’t forget the brewers! In Copenhagen, Carlsberg, the world renown brewer, has been pouring investments into biotech for decades through the Carlsberg Foundation. Not only has it legendarily ‘refreshed the parts other beers cannot reach’, but it has also helped brew up Europe’s second biggest biotech cluster around Denmark’s Copenhagen & Sweden’s Malmo. BIO-Europe will be in Stockholm, Sweden, in November 2024. Think now of pine & silver birch trees to shake and Nordic investors to back your business.
Everyone tends to make a bee line for VCs on partnering systems, as if they are the only oasis in a desolate desert of financing, and then become disgruntled when no one responds to meeting invites. Do your research, read up which VC is actively investing in your area – which can be as easily done as reading the profile on partneringONE for just ONE minute – and only target those who are relevant. If you’re into the microbiome, but they are not, pass them by and go talk up your brilliant bugs to someone who cares.
Top tip: Use the ‘investment stage’ filter on partneringONE to identify those who invest at your financing stage. If you’re looking for Series B money, and they only invest at A, you’re going to go thirsty if you approach their establishment.
Have you used partneringONE to check out corporate VCs? Most of the big pharma have their own venture arms, as their motivation is to fill their pipelines with new innovations and securing first sip of something delicious is important in ensuring that happens. Many of the newer, biological, medicines available now, started off in biotech companies. Note a corporate VC may bring significant additional benefits beyond cash such as use of their labs and technical know-how.
When drinking, the best times are had in good company. Which investors would be around your ideal ‘beer-garden’ table overlooking Barcelona’s beautiful beaches and its gently swaying palm trees? For a larger financing round, an investor syndicate is typically comprised of two to three VCs and possibly one or two corporate VCs, who provide the investment for a Series B or C. To find out who typically like investing together, read some Series B press releases from companies like yours, which will name investors, and that should give you a head start to securing your own syndicate via partneringONE, and a successful 2024. Dos cervezas sin alcohol por favor! Salud!
Did you know that in 2023, partneringONE powered 75,000 partnering meetings across 19 events in 10 countries? Check out this article to make the most of partneringONE when you’re at BIO-Europe Spring in Barcelona.