Last night, as a BayBio partner, I attended the Ninth Annual Entrepreneur & Investor Roundtables event in Palo Alto. This BayBio event gives entrepreneurs in start-up life sciences companies an opportunity to meet and present to investors, both VCs and angel groups. The format is a speed dating arrangement that gives them about eight minutes to pitch.
I’ve attended this event for the last six years, and it’s an interesting reflection of how the industry has changed over time. In the early days, there was more interest in funding and more resources. Now the sources of funding are fewer, the dollars are more scarce—and the bar of approval is higher.
Investors, both VCs and angels, are more specific in their focus and they need to see higher levels of meeting milestones before approving additional or initial funding. There is more emphasis on demonstrating proof of concept before they fund the next level.
Also, the funding requirements to grow these companies are always going to be higher than many of their entrepreneurial counterparts in the tech industry. This is also different from entrepreneurs in the social media or software space, where an investment of $500K can keep you going for more than a year.
Although the funding climate is difficult and takes patience, the passion among entrepreneurs is still strong. Also, I’ve noticed over the last few years that these scientist-entrepreneurs are more business savvy than in the early years, and they have practiced and refined their presentations and their understanding of business forecasting and strategy.
The virtual company approach is almost universal in one form or another, with everything outsourced except for core competencies. Hiring fewer employees but using more consultants and developing collaborations is the norm. And overseas clinical trials are growing more common, in part because of the difficulty and expense of dealing with the FDA.
I have to say that I am always very impressed with the courage, stamina and determination of the entrepreneurs that I have met in life sciences. They are definitely not doing this for the money, but rather they truly believe that their efforts are helping humankind and/or the environment.
The other recurring fact is that I continue to meet people from all over the world at these events, which demonstrates that the Bay Area is still the global magnet for this type of talent and passion.