Angel Investors In Biotech
Valerie S. Gaydos Capital Growth, Inc. Pennsylvania Angel Network (PAN) www.paangelnetwork.com
* Blue Tree Allied Angels * Lancaster Angel Network * Great Valley Pennsylvania Angel Network * L.O.R.E. * Mid-Atlantic Venture Group * York Angels * Lansdale Angels * Indiana County Angel Network * Susquehanna Investment Network * Central Pennsylvania Angel Network * Private Investors Forum * Winners’ Investment Network * Robin Hood Ventures * Southern Pennsylvania Angel Network * LifeSpan
A Look at Angel Investing
Industry Review Angel Groups Individual Angels: Who are they? Angel Philosophy: Need & Wants
Angel Money: Where does it come
from?
Types of Financing Used
38% Commercial Bank Loans 34% Credit Cards 30% No Financing at All 20% Vendor Credit 16% Personal Loans or Leasing 4% Selling Accounts Receivable 4% Asset-based Lending 3% Private Placement 2% Venture Capital (private, institutional equity) 1% IPO
Average Angel Investment in Biotechnology vs. Overall Average Investment (including Biotech)
$600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $2003Q1 2003Q2 2003Q3 Biotechnology Overall
www.angelequity.com
2003Q4
2004Q1
2004Q2
Getting to know Biotech Angel Investors
Philosophy: Investors not
philanthropists
Risk tolerance People & personalities Doctors or healthcare professionals Others interested in healthcare
Getting to know Biotech Angel Investors
Various reasons to invest:
Personal interest in the specific disease Humanitarian reasons in general Educated in healthcare: Doctor, nurse, PhD. Industry familiarity: Former executive in related industry
Finding Angel Investors
Understanding the investor
Risk Tolerance Overall Philosophy: yours & theirs Desired Returns Time Horizons Required (age of investor) History - previous investments Ability for follow-on capital Connections to more capital
What You Need to Get Investors
Have a Great Business Good Economic Model Have a Great Business Plan Have a Great Management Team Have a Proprietary Technology Have a Growing Market
Challenges
Finding Compatible Angels Angel Cooperation for Future Rounds Over Pricing Over Subscribing
Challenge #1: Finding Compatible Angels
Most important People matter Investor risk Understand investor philosophy Look for personalities that fit with your company philosophy
Challenge #2: Angel Cooperation for Future Rounds
Board seats Too many angels Realistic valuation management Reduce number of individual investors; favor angel groups
Challenge # 3: Over Pricing
Greatest source of discord between early rounds and later venture rounds Be Realistic Be Fair Be Honest
Challenge #4: Over Subscribing
Think Ahead!
Board seats available & appropriate number Prepare current investors for later rounds and requirements of venture investors Select investors