Saturday, February 6, 2010

Strategy, advice exchanged at Biotech VC Forum

This is the second of three articles I wrote last fall for WTN News. You can read it as originally published here. Enjoy!

Forget the recession. Or perhaps, thrive in spite of it.

That seemed to be the prevailing mindset at the AllThingsLifeSciences 2009 Venture Capital Forum held in Madison on October 1, 2009. Total funding sought by all 18 women-owned life science companies presenting at the event exceeded $138.9M – but was nearly matched by total capital raised to-date of $136M. And while the majority of companies were early stage, six reported 2009YTD revenue, including $5 M YTD revenue for EraGen Biosciences, Inc. and $1 M YTD revenue for A&G Pharmaceutical.

That’s not to say that the recession hasn’t had an impact on business plans. Notably, nearly every presentation included mention of exit strategy by acquisition or merger. Given current financial conditions, IPOs seem a distant memory. “Really, it’s only been within the last few weeks that the public market has opened back up again,” noted Laura Strong, CEO of Quintessence Biosciences, Inc. “For 12, 14, 15 months, there were no exits….it creates a backlog in the system.”

After over a year of battered markets and upheavals in the financial sector, investors and entrepreneurs are adapting to the present reality. “Flat is the new up,” quipped Suzette Dutch, Managing Partner of Triathlon Medical Ventures. But while investors may be scrutinizing burn rate and re-calculating potential ROI, angel investors and VC fund managers alike remarked on the opportunities available in Midwest biotech. “We have good relationships with local co-investors and we are seeking to provide our next fund with more Wisconsin-based opportunities by deepening our relationships and forging new ones,” said Dutch.

Throughout the forum, as well as during the training workshop “Equity Matters: the Route to NASDAQ” offered on Wednesday September 30, investors offered strategic advice to entrepreneurs. “Part of what most investors are looking for are [entrepreneurs] who are open to being coached, that there is evidence of flexibility,” said Judy Owen, Managing Director, Calumet Venture Fund. Teresa Esser, Managing Director, Silicon Pastures encouraged entrepreneurs to network actively rather than relying on passive communication such as e-mailed business plans, stating, “I want to invest in people who can sell. You have to be capable of selling to your customers.”

Initial reports indicate that the event was fruitful for at least two of the presenting companies. “Eso-Tech and Michelle's Miracle each closed on investments during the Madison events,” noted Lauren Flanagan, Managing Director, Phenomenelle Angels Fund. Bonnie Reinke, CEO of Eso-Technologies, Inc., announced that the company had not only closed on its Series A round as a result of the forum, but that the series was oversubscribed by 20%. “Based on significant interest by a number of individuals, a major angel network and an out-of-state VC at ATLS, [Eso-Technologies] is considering whether to further increase the current round now, or wait and open a new round upon completion of its first human trial in the next few months,” remarked Joseph Hildebrandt, Managing Director of DaneVest Tech Fund. Funding was raised from DaneVest Tech Fund and its Side Fund, with additional contributions by Phenomenelle Angels Fund and Barbara Israel.

Presenting entrepreneurs who are still seeking funding partners will have further opportunities. The forum’s road show will head next to Silicon Valley, CA on October 15 and New York City on October 30.

Companies presenting at the ATLS2009 Madison forum were: A&G Pharmaceutical; Ativa Medial; Avaxia Biologics, Inc.; CanFel Therapeutics, Inc.; Closys Corp.; Curemark, LLC; Epicardial Technologies; EraGen Biosciences, Inc.; Eso-Technologies, Inc.; Ibogen; Kemeta, LLC; Michelle’s Miracle, Inc.; Moerae Matrix, Inc.; PharmaJet, Inc.; Quintessence Biosciences, Inc.; Sequella, Inc.; SPR Therapeutics, LLC; and Stemina Biomarker Discovery, Inc..

Entrepreneurs presenting 2-minute fast pitches to angel investors at the Equity Matters workshop were: Nancy Fraser of Med Legal Consulting Source; Bobbi Gallina of Divine Baby; Merrill Guerra of Real Kidz; Sarah Manski of PosiPair; Jodi Soriano of Ohmx; and Christine Wheeler of Drazil Food.

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