ICAP Seed Funding Seminar Offers Ins and Outs for Startup Entrepreneurs BioBuzz

BioBuzz by Workforce Genetics

Finding funding can be a stressful experience for entrepreneurs looking to launch a biotech startup. The need for seed funding is essential but where are the best sources? And what are the proverbial conditions attached to this type of financing?

These questions were addressed in the inaugural presentation of Life Science Mentors from George Mason University’s Innovation Commercialization Assistance Program (ICAP). Philippe Sommer, one of the life sciences mentors associated with the program, provided an overview of the options available to future startup leaders in Virginia. Since its inception, ICAP has laid the foundation to support emerging businesses across Old Dominion. Part of this support is providing an understanding of funding.

Philip Sommer

Sommer spent five years as director of business development at pharmaceutical giant Pfizer before taking on roles at WestMed Venture Partners, Walnut Ventures, the Charlottesville Angel Network. Mass Medical Angels and now with ICAP. A current angel investor and former venture capitalist, Sommer noted that he has “been on all sides of the table” when it comes to funding. This varied experience has given him a better understanding of the objectives of each type of investor involved in the life sciences.

“It’s important to understand where each investor is coming from,” he told seminar attendees, some in person and others at live parties hosted by CVille Biohub in Charlottesville and 757 Accelerate, a growth accelerator. Norfolk-based startups.

The ICAP program was created to bolster Virginia’s strong small business development programs and life science pocket ecosystems that have been established across the state in hopes of building a powerful innovation hub in the center of the Atlantic.

Sommer explained that the science on which an entrepreneur hopes to build a business may have some potential in the lab, but when it comes to securing investment to develop this asset, it will be necessary to have a well-thought-out approach to look for seed investors. He reminded students and other attendees that most investors are looking for a significant return on investment, typically around 10 times the amount originally invested.

“Investors need insurance. They want to know how you’re going to invest their money and how they’re going to get that 10x return on investment,” he said.

Because of this need for a high return on investment, Sommer said most venture capitalists, as well as big pharma, tend to shy away from making seed investments that can support the transition from an asset from the lab to preclinical testing. And that leaves entrepreneurs with two main sources of funding, angel investors and what Sommer calls the “three Fs,” friends, family and fools. Although he noted that it sounds cynical, the three Fs play an important role in startup funding.

While family and friends can play an important role, Sommer cautioned that their funds cannot be treated callously due to the risks involved in starting a life sciences business, especially if those funds come from a person who may not be able to afford a loss.

“You really have to be careful not to cut ties with your family and friends,” he said.

During the presentation, Sommer, joined by Andy Krouse, former CEO of Cavion and current CEO of Charlottesville-based Slate Bio, walked attendees through a development plan for a startup, from test bed to a fundraising. $20 million Series A fund. . They also noted that some pharmaceutical and biotech companies have received considerable attention from big companies when they embarked on clinical trials. Some of this attention has led to larger companies acquiring smaller ones. In particular, Sommer and Krouse highlighted Biohaven Pharma’s February acquisition of Channel Biosciences, LLC and its Kv7 channel targeting platform in a deal valued at $3 billion. They noted that money is available from larger companies, but usually only after some validation.

Another piece of advice Sommer provided was that entrepreneurs should pay close attention to stock market trends. Money follows the market, he explained, noting the significant downturn in the current market. With no IPO as an exit given the market circumstances, Sommer explained that a company’s valuations can drop, making investors reluctant to part with their money. While bearish market trends can create slim financial opportunities, Sommer said if the science behind a biotech discovery is strong enough and a company’s founders truly believe they have something transformational in their pipeline, the money will come. He pointed to mRNA technology, which is the basis of COVID-19 vaccines used in the United States. Sommer said the technology has multiple applications in different disease indications, making it a very attractive technology.

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