Bildnachweis: Natalia – stock.adobe.com.
Big, multi-stage generalist funds like Sand Hill Road and new-age, technical, science-led specialist investors like Revent have one thing in common: when it comes to bioeconomy, they both invest in deeptech start-ups at nearly any stage – from pre-seed to growth. Why is that?
Even if the investment strategies of unique players in the bioeconomy field initially appear very similar, they are actually quite different. Their decision-making processes regarding which companies to invest in – which ones to keep on the watchlist, and which ones to decline – couldn’t be more different. It boils down to one central difference – which is really simple.
Does one size fit all?
Generalists are generalists, and they view their investment decision process in macro terms. And scientists are scientists – so, unsurprisingly, they will spend more time pondering the mechanics of a product or tech, working up careful analyses focusing on real-world viability through incredibly technical modelling. They may come onboard at the same time, in the same round, and it’s often most effective to mix and match different types of investors with each new capital investment in your business. But pitching them – whether they’re new investors, existing investors, or even on your board – cannot follow a one-size-fits-all approach.
A pitch deck focused purely on commercial application and total addressable market could be the ultimate draw for a generalist, but a technical investor will likely turn you down if your collateral focuses exclusively on this. Equally, if you talk like a scientist to a generalist investor, you might scare them off with a lack of vision on viability and scalability when you’re in the weeds discussing the scientific nuances of what you’ve developed. In contrast, if you’re a deeptech or biotech founder, discussing the nuances of scaling, and whether your nascent tech might work at a different production level, is absolutely normal, and to be encouraged with science-led investors. The opposite, to an extent, can be said for a near-total focus on a total addressable market (TAM). A science-led investor will be minded to see through this, assuming a lack of focus on the tech means a lack of viability in the midterm.
How to bind the opposites?
If both investor groups invest in the same companies but don’t respond to pitches in the same way – what’s the solution for a founder trying to get their funding round across the line? Well, the most important factor – after the initial step of dropping a one-size-fits-all approach to pitching – is communication. Before you speak to any investor, it’s important to curate a bespoke pitch that will line up with their investment strategy. Do spend time familiarizing yourself with their approach, we all publicize how we decide who and what to back – you’ll get that time back as your approach will be more targeted, and more likely to connect. Far too few start-ups utilize this approach when pitching for investment, instead taking the position that it’s more effective to pitch to as many investors as possible, to get the word out. This is an easier fix on the science-led side. If you’re a CEO from a commercial background wanting to pitch to scientific investment teams, bring in your CTO or CPO to the process, and have them articulate the science as part of the pitch. This might be a harder fix on the generalist side, but still absolutely fixable. If you’re a technical founder pitching for investment, it’s essential you surround yourself with commercially savvy executives – who can articulate your TAM fluently and effectively to the generalist audience.
Before you speak to any investor, it’s important to curate a bespoke pitch that will line up with their investment strategy.
Unlock the door – communication is key
A good example of where this approach to communication – and investor pitching – has to be implemented is in the food, agriculture and land-use vertical. A protein specialist is looking for differentiators that relate to the science behind the innovation. Alternative protein has become a very bloated space over the last few years. Any start-up in the sector looking to raise capital must now explain with clarity how they’re offering a new approach, for example – taking the approach of one of the VC World Fund’s most recent investments, Farmless – removing glucose from the precision fermentation process. This approach of highlighting a USP will again come down to communication. If you’re speaking to a technical specialist, go into the specifics, and delve into the science. If you’re speaking to a generalist, spend that same time discussing how that science evolves the business proposition.
Let’s go! Navigate the landscape!
It is possible to raise in this landscape. In fact, many VCs are more eager than ever to find and compete for the best deals, but you need to know – more than ever – how your message is getting through. At World Fund, for example, we have a team of scientists on-hand who will perform onerous tests and trials on your technology before deciding to invest. The need to do this at a generalist fund would likely put them off making an investment.
Dieser Artikel ist in der Plattform Life-Sciences-Ausgabe 1-2024 erschienen.
Autor/Autorin
Dr Nadine Geiser
Dr Nadine Geiser serves as a Principal at World Fund. Previously contributing her expertise to M Ventures, Bank Vontobel, and most recently as Principal at Redalpine, a distinguished Swiss sector-agnostic venture capital fund, Dr Geiser spearheaded investments in pioneering companies such as Umiami, Better Dairy, Mushlabs, and Uncommon Bio. Furthermore, she actively participates as a member of the advisory board of the BioInnovation Institute by the Novo Nordisk Foundation. Dr Geiser earned her PhD in Biotechnology at ETH Zurich.
