How to Attract Venture Capital

Transcription

1 How to Attract Venture Capital and Key Issues to Consider in Your Supply Relationships 6 th Annual Global Pharmaceutical Contract Manufacturing 25 th June 2013 Christian Wyss, VISCHER AG, Switzerland

2 How Does the Venture Capital Market Look Today? GPCM

3 How Does the Venture Capital Market Look Today? Substantial influx of corporate venture capital Smaller financing rounds Increased efforts for due diligence and documentation Social media and IT sectors absorb more VC money GPCM

4 What Projects are VC's Looking for? Attractive business plan CEO and management team Sustainable business concept Huge potential for fast growth Maximum multiplier potential Business models needing lots of people for growth will generally not attract VC's. GPCM

5 Do You Really Want Venture Capital? Dilution Composition of board of directors Information rights Paperwork, reporting, compliance "If you don't have money, start a smaller business." GPCM

6 Dilution Your claim: "Our plan and team are worth 6 million" The VC believes your sales pitch, puts 2 million in 25% VC stake 8 million Pre-money valuation Post-money valuation GPCM

7 Network Private and business contacts Advisory Board Academia Collaboration partners and customers Business awards Crowd-funding Business Angels GPCM

8 Brokers / Intermediaries How much %? Track record? Resources, contribution to the process (contacts, road show, appointments)? Finders fee agreement Know your market GPCM

9 Non-Dilutive Funding Make money early! Public-private partnerships such as the Innovative Medicines Initiative (IMI) Wellcome Trust Bill and Melinda Gates Foundation EU, NIH, CTI, PATH GPCM

10 Stages and Financing Options Own Equity Family & Friends Seed Capital Business Angels Venture Capital GPCM

11 VC Co-operation VC / PE industry is pretty small and highly networked. Groups of usual suspects co-investing together with changing the role of lead investors. This helps to diversify risk. One VC takes the active lead role other take coinvestments and vice-versa. GPCM

12 What Venture Capital is Available? VC's CVC's Family offices Regional banks GPCM

13 Convince! Quality and credibility Management Good business Stable financials (will be challenged) Reasonable valuation Realistic exit plan Taxes Do better! Show statistics of your industry and say why you do better! Data - success stories track record. GPCM

14 Commit Yourself! Entrepreneurs take risk. Show that you believe in the hypothesis of the company. Salary below market + ESOP GPCM

15 Be Prepared! Clean up all contracts, insurances, agreements, financial statements, minutes of general meetings, minutes of board meetings, IP issues, tax issues, social security, etc. References (customers, personal) GPCM

16 How does the Process Work (4-9 months)? 1. Sending in business plan 2. Screening 3. General feedback and telephone Q&A 4. Meetings with company team 5. Letter of intent 6. Due diligence (Business, Technical, Legal, Financial, Management) 7. Final negotiations and contract 8. Investment 9. Support and coaching GPCM

17 What VC's Focus on in Contract Manufacturing Relationships? Why are suppliers particularly important? At arms length relationship No dependency on a single CMO possibility to set up a second source of supply no leverage possibility to designate a new CMO. No experiments with inexperienced CMO's. The venture the VC will give money for is your project and not the CMO's ability to manufacture. GPCM

18 Due Diligence Parties Signatures Exclusivity and antitrust issues Provisions giving sole discretion to one party Termination possibilities Changes of control and assignment Annexes GPCM

19 Key Legal Issues Cristal Clear Attribution of IP Rights between CMO and Sponsor. Freedom / flexibility of Sponsor to change project or move on to new fields. Right to bring infringement actions. Right to determine patent filing strategy. GPCM

20 Contact Details Christian Wyss lic. iur., LL.M., Attorney at Law VISCHER AG Aeschenvorstadt Basel Switzerland cwyss@vischer.com GPCM