When it comes to drug development, creating, testing, and analyzing a market-viable idea is half the battle. The other half involves securing the required funding so that the therapy can be commercialized and brought to the masses. From tackling investor questions to working around tight government regulations, fundraising comes with its fair share of challenges. So, what does it take to secure clinical trial funding? Our latest blog explores this topic.
Building Investor Trust: Laying the Foundation for Your Program
Investors want to ensure that they are funding a well-thought-out idea. Whether you’re seeking government funding or pursuing established venture capitalists, they all will have questions to help improve their understanding of your idea and aid in risk evaluation.
What Do Potential Investors Look For?
The cornerstone of any approach to an angel investor or venture capitalist is a viable exit strategy. And there’s a good reason why they place so much emphasis on it. A well-thought-out exit strategy is what ensures a return for the investor. Essentially, it tells them how they will profit from their investment.
While fundraising, you could have either of the two exit strategies: M&A or an IPO.
- Merger & Acquisition (M&A): One viable exit strategy is being acquired by a well-established pharmaceutical company. During M&A opportunities, potential partners usually place quite a bit of emphasis on the robustness of phase II proof of concept studies. A thorough phase II proof of concept study helps them evaluate several key viability indicators, such as whether the proposed treatment is indeed delivering the intended clinical results, its long-term human usage impact, and the optimum dosage levels for commercialization.
2. Initial Public Offering (IPO): If your idea has gained traction quickly and there is a feasible commercial opportunity, an IPO presents a viable exit strategy for investors. With robust growth rates and a potentially large commercial opportunity, having your company’s shares listed for institutional and individual investors is usually a preferred exit strategy that is equally beneficial for the founders and investors.
Tackling Investor Questions and Concerns
Apart from a strong emphasis on a bulletproof exit strategy, there are certain nuances of an investor’s mindset that may surprise you.
Most investors place a lot of emphasis on innovation and exploring new frontiers but at the same time, they stress having a guaranteed ROI. They often find it tricky to understand that although innovation may represent a perceived financial risk, it may also lead to sustained profitability. This leads to the question: How does one address this seemingly conflicting investor mindset?
The solution is to keep your message consistent. You should focus on making sure that each relevant phase II and III proof of concept study is evaluated thoroughly from every angle. This will help the investors visualize precisely how effective your proposed treatment is and its commercial viability.
To do that effectively, a young startup should employ the services of a reliable research partner. Their expertise and resources should help give you thorough insight into the study procedures, statistical analysis, sample size, estimates, and assumptions. This will allow you to make a strong business case to potential investors.
Making a Compelling Presentation
An extremely important component of your fundraising strategy is a cohesive investor presentation that simplifies the key ideas and makes a strong business case. There are three key pieces of an effective investor presentation:
- Explaining the problem: Focus on explaining the issue you intend to tackle. Your objective is to get potential investors to agree with your assessment of the prevailing problem or need.
- Explaining how the solution works: Clarify exactly how the proposed solution/treatment will solve the problem. This is where you cite clinical studies, behavioral models, and relevant industry publications to demonstrate your treatment’s viability.
- Making a strong business case: This is where you discuss how the proposed solution can be scaled and brought to the market. You thoroughly discuss factors such as long-term clinical implications, market size, and a commercial plan along with projected growth rates.
Listen to how one executive partnered with Worldwide Clinical Trials to help prove and explain the ins and outs of his clinical development work and why it’s a viable program for investment. Download the podcast now.
The Key Takeaway: Establish a Strategy, Focus, and Clarity
Although fundraising may not be as simple as going from point A to B, the likelihood of successful fundraising increases considerably if your pitch includes a well-thought-out exit strategy; a consistent, focused message; and a compelling, clear presentation that explains the problem at hand and establishes a strong business case for the initiative to be supported financially.