clarus ventures

Helpful Tips for the

Aspiring Entrepreneur -

A Venture Capital

Perspective

Emmett Cunningham M.D., Ph.D., M.P.H.

Partner, Clarus Ventures, LLC

www.clarusventures.com

McCormick Place, Chicago

Spotlight on Innovation in Ophthalmology

From Theory to Therapy

Monday, October 20th, 2014

12:15PM - 1:45PM

GRAND BALLROOM S100C

Protect Your Ideas (IP)

Is it still intellectual

property theft if the

ideas aren’t intellectual?

• Draft a dated / signed invention disclosure

• File with counsel / tech transfer office

File Before You Publish or Present

“Prior art” is no longer patentable

Choose Your Advisors Carefully

• Discrete

• Knowledgeable

• Experienced

• Counsel

• Consultants

• Institutional

Investors

CDA

Core

Team

Understand the Difference

Between a Company and a Product

Tools

Instruments

Small market devices

Small market drugs

Multiple products

Large markets

Product Company

Understand What it Takes to Bring Tools,

Devices, and Drugs to Market

Tools

Instruments

510(k) Devices PMA Devices

Drugs

< $500K

1 year

$5-50M

3 - 5 years

$50-200M

5-10 years

Ophthalmics

Individuals TeamsNon-Ophthalmic drugs can cost over $1 billion

Think Through What Role You

Want to Take in the Process

Know Your Own

Desires and Limitations

Set Realistic Expectations

Regarding Valuation

“A small piece of a big pie

is much better than a big

piece of nothing ……”

Money is Only Part of the Reward…..

The primary

objectives are to

see your idea

become a reality &

help patients …

MoneyThe Most Expensive Thing You Will Ever Buy

Understand Funding Sources

Stage

Source

Of Funds

Funds

Required

Availability

Of Funds

Modified after: Center for Venture Research – University of New Hampshire

Pre-Seed Seed / Startup Early Late

Founders

Friends

Family

SBIR / Foundations

Angels / IncubatorsInstitutional Investors (VC)

$50K $100K $1M $100M

Risk

Risk Not drawn to scale!

“Innovation Gap”

High

Low

$651$665 $660 $666

$670

$688$706 $701

$702

$656

$674 $675

$820$810

$779$764

$740

$763$770

$741

$727

$670

$500

$550

$600

$650

$700

$750

$800

$850

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015E

NEI (Actual) NEI (2014$)

NEI Funding Flat, but …

Down ~25% after Inflation (2014$)

28% of RO1s Funded

Inflation Calculator

http://data.bls.gov/cgi-bin/cpicalc.pl

Data provided by :

Matthew McMahon, Ph.D.

Director, Office of Translational

Research, NEI

$0

Founders, Friends, and Family

(Typically < $500K)

“Yes, that is me.

We’re a very new company.”

“You’ll never guess who

I bumped into today…”

Founders

Family

Friends

Research Grants and Foundations

(Typically < $1M)

tgfThe Glaucoma Foundation

info@glaucomafoundation.org

inforequest@rpbbusa.org

info@jdrf.org

Angel Investors

(Typically < $2M)

Ask local entrepreneurs, lawyers, etc…..https://www.cbinsights.com/blog/top-angel-groups-mosaic/

Top 20

Healthcare

Angel Groups

Angel Investors

(Typically < $2M)

https://www.cbinsights.com/blog/healthcare-periodic-table/

• Launchpad Venture Group

• Central Texas Angel Network

• Houston Angel Network

• Keiretsu Forum

• Maine Angels

• Sand Hill Angels

• Life Science Angels

• Tech Coast Angels

• BlueTree Allied Angels

• Queen City Angels

• Desert Angels

• Golden Seeds

#1

www.angelcapitalassociation.org

Ask local entrepreneurs, lawyers, etc…..

Incubators & Accelerators

(Various Models - Typically < $2M)

www.forsightlabs.com

And many universities…..

http://www.jnjinnovation.com/

http://www.roche.com/research_and_development/partnering.htm

Ycombinator

www.ycombinator.com

http://startx.stanford.edu/

Innovation Gap Widening

Stage

Source

Of Funds

Funds

Required

Availability

Of Funds

Modified after: Center for Venture Research – University of New Hampshire

Pre-Seed Seed / Startup Early Late

Founders

Friends

Family

SBIR / Foundations

Angels / IncubatorsInstitutional Investors (VC)

$50K $100K $1M $100M

Risk

Risk Not drawn to scale!

“Innovation Gap”

High

Low

Venture Capitalists

(Typically > $5M)

Venture Capitalists

(Typically > $5M)

www.nvca.org

https://www.cbinsights.com/blog/healthcare-periodic-table/

Source: PricewaterhouseCoopers, Silicon Valley Bank

Total VC vs BioPharma vs

Medical Device Investments (2000-2013)

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

$-

$10

$20

$30

$40

$50

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Billio

ns

Total VC $ BioPharma Device

$99 Bn Healthcare ~ $4Bn

Courtesy Jon Norris, SVB

Lifescience Venture Capital Funding Gap

$6.0

$7.3

$9.1

$8.6

$6.6 $6.3

$7.7

$6.7

$6.7

$3.4

$…

$7.9

$6.1

$5.2

$1.8

$3.7 $3.6

$3.9

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0

$8.0

$9.0

$10.0

2005 2006 2007 2008 2009 2010 2011 2012 2013

Invested ($Bn)Fundraised ($Bn)

Source: PricewaterhouseCoopers, Silicon Valley Bank Courtesy Jon Norris, SVB

$2.8 Bn

(1.7x Gap)

0

100

200

300

400

500

600

0

5

10

15

20

25

30

To

tal D

olla

rs In

ve

ste

d ($

M)

Nu

mb

er

of

Ve

ntu

re D

ea

ls f

or

Dru

g a

nd

De

vic

e

# Rx Deals # Device Deals VC Investment ($USD, Millions)

business intelligence

Ophthalmic Investments by VCs Over Time

(1999 – 2014*)

VC Funding Stable• ~ $400M / year

• 15 – 20 deals

*2014 figures through September

SOURCE: Strategic Transactions

VC Investment By Ophthalmic Indication

(1999-2014*)

4…

36

2118

12 118 7

12

7

3 4

0

5

10

15

20

25

30

35

40

45

50

0

100

200

300

400

500

600

700

800

900

1,000

1,100

1,200

Nu

mb

er o

f De

als

Pri

va

te P

lac

em

en

ts (

$M

)

Dollars ($ Millions) Number of deals

*2014 figures through September

SOURCE: Strategic Transactions

50%

100%

150%

200%

250%

300%

350%

400%

450%

2004 2006 2008 2010 2012 2014

10-year Stock Price Performance

53%

292%

Source: FactSet as of 09/16/141 Medtech index consists of medical technology companies traded on North American exchanges with market capitalizations over $1bn

78%

Returns summary

10 yr 5 yr YTD

Medtech1

63%

Biotech

235%

S&P 500

87%

16%

19%

9%

Best Three Years for Biotech in a

Decade

Industry Partnerships(Any Stage – Best After Some Value Creation)

Give Yourself Enough Time To

Raise Money – Up to12 months…

Ask for Enough to Get to an

Important Milestone (Data) …Plus

…time to raise more

money….

Seek Out Experienced Investors

“Your financial goal is to break even?

You must be an experienced investor!

Come to Pitch Meetings

Practiced and Prepared

He’s Expecting you………..

Take the Time to Write a

Concise Business Plan

• Consolidate your ideas

• Understand the strengths and weaknesses of the opportunity

• Learn the market dynamics

• Construct a realistic budget and timeline

• Use of Proceeds ; Milestones

Focus on Business Model and

Confidence in Rationale – Science and Data

Clinical Results

It’s All About the

PowerPoint Presentation

Use Pictures and Graphics

And not this . . .

Word Slides Are a Sleeping Pill

Our Brains are Compartmentalized

Very

Difficult to

Listen and

Read at the

Same Time

Average Attention Span ~ 10 minutesSegment Presentation Into Separate Topics / Q & A

10 minutesNew Topic or Q & A

Believe in Yourself …

Innovation

is driven by

individuals

and small

teams

And in your vision …

Steve Jobs

“People don’t

know what

they want until

I show it to

them.”

Follow Your Bliss……..Not Others

You Don’t Always Have to Leave

Your Day Job…..

And have fun . . .

Plan to Join Us . . .

7th Annual OIS@AAO

Las Vegas, Nevada

November 12th, 2015

4rd Annual OIS@ASCRS

San Diego, California

April 16th, 2015

www.ois.net

ecunningham@clarusventures.com

650 238 5014

www.clarusventures.com