clarus ventures
TRANSCRIPT
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
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
