ThE lAST woRD

Closing the deal – suggestions for a successful Financing

the Canadian life science sector has seen a significant increase in fund flows over the past five years1 and the US biotech bull market is now in its 6th year, yet access to capital continues to be one of the top concerns for Canadian biotech companies.2 Great science, a strong team and the potential for return on investment are essential to securing capital; but I’d like to share some suggestions to successfully complete a financing, based on my own experience and particularly our most recent financing completed in December 2017.

have great investor materials

Your pitch deck is probably the most important investor document. Invest time and energy to make it perfect. We spent months refining our pitch deck and hired a communications consultant to clarify the messaging and create personalized graphics. If you’re not PowerPoint savvy, I suggest you do the same.

Then, extend the quality of your pitch deck to all your documents. We built several additional detailed presentations to address investors’ specific needs, such as understanding our candidate’s mechanism of action, market and competition. Providing additional, more detailed investor materials whose quality and messaging is consistent with your pitch deck makes the difference between looking sloppy and looking professional.

Build trust with investors

Trust is undoubtedly one of the key factors for investors when considering whether to fund a project. You have likely built trust amongst your long standing network of potential investors, but how do you build trust with someone that you just met? When investors reached out via phone or email demonstrating serious interest in our project, I made a point of arranging face-to-face meetings with as many as possible. In a world where global investor networks can be very easily accessed online, I find that in-person meetings accelerate the establishment of a trusting relationship.

Another way of building trust, and generally good business practice, is to highlight the risks inherent to your project, including those identified during your own diligence. Honesty and vulnerability play an important role in building trust with potential investors.

“no” is “no”, most of the time

I’ve heard the advice to not take “no” for an answer. Although I’ve never seen an investor change their mind once they give you a “no”, there are a couple of circumstances that can lead to an investment after a “no”. New data can change a “no” to a “yes”. If additional data addresses an investor’s specific concerns, that’s a great reason to go back to that investor. Also, a “no” from an investor isn’t always a “no” from their firm. A different partner from the same firm could have a totally different opinion on your project or could simply have more time to dedicate to exploring your opportunity.

Track progress

There’s a reason why salesforce.com is one of the leading sales tools available – it helps close deals! Internet-based customer relationship management (CRM) technologies (many of which are free) can be easily adapted to track your investor interactions and ensure you follow them up during the sales process. The CRM I used throughout my last financing helped me keep track of more than 30 relationships from first meeting to due diligence and finally, to closing. Once the financing is complete, CRMs can also help ensure you maintain relationships with current and prospective investors by following up with them regularly.

It takes solid science, a strong leadership and development team, and a compelling investment proposition to get the attention of investors, but there are other factors that are often key to filling the book. In my experience, presenting high-quality investor materials, establishing strong relationships, applying basic sales principles and reliably tracking your sales process can maximize the chances of closing a successful financing.

references:

1. https://www.cvca.ca/wp-content/uploads/2018/03/Q4-2017_

Canada-Report-ENG_Final.pdf 2. http://www.biotech.ca/wp-content/uploads/2018/06/Canadas-

Biotechnology-Industry-Infographic-En.pdf

sell the opportunity

You may be selling an opportunity for investors to participate in the potential upside of your project, but remember that basic sales principles still apply. Competitive demand and deadlines, real or artificial, can help close financings. Financial advisors are masters in this art and I suggest hiring one that can help say the “right things to the right people at the right time” to help investors pull the trigger on an order. A simple technique, not without risk, is to set a closing date and stick to it. Often, a deadline is sufficient to encourage a final investment decision.

Roberto Bellini is the CEO of BELLUS Health, a Montreal-based biotech company developing a drug for chronic cough.

To see this story online visit https://biotechnologyfocus.ca/ closing-the-deal-suggestions-for-a-successful-financing/