Is there a magic formula to properly orchestrate your fundraising strategy? No, unfortunately… But Marina Pavlovic Rivas, co-founder of Eli Health, shared valuable advice from entrepreneur to entrepreneur, in order to properly plan a financing strategy, as a guest in our latest Startup Wednesdays.
It all depends on your goals
It’s one thing to be able to bootstrap software development, to be very productive with little capital. But in biotech, the reality is different: to develop a marketable product, a medical technology which also requires a clinical regulatory aspect, a multidisciplinary product which combines biotechnologies, data sciences, mobile application, it takes much more funds.
Logistically, the pandemic has made everything more simple
You can do everything from home, no need to go to different cities. This opens up the field of opportunities and allows a change in the logic of financing: instead of targeting funds in geographic terms, you can focus your search on your match with investors regardless of their origin. The result is that one of our co-leads is based in Hong Kong, another in New York with investors in Montreal and elsewhere in Canada. We could focus our discussions on the match with our mission instead of focusing on geography.
Non-dilutive financing, to be preferred
There are some programs open to all businesses (PME Montréal, Montréal inc.), some are more specific ((Mitacs, Medteq+, AI programs from the Ministère de l’économie et de l’innovation). You have to spend a lot of time researching, digging, trying to understand the programs. Taking the time to build the demands is really worth it. Our first year of operations was almost exclusively funded on a non-dilutive basis, but we had to find additional funds when we reached 50% of our capital financed this way. We needed to diversify.
Tips for structuring your fundraising
You have to plan well: have all your documents in advance, your data room with the financial model, your pitch deck, your pipeline of investors you are targeting. We used a good old Google Sheet: since it’s a collaborative tool, we can share our pipeline directly with people in our network. There are some very simple templates: a column with the names, a column with the investment firm, the average check amount of that firm and, the most important column, who can introduce us to these funds. If you can identify in advance who can make an introduction, once the round is officially open, you can build the momentum. Once someone embarks on the round of fundraising, they can connect with other funds. This is momentum. Everything becomes easier then. But you need a good planning strategy to get there.
Tips for contacting VCs
Ideally, these are spontaneous connections, warm introductions from an entrepreneur who has received investment from this firm or from another investor who has already committed to invest. Otherwise you have to build a pipeline and make some cold outreach. It’s a numbers game: the more you do, the more you end up with a yes and the momentum builds. Being part of an accelerator can also help: other member companies may have received an investment in a similar area. So you have to talk to your peers, be creative, and if that doesn’t work, fall back on the pipeline and not get discouraged with the no!
Tips for choosing VCs
It all has to do with the issue of valuation. If we accept too many proposals, we end up diluting our capital. We had a maximum figure of dilution in mind for this round. Once we got there we had to make choices between investors. We focused on specific criteria but it was difficult nonetheless. We had to prioritize those with whom we already had existing relationships.
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