Fundraising and Financial Planning

Vellos Team
23 January 2024

For biotech and MedTech startups, particularly those emerging from academic research, navigating fundraising and financial planning is crucial.

This comprehensive module covers various funding options, strategies for investor engagement, and essential financial management practices.

Non-Dilutive Funding: Grants and awards provide capital without equity exchange. Some teams secure substantial non-dilutive funding initially.
Dilutive Funding: Raising capital through equity. This includes:
Angel Investors: Individuals offering capital for equity or convertible debt.
Venture Capital Firms: Invest in start-ups in exchange for equity. Teams may raise either a pre-seed or a seed round first, depending on stage of the POC and market interest.
- Pre-seed rounds often range from £100,000-500,000
- Seed rounds can be £1-5M, typically £1-2M

Researching VCs: Investigate each fund’s investment thesis, portfolio, and typical first ticket sizes to tailor your approach.
Creating an Investor List: Compile a list of VCs, ranking them in order of preference. Start engagements with lower-ranked VCs in your list to gain experience.
Networking and Introductions: Leverage networks for introductions. Ask those in your network who you should speak to, and whether they can connect you. Utilise LinkedIn to see if your warm contacts are connected to relevant investors, they could put you in touch with. Attending networking and industry events to connect with investors. Focus on investors who have the potential to lead the round (invest majority of the round size), as they can help attract following investors, unless you have a champion who doesn’t lead, but will attract others.
First pitch: The first pitch for investors should be non-confidential, and acts as an honest teaser into your potential. Further down the diligence process, you can ask investors to sign an NDA to learn before, however they typically will not sign until they are committed to diving deeper.

Investor Scrutiny: Be prepared for investors to thoroughly evaluate your team’s expertise, technology viability, market potential, and financial plans. Investors will often have a scientific background, but as their expertise cannot cover every area, they will have experts within their network who will follow up for scientific and technical diligence. This can include those from academia, industry and their portfolio founders.
Documentation Preparedness: Ensure all aspects of your project, including IP and market analysis, are well-documented. Often, a legal workshop will be commissioned from a lawyer to assess the legal, IP and patent landscape.

Financial Needs Estimation: Project financial requirements considering operational and development costs.
Understanding Runway: Runway is the duration your start-up can operate on current funds. Calculating this is crucial for determining when additional funding will be needed.

Cap Table Management: The cap table shows equity distribution among founders, universities (in cases of spinouts), team members, and investors. It’s important to ensure founders and key team members are incentivized with significant equity.
Valuation Techniques: The valuation accounts for start-up’s market size, unique technology, and IP. You can see the typical fund size and valuations of similar companies for guidance.

Regulatory Compliance: Adherence to financial regulations is essential.
IP Valuation: The value of IP assets significantly influences the start-up’s overall valuation. This value can also account for the future IP development potential.

Members benefit from career support, bespoke job-matching and opportunities to become part-time fellows or consultants within companies.