Life Science Venture Capital

11th Annual NIH SBIR/STTR ConferenceJuly 1, 2009

Randy H. Weiss, Ph.D.Partner, Triathlon Medical Ventures

Background• Partner, Triathlon Medical Ventures

Fund I is $105M (17 investments; raising Fund II) Focus on early-stage biomedical investments in Midwest

• Member, St. Louis Arch Angels

• Co-founder and Board Chair for Cardialen Implantable medical device for painless treatment of atrial fibrillation

and flutter (spin-out of Washington Univ. in St. Louis)

• Co-founder, Interim CEO, Board Chair of Vasculox Biopharmaceuticals for organ transplantation (spin-out of Washington

Univ. in St. Louis)

• Entrepreneur-in-Residence, U. of Iowa Research Foundation

11th Annual NIH SBIR/STTR Conference

What are VCs Looking For?

• Innovative technology that enables a competitive market advantage over current and emerging products

• Products that address significant and recognized unmet needs in large and growing markets

• Strong and defensible intellectual property with freedom to operate or other barriers to market entry

• Development plan that can be achieved with accessible capital to provide an exit with attractive returns in a reasonable timeframe

• Successful, experienced management team

11th Annual NIH SBIR/STTR Conference

Potential for High Growth Companies

High Potential:

• Innovative, disruptive technology• Exit greater than $100 million (medical devices) or $200

million (pharma/biotechnology)• Large up-side potential but with high risk• Capital needs might be $25M or more• Expected multiples of >2.5x• Exit in 3-7 year timeframe• Strong VC interest• Less angel investor interest• Example: Pharmaceutical company has plans to advance

pre-clinical drug candidate through Phase II clinicals

11th Annual NIH SBIR/STTR Conference

Potential for High Growth Companies

Medium Potential:• Incremental improvement in technology• Exit between $10 million and $100 million (healthcare

services, medical products/IT)• Up-side potential may be capped but with lower perceived

risk, earlier revenue expectation, and lower capital needs• Exit within 3-5 years• Strong angel investor interest with some VC interest• Expected multiples of >10x• Example: Medical software firm has plan to ramp-up

revenues to $3M in 2-3 years

11th Annual NIH SBIR/STTR Conference

What Do VCs Expect in Return?• Invest in a company, not a research project , with a well-

defined business plan and management team that can execute the plan

• Ownership in the company

• Opportunity to invest in follow-on rounds

• Seat on the board (assuming a substantial investment) with voting rights to allow for control over the company

• Defined exit strategy that provide attractive returns on investment in an acceptable amount of time and with acceptable risk

11th Annual NIH SBIR/STTR Conference

Investment Process

• Submit Executive Summary or Business Plan

• One or more individuals of investor group will screen opportunity

• Invitation to present to entire investor group

• Due diligence (under confidentiality)

• Term sheet submitted by lead investor(s)

• Negotiation of term sheet

• Additional follow-on investors identified

• Closing of investment

11th Annual NIH SBIR/STTR Conference

Due Diligence

• Corporate/Legal

• Management

• Science & Technology

• Intellectual Property

• Manufacturing/Product Development

• Clinical/Regulatory

• Market/Sales

• Business Development

• Finance/Investment

• Shareholders/Board of Directors

11th Annual NIH SBIR/STTR Conference