If you had to point to a single differentiating factor between successful early-stage science and technology companies and those that struggle, it would be the leadership team guiding the organization on the aspects of both science and business. Many organizations are founded on inventions and ideas that have significant potential, and the obstacle to success becomes the ability to obtain funding to take those ideas from the lab to the marketplace. Successful early-stage companies are able to pursue and receive multiple types of funding to meet the needs of research and development and building the business infrastructure, systems and tools necessary to get funding.


One of the rising stars of life science companies is Phthisis Diagnostics, based in Charlottesville Virginia and led by Dr. Crystal Icenhour. Founded in 2005 as a spin-out of research started at University of Virginia, this company has been able to raise funds from both private investors and government research grants.


The process of fundraising is detailed and lengthy. Whether the funding is from government sources or private, each process involves a unique set of requirements, milestones and expectations. The biggest challenges of the fundraising process include:


  • Length of time to identify funding sources
  • Detailed proposal development
    • “Package” and “proposal” requirements are often unclear for investment groups – angels, venture capitalists, etc.
  • Restrictive submission “windows”
  • Readiness when opportunity that matches the technology opens
  • High level of competition for funding
    • Number of opportunities being presented to private sources
    • Number of proposals submitted for funding opportunities posted by government programs
  • Length of time to go through the process
  • Confusion when it comes to control and results needed for investment (milestones for investors to enter may be later in the company and product development life cycle)
  • Lack of clarity from some sources on what they actually are interested in or want
  • Cost of raising funds, whether it’s legal/securities, or licensing of science from an university or other source


So with all of these challenges, what makes the difference between a successful and a failed venture? Here are just a few steps that must be taken:

  • Do homework on the process
  • Work with the vision of obtaining private funding
  • Use government funding only early in the process, to get things started and to a point of showing results to potential private investors
  • Obtain visibility for science and company
  • Network and connect with influencers and potential funders early and often
  • Understand the funding process in general:
    • Be prepared for the due diligence process.
    • Understand term sheets
    • Establish a clear vision and exit strategy
    • Know where the money is in the marketplace – how you will make money?
  • Develop a leadership team and board that is worth investing in

To know what a particular group (like angels, for example) are looking for, go beyond the websites that may not be current; talk to previously funded companies and learn as much as you can about what “got the deal” including what questions were asked, likes/dislikes, presentation format and expectations and the personalities of investors and their interests.


Too many individuals don’t grasp what they don’t know when they first enter the funding process. It is important to talk to peers about their experience raising funds, and the research that went into it, as well as the investment group management, portfolio and process. Understand the funding source options—from angels to private equity—and most importantly know how your business will be valued. Valuation is based on the potential for future revenues, intellectual property and the experience of the leadership team, not to mention a successful track record.


Ultimately, people invest in people: A great team with a good market opportunity has more to offer than a great technology with an inexperienced or “okay” team. Assemble a strong team and make connections and build relationships with potential funders well in advance of when you will need the money.


Author: Lea A. Strickland, MBA CMA CFM CBM GMC

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