Newsletter Editorial, March 2021
I have been an early-stage investor for over ten years, and I’d like to share a secret with scientific founders who pitch VC’s: VC’s don’t believe your slide claiming a > 1B USD sales potential.
However, even more damaging is that the analysis has potentially revealed that commercial understanding is one of your ‘unknown unknowns’. Let’s explore what it takes to have a truly credible market analysis. Like most things at BII, it is simple in theory and much harder in practice – especially if you haven’t done it before.
The most important factor in a convincing market pitch to VC’s starts with a granular understanding of your product’s unique selling points. They should be both attainable and meaningful.
Attainable means that your data support the product that you describe. Meaningful means that the differences you aim to bring to market actually matter when considering what future competitors look like. Will the differentiators you offer allow you to gain traction with authorities, health care providers, and payers?
We spend a lot of time at the BII portfolio companies thinking about a Target Product Profile (TPP) and what is the right attainable and meaningful market to address. In therapeutics for example, we shy away from trying to displace entrenched generic competitors and move towards addressing fatal diseases with no approved therapies – but not so barren that no one will believe you have a chance!
Developing a TPP takes experience and knowledge, which is the second most important factor in your market analysis.
Our approach at the BII is iterative. We start building your TPP when we perform diligence on your application. We ask if it is attainable and meaningful. We bring in our partners at Back Bay Life Science Advisors to provide us an analysis of the technology’s commercial context. They, like other professionals, have a broad contextual understanding of how different approaches have failed or succeeded and why.
Once at BII, we expose BII companies to our growing VC network via short, facilitated meetings. Our companies’ TPP’s are further forged in the ‘friendly fire’ of their questions, skepticism, and feedback.
Ultimately, they end with a TPP that is quite different from the original idea but one that is convincing.
It is simple in theory, yet the biggest challenge is the founders’ ability to accept that their audience’s skepticism is actually an opportunity to understand, pivot, and try again. Founders that choose to ally themselves with experienced and knowledgeable professionals in the field do even better.
Our goal at the BII is to enable BII founders to turn that previously flat sales potential slide into a convincing culmination of their pitch and experience the moment when VC’s actually buy into their vision.
I encourage you to revisit your TPP and ask yourself if it is attainable and meaningful.
Chief Business Officer, BII