The Breakthrough Conundrum

The post-recession move away from traditional early stage investments by venture capital firms has been examined recently in life sciences publications and conferences. The 2014 National Venture Capital Association Yearbook reports that through 2013, VC investments in early stage life sciences companies fell from levels in previous years. VC investments in life science are on track in 2014 to exceed 2013, yet investment in early stages still lags.

This investment climate is particularly challenging for start-up companies with a breakthrough technology. At a recent entrepreneurial showcase event, discussions focused on how to get VC funding and how to partner with large companies pointed out that in spite of claims by VCs that funds are designated for investments in innovative technologies, it is difficult to get funding for a breakthrough technology.

Many groups, including angel investors, traditional VCs, and corporate VCs, say they want to invest in or acquire breakthrough technologies, but upon review of their recent investments indicate that they do not. So, the life sciences entrepreneur is left to decipher whether the VCs are risk averse or the fund managers do not understand a breakthrough technology when it is presented.

A breakthrough technology is typically a high risk investment that may be difficult to comprehend, even to the most scientific-literate investor. Many breakthrough technologies are disruptive technologies that may change an existing market or create an entirely new market, making them inherently difficult to value.

Participants at the recent showcase commented that if you don’t recognize the potential of an innovative technology, it is easier to just say no than to try to understand and evaluate it. With an incremental improvement in a product or technology, however, the immediate impact is easier to understand. The evaluation process is also faster and less complicated.

Getting funding for a breakthrough technology requires patience to keep presenting and explaining the technology, until you have a technical description that ignites the “ah ha” moment in the audience and lands your company an investor who gets it. You must have a compelling story that clearly describes the technology and how it will fit into the existing market space. Realistic total market values and market share projections within existing markets as well as projections for potential future markets demonstrate your company’s understanding of current market forces.

In addition, you have to build trust. Over the years, many investors have told me they invest in people, not specific products or technologies. A good track record in other ventures is beneficial, and a strong network can foster key relationships as well.

BIP can help you estimate the market potential for breakthrough technologies. Contact us today to discuss our process for evaluating a breakthrough technology.

Has Innovation Become a Buzzword?

Innovation is currently in the top one percent of words looked up on The definition, incidentally, is given as a new idea, device, or method. Why is innovation such a hot topic right now? We have heard presentations on innovation at several recent meetings and seminars as governments, companies, and universities wrestle with how to define, measure, and promote innovation, especially in the life sciences.

Defining and measuring innovation is a challenging issue. How do you decide what is relevant to innovation in your work? Would it be the same for all groups? Ultimately, you are stuck with what is feasible to measure. Some of the parameters reported, such as R&D funding and number of patents awarded, seem logical. Other factors, including income levels and educational background, have been examined as part of a broader attempt to look at the overall environment conducive to innovation, but are less easily standardized and normalized across different corporate and academic cultures.

Trying to determine how to promote innovation is even more challenging. Whole management programs have been developed to encourage and promote innovation and innovative thinking, but beyond the cliché of “thinking outside the box,” what is innovative about these programs themselves? Can innovation and innovative thinking even be taught or is it an individual trait hardwired to a person? Innovation strategies, theories, and impacts extend across the U.S. landscape from education e.g., Harvard and NC State to mainstream media e.g., The Wall Street Journal and the New York Times and even the Smithsonian’s profiles of innovators.

Is innovation simply a fad that has become corporate speak or a buzzword, or is there a true movement towards innovation? If innovation has been fully embraced, how long will it be until the average person feels its effects? One could argue that the rate of technology adoption from Facebook to Instagram to Google Glass is a sign of innovative product development making its way to consumer goods and services so innovation is already being felt in our daily lives.

Tell us what you think about promoting innovation. What academic, corporate, and governmental intangibles promote innovation?  How do you create an environment that will encourage taking risks, interdisciplinary approaches, and valuing different perspectives?

What will you do with big data?

Big data and big data analytics in the biotech and pharma industries have come into their own as research and development tools in the last few years. Basic biological research, drug design, computational biology, disease prediction models using whole genome sequencing – all are enabled by new technologies and access to big data and cloud computing. The explosion of interest in big data is illustrated by the numerous conferences, white papers, industry news, and journal articles aimed at educating business leaders and scientists on the resources available for the analysis of big data sets for health and life sciences applications

Industry and government funding has increased markedly as well, all dedicated towards the goal of training scientists, business, and IT professionals to develop and utilize novel methods, applications, software, and tools for big data analysis. Big data datasets are publicly available from a number of sources, such as the NIH, the 1000 Genomes Project, and Amazon Web Services. Proprietary datasets, often curated and specific to a given disease or area of interest, are also available for purchase or fee-for-use. The NSF and the NIH are funding projects such as the $50 million iPlant Collaborative and the Big Data to Knowledge (BD2K) initiative, launched in December 2012.

The availability of data and computing power and the current trend for utilizing big data and analytics raise a number of questions for life sciences firms. We here at BIP have been thinking about these questions recently and how they can be answered for our clients –

  • What do all of these new data resources mean for your product development and your company?
  • Where is the “big data” coming from and is it the right data and/or analysis tool for you or your company?
  • Can smaller firms not associated with academia or big pharma utilize these new big datasets and cloud-based computing options effectively and efficiently?
  • Are there patient privacy issues related to any of the data needed for your research?

The answers to these questions may be unique to each firm, line of business, and phase of product development. Are you the type to jump first and ask questions later?

Big data analytics may or may not be relevant for you at this particular moment and utilizing big data requires serious consideration of these and other “big questions” before proceeding. Strategic planning on adoption of big data now could avert trouble down the road and has the potential to allow you and your company to achieve what has never been possible before.

BIP would love to hear from you about your approach to these questions, your answers to these questions, and your pathways forward. Is big data right for you?

Yes, you do have competition

I recently attended a meeting and heard presentations from several start-up companies about their technology, potential market, and near-term strategies. Most of the presenters either casually dismissed the competition or claimed their company has no competition. We hear this all the time from start-up companies and even from seasoned management teams who should know better.

Here is what I would like to say to everyone who insists their technology has no competition. You really do have competition – even if it is indirect. Saying you have no competition makes me think that you don’t understand the market. There may not be another company with exactly the same technology, but how is the problem being addressed in the market now?

So, how do you identify your competition? Searching with a web browser is one place to start, but BIP recommends using a number of additional approaches to find potential competitors. For example:

  • Talk with experts in the field and potential end users. They will know the current state of the art and may be aware of other new technologies.
  • Consider indirect competition – medical practice, for example, is slow to change. You may have a new surgical tool, but the current treatment will still compete.
  • Study competing academic research. Have any companies spun out? Has technology been licensed by another company?
  • Examine relevant intellectual property. Keyword searches of patent databases may be enough to identify competitors you did not know were working in your market space.

Of course, BIP can do any or all of these tasks for you. Existing companies and start-ups have competition; let us help you find it. Contact us today for more information on our competitor analysis projects.