Author: Pascal Hänggi
At the end of my PhD, I went through the process of setting up our own start-up with colleagues. I experienced the time when you are still in the academic ivory tower and taking your first steps in the business world. To get a more diverse picture, I asked young CEOs (among others Ruben Herrendorff, NXI Therapeutics) about their experiences of gaining credibility as a young founder.
"It's a Long Way to the Top”
To cut a long story short, starting your first company requires full commitment, it is “in medias res” and no more going through the motions. We give an insight into the journey from an idea in an academic lab to selling it to investors for a few million. Unsurprisingly, having a great idea or a prototype is not enough.
From presenting your research at a scientific conference to playing a game of buzzword bingo
Whether you're a postgraduate student presenting at a conference or the founder of a start-up, the ability to give an engaging and well-prepared presentation is a valuable skill for everyone. Hardly a lecture is given these days without an accompanying PowerPoint presentation full of flashy charts, images, exploding subtitles and often far too many bullet points. Academic presentations tend to be more formal and include research to support the ideas you present, references to credible sources and a clear demonstration of your familiarity with the subject. The difference between an academic presentation and an investor presentation is that they are essentially the same, but very different. Therefore, we will focus on three points that are specific to pitching. You can find endless lists of do's and don'ts for pitches and presentations online. Rather than stating the obvious, we highlight three key elements that can help build investor credibility during the presentation on the way to a Seed or Series A round. Your presentation is a cornerstone of your credibility and one of your first interactions with the business world.
The stage is yours
As simple as it sounds, as important it is. You need to tailor your presentation to your audience. There is almost never a "one size fits all" presentation.
Finding out who you are talking to is the homework you need to do before every pitch: A) What is their background? B) What investments have they made in the past? C) Who else might be unexpected in the presentation? You want to engage your audience. You should go back to basics without making anyone feel less intelligent without a PhD. Use pictures in conjunction with your presentation to convey specific messages. But do not use complicated graphics and unnecessary photos to hide the fact that you have not yet done all the experiments. People notice these things, so use images only to emphasize key points. Use images to illustrate rather than decorate.
Even if you've been practicing like crazy, it's normal to feel nervous. By making a conscious decision to channel this nervous energy into enthusiasm, you can actually improve your own performance and build confidence at the same time. Taking long pauses and deep breaths is a good exercise and, if done in a controlled way, can help you to emphasize certain points in your presentation as well as calm you down.
Not only when you are nervous, you need to practice a lot to gain credibility and to be able to keep to the time limit. This is especially true if you have been in the academic world and have mainly presented to graduates, postgraduates and professors. It is very helpful to make a presentation once or twice to lay people from outside the organization. Rehearsing will help you find out if you're really able to tailor what you say to your audience. Finally, as in the academic world, you should end your presentation with a summary.
The "So what?" question should be answered for each slide and key point. This will help ensure that your message and visuals are clear and meaningful. Use the "less is more" rule when preparing your slides. Avoid using too much color, too many animations and too many changes in font style. You don't want to make your audience suffer by over-animating and over-sounding. Create visuals where simplicity is key and do not fill every slide with text. The easier your slide is to read, the more people will actually take the time to read it. You might ask, "How are people supposed to know all this if I don't put it on the slides?" No matter how detailed your slides are, your audience will always need you to explain things in a clear and concise way. You probably have a lot to say in your presentations. However, it is wrong to feel the need to fill every slide with exactly what you want to say. If you fill your slides with too much text, your audience will look away. They will spend more time on their phones than paying attention to you. Use relevant images on some slides and omit text on others. Give your audience the element of surprise by including only the most important points on the slides. Make sure you practice using tone, intonation and inflection when speaking your words aloud. Avoid speaking without feeling. Your hand gestures should be in line with and complementary to your main points. Don't use too many hand gestures. It's like "shouting with your hands". You may find that the project you are working on is so interesting that you think using 60 slides is the way to go. After the first 30 slides you can hear snoring everywhere.
1) Overuse of buzzwords, 2) Overuse of corporate jargon, 3) Overuse of scientific jargon and technical language, 4) "I know everything" attitude, 5) Poor team dynamics, You bring your team, but don't let them speak. Inventors are not just about the person who started or runs the company, but about the other people and the chemistry between them, 6) Missing the "aha! Failure to nail down your story and get to the 'aha' moment quickly in the presentation, 7) Trying to sound smart by overusing corporate & scientific jargon.
Using big words, jargon or acronyms that your audience may not understand will confuse your audience. The authors (B. Fugere, C. Hardaway, J. Warshawsky) of "Why Business People Speak Like Idiots" warn against using corporate buzzwords or phrases such as "paradigm shift", "reach out", "win-win solution" and "collaborate". These words have lost their power. They have been overused in business. Personally, I agree with the key point that less is more and simplifying your words is better. If your audience doesn't give you credibility because you haven't used all the buzzwords, then they are probably not the ideal investor for you.
“The waiting is the hardest part”
After pitching many times to many different investors, time flies, but each day brings you one step closer to your Seed or Series A round. The hardest part is waiting for the term sheet and closing. One of the biggest challenge at this moment is that investors are asking you to do more studies, but you are struggling to pay the salaries, let alone buy reagents. This financial gap puts a lot of pressure on young founders. Always bearing in mind that if you don't sign a term sheet and close the funding round, you can't pay your bills, everything is just gone. This situation is very difficult because you may choose investors who do not have the same vision for the business as you do. But under pressure, you may be willing to compromise on terms you would never accept in other circumstances. So I asked the young founders about their experiences of raising money from angel investors and venture capitalists. A key point was the importance of non-dilutive funding, such as grants. This allows the founder to retain full ownership of the business without dilution. It will also give you more time to find the right investors and take some of the pressure off you. Another financing option to buy more time for important experiments (validation), interaction with investors and building credentials are convertible loans. They are dilutive later and not immediately.
“Finding Ms. & Mr. Right”
Let us assume that there are a number of angel investors and venture capitalists who are ready to provide a term sheet and who are willing to invest in the start-up. The key question now is how to identify the most suitable investors. It is important to take your time when making your decision. There are many factors to consider. This can start at the reception desk of their office - who will welcome you and how you will be greeted. No one expects a welcome reception, but at least someone should be there to greet you. Respect on both sides must be the basis. Spending too much time on the phone during a presentation is disrespectful and a red flag. Regardless of how much time they spend on the phone, you may be asked indirectly about your or your team's track record. This will give you an insight into the investor's approach and perspective. Independent if you have previously only worked in academia, don't have fifteen years of industry experience, or an MBA. This does not mean that you will not be fully recognized by the board and that you are the wrong CEO. There are investors who have a reputation for bringing in their own people and replacing all the founders.
It is always important to do your due diligence on investors, not the other way around. It is also the point at which you, as a team, should ask yourselves the following questions: What added value does the investor bring to us? In the best case, it is not just money.
The best case scenario is that you have an investor who is willing to be your sparring partner and be part of the growth of your team and your business. They will be respectful and open from the start about their vision for the future. They will help you build your track record. The aim of sparing is for the founder to learn how to use their strengths and focus on improving their weaknesses. This requires a willingness to learn, to listen well, to try to integrate other points of view where possible, to bring people into the team who are smarter and more experienced than you, and to show mental flexibility, to constantly learn-test-adapt. When talking to investors, it's also important to listen carefully to their expectations, vision and strategy. All in all, to live happily ever after with the investor, you need to be able to stand up for your vision, possibly say no to certain term sheets, and be lucky enough to be in the right place at the right time.
“Everything - Everywhere - All at Once” is not working
To gain credibility outside the academic ivory tower, certain skills are essential.
Running your own business with just a handful of people, rather than a large and experienced team, requires you to be hands-on. You need to be able to register with the Swiss social security system as well as buying a coffee machine and organizing board meetings. Even though you are a small team, it is not going to work if you try to do everything yourself. You need to learn how to delegate responsibility to your team and allow them to grow and develop with you.
No doubt you are passionate about your science and technology. But the big picture is not a publication in Nature or Science. It is about drug and product development. Therefore, it is not possible to do every single "nice to know" experiment for a publication. It is important to focus on the studies required by health authorities to obtain approval for future clinical trials.
In academia, grant submission deadlines are usually of paramount importance and other deadlines are not as critical. In a fast-paced environment like the life sciences sector, with all the different stakeholders, this is different. Deadlines, making decisions and knowing how to say no are key. You cannot manage an infinite number of projects and programs. The decision to stop a program is a difficult one But trying to do all the projects in your pipeline at once will not work because it will take resources away from the most promising assets.
From the “Past Lives” to “Maestro”
All in all, there are many challenges on the road from postdoctoral researcher to experienced CEO with a track record in the life sciences industry. But with the right investor as a sparring partner, all the hurdles can be overcome and the young founders will grow from the "Past (academic) Lives" into an experienced “Maestro” with the company.