Silicon Valley biotech VCs: mistake startup founders make pitching

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• Biotech is one of the
  hottest sectors for venture-capital funds right now, but
  pitching a science-heavy startup to investors isn’t always
  easy.
• We asked the
  top investors in the space to tell us what startup leaders
  do wrong when they try to attract venture funding — and what
  they can do to avoid these pitfalls.
• Their answers contain some key lessons for biotech
  startups.

Biotech is one of the buzziest sectors for venture-capital funds
right now.

Across the globe, VC investments in biotech startups topped

more than $10 billion for the first time in history. Over the
summer, dozens of American biotech companies
went public. Nearly a third of the companies in the latest
class of Y Combinator, Silicon Valley’s biggest startup
accelerator, were in the biotech sector — up from just 8% the
year before.

Much of the recent excitement has centered on new ways of
tackling cancer
using patients’ own immune systems, fresh therapies built on
gene-editing tools like CRISPR, and potentially revolutionary
techniques for
making meat without factory farming.

But if you’re a science- or health-minded entrepreneur in Silicon
Valley, cutting through the noise can be a challenge.

We talked to investors who’ve backed some of the companies
working in these areas to learn what startup leaders get wrong
when they pitch their ideas.

Emphasizing a tool’s impact on the market over its impact on
patients

Hollis
Johnson

Cure disease. Fix the food system. Prolong life. 

These are just a few of the intrepid aims of today’s
leading biotech startups.

But accomplishing these goals requires laying practical
groundwork. In healthcare, that could mean painting a concrete
picture of where and when your startup’s technology will be used.
Whether it’s a new disease-detecting diagnostic or a new drug to
treat an illness, investors want to know how a tool will fit into
the current standard of care, Dan
Estes, a partner with venture capital firm Frazier Healthcare
Partners, told Business Insider.

“The biggest mistake I see is when someone spends more time
talking about how a product would affect the market than they do
talking about how it would affect the disease it’s designed to
treat,” said Estes, who serves on the boards of four
pharmaceutical startups, including Cirius Therapeutics, which is focused
on tweaking the human metabolism to NASH, and Sierra Oncology, a cancer
therapeutics company.

Rather than focusing exclusively on how a new technique or drug
would impact the market, Estes said he prefers when startup
founders also demonstrate how people would actually use it.

“How will it help patients? What would that look like?” Estes
said, adding, “The best investment is where you can very clearly
see where a physician would use” a new piece of tech.

Graham Walmsley, a principal at San Francisco-based VC firm
Versant Ventures, agreed.

“When I see too much about revenue and market front-loaded, it
suggests some naivete,” Walmsley, who recently led Versant’s
investment in a clinical-stage therapeutics company focused on
treating non-alcoholic steatohepatitis (NASH), which is poised to
be a significant burden on the US healthcare system due to the
growing
number of patients with the disease, said.

Instead, he’d like to see entrepreneurs “build out the
entire clinical case” for their company or technology first.

Clinging to your pitch deck

If you’re headed to a meeting with a venture capital firm,
chances are you’ve planned ahead. Whether  you’ve brought
index cards or a PowerPoint presentation, you’ve likely got a
list of basic points about your company that you want to get
across. But sticking too strongly to a list of prepared items can
also turn off investors who want to ask questions.

“There’s a saying that I like which goes something like, ‘You
have to release your agenda,'” Frazier’s Dan Estes said. “I think
sometimes companies stick to their pitch deck too closely.”

That means if you’re pitching your company to a venture fund and
someone on the fund’s team wants to skip ahead to another part of
your presentation or pause on a slide to further explore
something you’ve mentioned, it’s better to be flexible than to
rigidly plow through your talking points.

“It’s better to let the questions guide the discussion rather
than walking through every component dogmatically,” Estes said.

Similarly,
Dylan Morris, a general partner at venture firm CRV who
focuses on bioengineering and recently led the firm’s investment
in a drug development startup called System1, said startup
leaders should focus less on the technical details or decades of
science that went into their technology and more on keeping
potential investors engaged.

“Don’t come into the meeting to teach. Come to sell,” said
Morris.