A | SOLICITING ANGEL INVESTORS - OR FRIENDS AND FAMILY - CAN BE A USEFUL WAY TO LAUNCH COMPANIES. However, since they aren’t typical life science investors, certain considerations come into play:
- Make sure the investors are aware of the risks of early-stage investing. Traditional VCs have dozens of companies in their portfolio and fully expect some failure; angel investors don’t usually have that type of diversification.
- Make sure the angel investors keep capital in reserve. Most likely the company will need more capital than it originally thought.
- Keep the angel investors well informed. Make sure they hear about the challenges as well as the successes along the way. The goal should be no surprises.
- Put seasoned life science executives on the board. They will provide the judgment and mentorship capabilities that an angel investor can’t.
DENNIS PURCELL, a founder and senior advisor of Aisling Capital, has completed over 200 transactions and supervised over $15 billion in life sciences industry financing and advisory assignments.