Life Science and Healthcare VC Checkup from the Venture Summit Conference
Sr Associate, Jessica Davis recently participated on a panel titled Life Sciences & Healthcare VC Checkup at the Venture Summit West conference. The session included panelists across a broad range of funds including health tech, med-tech, therapeutics, femtech, private & public markets.
The VCs weighed in on life science & health sector areas of interest, high priority subsectors for near term investments, perspectives on public market conditions and how it is impacting earlier stage investments, and recommendations to founders looking to fundraise in the current environment.
Here are a few topics where Jessica provided her insights:
What do you see as the attractive sectors in life science and health sectors and why? Can you share insights?
Jessica Davis - We are very proud to focus on the life science industrials sector. Historically, most companies in this space had to bootstrap their growth or primarily relied on seed money from angels, friends & family, or grants. Life Science Industrials are the fundamental core of all the components that biopharma relies on - the tools technologies and services enabling discovery, drug development, and manufacturing. Additionally, they are insulated from the binary outcomes that medical devices, diagnostics, or therapeutics are privy to. Since they are insulated from the burdens of clinical trials or regulatory reviews, they don’t have the same capital intensity.
What are your thoughts on recent high valuations? How is your company managing it going forward?
Jessica Davis – At Dynamk we are always calculating valuations rooted in fact and meeting our financial criteria. We look at factors such as whether milestones were met, have they demonstrated market traction and validated data, what are the potential exit opportunities, is there significantly sizable TAM / SAM / SOM, and what is the opportunity funnel. Recently, as with much of the market, there was some frothiness in the Life Science Industrials space. However, the major strategic players were making offensive acquisitions to fill portfolio gaps or advance toward the needs of next generation therapeutics. Fueled with excess capital from windfalls caused by the pandemic, these strategics are willing to pay a premium for long-term strategic advantages.
What advice do you give to the early-stage CEOs in the audience seeking investments?
Jessica Davis – It is important for founders to remember that this is a two-way relationship – it is as much about what the founder wants and needs in an investor as what the investor is looking for in a portfolio company. The right investor partner is crucial. Separately, when speaking with investors, be clear about your ask – why are we talking today? If you’re fundraising, how much do you hope to raise? What are the uses of funds? What is the target valuation? If you’re not fundraising, how can I help you today?
With the recent retrenchment in public markets, there is a lot of discussion regarding a cutback in later stage and crossover investment and a focus on earlier stages. What do you think of this prediction?
Jessica Davis – I think this trend depends on the market focus. From a life science industrials perspective, we feel that valuations may experience a decline back to normal levels (without the recent frothiness) and away from recent significant inflations. Investors are realizing that they need to return to informed, milestone-based valuations incorporating actual facets of a company into those valuations. Over the past several years in the LSI market, we have seen an increased focus on later-stage (post series B) investments. We think this trend may continue given the return to more fact-based valuations.
