Top Consultants for Pre-seed, seed stages

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  Startup.com and Excedr Lab Equipment company.

By Exectr-tm

"This type of early-stage funding is pivotal for most startups, particularly in the biotech field where initial research and development costs can be substantial, because it provides the essential capital needed to transition from concept to early operational stages, such as conducting preliminary research, prototyping, "  Startup .com

"Everyone Pivots: The Truth About A Startup Pivot"  (link is not an endorsement)

https://www.startups.com/library/expert-advice/startup-business-pivot 

"I'd say most startups fail because the founders and teams don't learn and pivot fast enough from what doesn't work” - Andrew Hyde 

[We agree and say]

If that is true, (and common as many say), then too many failed to start right, or the concept was not validated for scientific soundness, scalability and efficiency, or the market was not well-studied.

---"This should be a scary, or shockingly horrible statement to investors.  If true, it means the earliest vetting, validation, planning and market research were NOT done, or incorrectly done.

The venture likely had no or inadequate outside expertise to review and critique the entire venture, and most importantly.. validate that the underlying science rationale of the innovation... Works. "-- RS 

   The fundamental science rationale BETTER Work !  Not just ”may work” on paper;  But is practical and do-able. Everything else important rides on that.

Yes, you may need to quickly change and pivot to a new direction, but avoid that as possible.

Investors should NOT be happy with that.

The CEO will, however, need to make some course adjustments, like tacking into the wind. Ideally, starting right, you'd have a strong, slight angle tail wind.

--- "Get an unbiased outside hard critique, validation and suggestions, BEFORE planning your presentation.. business plan or anything." -- RS

A very good article on pre-seed funding, ( slightly relating to required resources and instruments (lab equipment)), is by Excedr, an instruments and lab equipment company:

50 Biotech Seed & Angel Investors to Check Out in 2024.

The article covers names of angels and biotech investing firms- VC firms, etc.

Also Understanding Seed & Angel Investing, types of investors, emerging trends in sectors.

and challenges and opportunities. Good as a reference.

Our position, from being connected with some startups is the need for the entrepreneur to 

"get out and circulate", make contacts, go to investor events (where ventures are presented (30 of you get 3 minutes each)) (you can sit in the back to catch Angels on the way in/out), hang out with incubators, practice talking alternative financing methods with labs and equipment-instrument dealers 

You're going to repeat parts of your deal "pitch" often    Know it by heart:

• Elevator  pitch (1 minute)  2 sentences, then... 
• Competitive  advantages CA
• Unique  Selling Proposition USP
• Size  and potential of Market niche (emphasis on demand (size) and scalability).      SPM
• Barriers  to competition (skills, secrets, high capital required*, legal acumen*,     IP portfolio, etc.)

* These last 2 bold items seem counter-intuitive as almost impossible, but in the early 1990's, new telecom companies like MCI grew by competing with giants AT&T and SWB... by excellent capital-raising (state by state then merger), and excellent legal help(pushed AT&T back). MCI's skill level was weak, their network weak, but they found a large underserved gap in the market (trucking firms) who were being over-charged. MCI focused, improved and used new technologies to grow and win huge business.

  Learning to work deals, ... almost simple "trading" value/resources between people "in the business", discussing potential with NO guarantees nor ownership (equity), being careful to make full disclosures of risks, while knowing and avoiding the rigors of a full blown offering (unless a small, less than 20 person S-corp, or LLC)--- as possible before moving to later "Offering" stages.  Consult an investment banker before even approaching  10% of the provider/resource owners' net worth.

 A pre-seed future-exec [you?] may work "deals", with existing labs or certified used instrument dealers, who may finance and defer starting payments, on lease or lease-purchase (installments). The agreement can "back end load", defer or "balloon" the later payoff (or return, trade-in, replacement (note-- risky)) or allow an extension, forbearance or rollover clause (pass by a CPA or business lawyer).

For the Scientist-Consultant to the Founder (their view):

   The founder-entrepreneur at pre-seed or seed stage might consider the same approach as above to retain a TopPhD-consultant.  From the outset, discuss a possible deal to incentivize the consultant toward "making it work" by having a base fee and a "kicker" at the point of finding a critical improvement by the consultant, via granting a small royalty on future sales:

   If you're the consultant doing contract research for viability analysis with a biotech entrepreneur wanna-be, if found possibly viable, negotiate for a small royalty (to you) when you begin to find such valuable "fix" for his/her concept that has big potential (but can't make work without your skills and fix);  You might discuss upfront such possibility, discussing that  degree of apparent scalability might alter the value of the fix;

   If the entrepreneur has/gets significant funds ($100,000+), the consultant might further negotiate (make a deal) to bootstrap his/her own valuable other IP by offering the client a similar royalty (an exchange) to share some resources which your future magnate-client, and you, both need (a lab, space, equipment,(money?)). (that is, trading small royalties on potentially large future sales-- for resources).   

i.e.: The client has some money and a lab, and you have the high skills; You each get critical resources (your skill, a small portion of client's lab. office, instruments).   This also encourages care in secrecy for both, and encourages a long cooperative relationship;  Life-science lab R & D is usually a long process with  few "breakthroughs", with long, hard work between.

  One of the two projects might actually succeed; Helping each other, BOTH might succeed;  Both might learn that one of the two concepts has much more potential, proof and scalability, and shift all efforts, lab and funds--- to that one.

  Though NOT a partnership, an alliance like this, via royalties, requires you both

a)  get along (work well together) and 

b) are both "sophisticated" in biotech science, business and financing. (plus you both disclose all risks you can think of, to meet any unlikely suggestion that you traded "securities" (royalties on revenues usually are not; It's a contract, based on revenues).

THIS IS NOT FINANCIAL, BUSINESS, OR LEGAL ADVICE; Consult professionals to confirm anything you do.

(Read how  Sir Richard Branson started Virgin Airlines, to see how a brave, quick, bold, persistent wheeler- dealer started a billion dollar company with almost NO money.)
 

   If your concept is really good, disruptive to the point of being a "Wow" product or process showing a half or better improvement in costs, efficiencies or purity--- then hire an outside expert to help design the "proof of concept" experiment, and an opinion on practical producibility. 

Maybe start Smiling, being more Confident;   That...  sells.

   Observe boutique investment bankers, angel groups and "wealth managers" (they know where to find real money), and even a hedge fund--- and practice delivering your "elevator pitch" CA, USP, market size and barriers to competition, in 3 minutes. 

Don't start with your real final selected Venture Funds or VC's†.  Know how to not disclose an imporant aspect; Merely hint to potential and that the concept has been proven workable (if so).

   Try it with a Biotech business lawyer who might give you a free 30 minute consultation. Do not disclose any secrets, only scale of disruption of the current technology and barely the nature.

These people will usually not favor alternative financing, but some may understand exchange of percent of future revenues (royalty) for advance of cash, supplies, resources and/or a lab.

i.e.: 1/2 -2% of future $500 million sales/ year ( to a current funder or professional).. is a future lot of money.

    A little-known truth is: "Money chases a really good [scalable] idea, with high margins."

Some experts say good ideas are a dime a dozen, that only execution matters, (StartUp.com) but others in the know  say the above... for "great" ideas. 

* DFPS:  See ForStartUps.   Disruptive, Free of regulations, highly Profitable, Scalable

†  Equity funding actually comes through "Venture Funds" which get money from VC's

THIS IS NOT FINANCIAL, BUSINESS, OR LEGAL ADVICE; 

Consult professionals to confirm anything you do; Equity (stock) offerings are highly-regulated (you can't advertise to the public, and other strict rules). 

The distinction is:  “how good” is the actual concept; 

 Is it:   more than an idea, has had some testing (proof),  very secret, well-protected, immune to competition, a  big market niche, highly scalable with little labor and how rare it is (only possible by you).

Even better, can it become profitable in 2 to 3 years? 

   If so, you have a winner  with Funders.

One more note: 

Act like it, if you know what you've got.  Hit those facts, be confident, and polite,

 Let it be clear, you are ready to walk, and WILL find funds.  Money is OUT THERE.

Think of them as...  "You've got nothing special (because they don't)".

   The really smart ones.. . will see "success and $$$  walking."  Stick to bottom lines.

Ask  questions.  "They need you more than you need them."

I'd be cautiously slow to assign (turn over) my main IP at any early point.  (Expect that to be a possible deal-killer, because it is the main and only real Asset, besides you; They have duties to investors to secure value in the new company).  (Valuation of trade secrets  is extremely difficult, since most of it cannot be disclosed.  The value is what it can bring in sales-profits.  Skip the other 4 methods of valuation.)

    When eventually forced to assign IP,  consider pressing for a "keep back" of 20%+ on the distinct IP asset ownership, and in all adaptiions, derivatives, assignments and licensing.

 (Although keeping a high percentage of company stock may already entitle you to indirect ownership via your % ownership through the company (but lacks as much control)).

(Having distinct part-ownership should give you independent ability to legally defend the IP when the corportion you run might decline to.  You might engage as "pro se" (but that could expose you to some personal liability if you lose).  Ask a lawyer.)

It's as much about attitude as the rare concept. (Don't display over-confidence). 

But...  a fine "Goldilocks"  balance.   Find it. 

Don't let opulent wining and dining..  snow you.
 

  Educate yourself on Key Business Principles

Focus on the Best Books, such as 

"Business Sense" by Dan Thomas (famous consultant)

Books similar to "Guerrilla Financing" may help. 

Inc. magazine is usually good.

At some point you'll need a book on basics of Advertising (with examples).

Read the old classics of advertising on hugely successful 4 to 6-word ads than ran for years.

Find a company or software that evaluates your entire concept and plan as a business, or find a consultant who has that and input your information (takes a day or two to input); It should produce an excellent report using top MBA and top Consulting firms' principles, in analysis and charts. 

You will learn a lot, including SWOT analysis. You will better know what investors and grantors are looking for, and weaknesses you have.

You'll learn strategy.

 
We can likely help you on this adventure. 

Contact us with questions, or for a free 30-minute consultation