The case for going on a yearlong fundraising road show
Many people will tell you to raise as much money as you can as early as possible. But Nick Franano, the CEO of Novita Therapeutics, told the audience at the Kauffman Foundation Life Science Ventures Summit that there is value in raising slowly, making 1,000 investor pitches and raising money gradually from several sources over time.
Franano created Proteon Therapeutics, which has a deal to be optioned for $550 million to Novartis and has since created Novita as an accelerator to launch new drugs and companies.
With Proteon, Franano and the founders took the following steps while fund-raising (and he’s using the same formula with Novita).
- Put a significant amount of personal net worth into the company
- Raised money from angels
- Received state funding that matched the angel investment
- Added more angel investments and federal grants
- Raised venture capital (multiple times)
“A lot of my colleagues raised their money in a single large sum,” Franano said. “But going on the road and pitching my own Series A was a learning experience.”
The single best pitch Franano ever made was when he was closing his Series A – after more than 1,000 pitches. “I had three of the four Series A investors committed. The pitch was magical. Everything was locked up.”
The process was a difficult one, Franano admits. But Franano thinks entrepreneurs will use their money better if they raise it gradually over that period of time.