Getting the Pulse of Biotech Companies

Shirley Eis, co-partner of Rigo Telecommunications, sees Biotech as the hottest spot for investors and entrepreneur to put their money, but it’s not an area for everybody.

Entrepreneurs in the field need more than a good idea to build a successful biotech company, and angels need to do their homework to find the best deals in biotech. There are no guarantees for investors despite the number of burgeoning biotech companies.

While more money flows into biotech , it’s still not easy to get funding. These days, start ups must have more to offer than just a good idea to build a successful company. There’s plenty of risk for start ups which need the experience of angels who have already taken businesses to maturity or public. From her perspective, entrepreneurs need:

1. Great Idea, but this is only the beginning,
2. A rock solid business plan,
3. A terrific management team,
4. An intense desire to succeed

Biotech offers unlimited investment opportunities because all the research that has been going for the last decade is paying off in treatments and drugs that can revolutionize medicine. “It’s still not easy to get money for biotech companies,” Eis explained. “There are few people who understand the field. Investors have to understand the business plan and not buy someone else’s hype.” When Eis evaluates biotech business plans, she turns to the advice of scientists to reach more informed decisions.          

Nonetheless, Eis thinks it’s a great time to be an angel because there are plenty of start ups looking for funding. As a rule, Venture capitalists will only touch later stage companies that has created a gap that angels have filled. However, she sees VCs doing more deals with established companies in 2003.

Eis, based in Stamford, Connecticut, has a great perspective, having worked both sides of the fence as an entrepreneur who launched her own start up in 1981 (sold it in ’99), and as a private investor who now mentors entrepreneurs. Her company is not a investing firm.

“Larger venture firms will only tackle mature deals,” Eis said. “That has created a lot of opportunity for angels who invest not only their money, but are willing to spend time mentoring companies. That’s a critical difference. Giving the time can help avoid mistakes and accelerate the company’s growth.”

Locating funding is always a challenge for entrepreneurs. She recommends referring to several good books that lists VC firms. In addition, every state offers venture capital funding to support the growth of start ups. Of course, there’s always networking at private investing forums.

As a woman, Eis found little discrimination. When it comes to investing, having a good business plan means more than gender. Eis can be reached at seis@optonline.net.

“This is an exciting time to be an angel investor,” Eis said. “Early stage still presents risks but angels who will see them through the rough spots can profit from investing their time. You won’t see deals as you do in a robust economy. But the good deals are out there.”