How to attract investors for deep tech and life science start-ups

00:00:03:14 - 00:00:36:10

Sara Walker

Well, we're joined by Zoe Reich, Venture partner, Octopus Ventures, and also Claire Brown from the OSE. Oxford Science Enterprises to talk about us both the challenges and opportunities for women in STEM  system in deep tech and also life sciences. Thanks very much for joining us. First of all, to you, Zoe, in terms of sort of investing, what are some of the key challenges that you've seeing out there and what do people who are trying to get investment need to look out for and address?

00:00:36:12 - 00:01:17:01

Zoe Reich

Yeah, So I particularly look at deep tech fields, everything from advanced engineering through to Advanced Materials. And inherently, these are often platform technologies. They could be applied to different use cases in different verticals. And one of the greatest challenges that we see is really trying to find the right indications of market fit at the earliest stage. So how are you developing a product that is for a ready market that you can get appropriate feedback for now versus maybe your second or your third market that ultimately might be larger but doesn't quite fit the technological readiness or form factor that you have today.

00:01:17:03 - 00:01:20:11

Zoe Reich

So trying to navigate that customer discovery process is one of the key challenges that we see early stage teams struggle with, particularly because often in tech you've got largely academic founders who don't necessarily have a background in commercialisation or really navigating these commercial pathways. So as much support as possible on that customer discovery process to try and avoid the typical series A pivot is really one of the key challenges.

00:01:48:00 – 00:02:00

And Claire what sort of advice do you give when you come across companies or people who are looking to grow and looking for that sort of backing, What's the kind of advice that you're putting out there?

00:02:00:04 - 00:02:24:07

Claire Brown

And I think, you know, one of the things that we often like to see, particularly in the UK, I think we, you know, having spent time in the US is I think how do you create your story to almost sell the future as well as underpinned by shorter term milestones. So we want that big vision. We want people to be ambitious and I think sometimes we can be almost apologetic for asking for the money that we really need.

And particularly life sciences is important because the amount of capital you need is significant and maybe unlike deep tech is not customer your customer. We know who the customer is. We know the business model for a therapeutic. It's going to be large pharma or mid-size pharma, and we know what we need to execute on and we know what to achieve.

00:02:43:14 - 00:03:07:07

Claire Brown

But it's quite a risky area and we have to balance that risk by seeing where the opportunity can be. And I think if you get that balance wrong and you point out  too many of the negatives and don't sell the kind of big vision piece, then that can sometimes go against you. I think because all, you know, life science investors might say, well, we know that this drug could fail in phase one, and then that's all the money down the drain. So I do think it's about balancing that risk and mitigating it, but actually showing that big vision picture.

00:03:15:09 - 00:03:29:12

Sara walker

The climate, I suppose, for getting investment is really challenging. You know, at any time. So what would you say to someone who's looking for that investment that they need to get your backing, either you know, from Oxford or from the OSE?

00:03:29:14 - 00:03:51:04

Zoe Reich

Yeah, So capital is still being allocated and I think that's probably important too to really stay. But the bar in order to get that seems a lot higher, certainly in this current environment. So we are seeing less deals go through and according to which sector you look at, it could be up to 50% less capital than last year. So really my advice is have a such a keen focus on product, on building something that has that true need of what your customer is and have that as your sort of North Star really from the very early stage. Don't just think, what do I need to do to go from lab to field in terms of, you know, our robust nature of your technology. Really focus on who is my first customer and how am I building something exactly in line with what their requirements are. Because really the more market proof points that you have, the greater comfort you can give on the commercial risk side. And that is much more likely to enable greater capital to go into your business.

00:04:35:17 - 00:05:04:21

Claire Brown

I think a similar question. I mean, what is the challenge? It's always a difficult finance environment. I mean, our projects and the investments that we make predicated on excellent science, but excellent science without excellent execution can equally go nowhere. So I do think that what you have my my feeling is really good science will always get an investment. But what you need to do is shape it and make it look much more attractive than maybe even the science is a mature. It's still got to develop. Your teams are mature. So I would say if I've got an academic or an early stage founder who doesn't have all the picture, it doesn't have all the story, they don't have, you know, the fantastic team that’s very well connected or they don't have a board that's helping them sell that story to try and assimilate people round about them. It can always be that kind of virtual company, if you like, so that when they go to talk to the investors to actually position with their stories that there's a credibility that comes along that actually the science hasn't quite meet yet. So I do think good science will always get funded, but there's no doubt about it. You have to shape it in a way that that good science will get funded.

00:05:47:07 - 00:06:06:22

Sara wa;ler

And just finally, then, to the to both of you, in terms of the future, what are you most excited about seeing developing in both the deep tech and the life sciences space when it comes to sort of projects and investment?

00:06:03:24 - 00:06:40:05

Zoe Reich

Okay. So one thing I love about my job is that you never know what's going to come out of the university ecosystem. So inherently, most of deep tech comes from blue skies research that really identifies this nugget of commercial potential. So whether you're looking at everything from a new quantum technology to a novel infrared sensor, it is that, I didn't know that this was possible, that really makes it exciting. But I think what is particularly different about now is really the increasing availability of capital at the growth stages as we have things like the Mansion House agreement that's being put into place. So this DC pension scheme with up to 5% that could be allocated into private stocks, opening up the possibility of around about 50 billion. There was a lot of small print, but we don't need to go into that now that that is really a scale of capital that we haven't seen in the UK and broader European ecosystem in order to continue to support these companies through that sort of critical growth funding stage.

00:07:08:20 - 00:07:34:11

Claire Brown

I think part of it is about making sure that you've got enough money at the beginning and you've got, you know, supportive investors that are going to continue to help contribute to our business all the way through. So again, it goes to that vision piece. If you create a good vision and you can put the the points of success along the way that you can point to, that provides a comfort level that you're more likely to get investors coming in at the beginning and joining in on that journey.  And that makes life a whole lot easier. So I do think that part of this is about being we know it's going to be difficult. The things that I'm excited about is that now we're starting to see technology at a level of innovation that we haven't seen. And so over the past few years in the life science sector, as we've started to understand about genetically validated targets, that is opening up a whole new area of unmet need.

00:08:01:02 - 00:08:36:11

Cliare Brown

We are those diseases that we have not been able to address now are now starting to give us become the roadmap in order to go after them. And I think we'll start to see that a whole new play set of targets coming out and a whole new ability to target those with new modalities. So I think it's sort of that intersection of if you've got really compelling technology developments alongside maturity of people and landing on how they've had success of drug development in the past and matching of those, then the next generation of companies are going to have even better success because we've learned along the path. So I do think these are things that are steep right now we've never had before, and it's this intersection of this across disciplines, you know, with machine landing and and deep learning Now joining in with things that are a bit more traditional, the biotech and life sciences and and drug discovery. It's actually making an efficiency level that would never be the pace before.

And so actually that pace of speed of innovation is such that we just what an unprecedented times I think right now in the life science sector and it be for sure.

00:09:10:08 - 00:09:18:07

Sara Walker

Great. Well, thank you both very much for joining us Claire and also Zoe and both companies really looking at tomorrow, sort of building tomorrow on today.