Raising Money with David Esposito, Part 2

We needed to ensure our story was compelling.

David Esposito, CEO, ONL Therapeutics

David Esposito, CEO of ONL Therapeutics, was in the midst of a Series B fundraising campaign and had devoted significant time and effort to find potential investors that were interested in the company. As I described in Part 1, David had built and executed an investor outreach plan through his consistent persistence.

Now that investors were interested in the company, we had to figure out exactly what to tell them. We needed to hone and customize our story.

Science can be hard to communicate, with many complicated details that can take years to fully grasp. Trying to communicate science, properly calibrated for your audience, can be challenging and full of pitfalls (Exhibit A: my attempts on this blog). As a biotech company, science is at our heart. We had to figure out how to communicate our message in a meaningful way that continued to build investor interest.

So how would David shape our storytelling efforts?

Customized, Flexible Storytelling with David

Storytelling in fundraising is often called “the pitch.” But, as I learned from my experiences with David, it’s more than just the content itself. It also includes how you say it, who says it, and who your audience is.

PowerPoint slides formed the backbone of our materials for investors and provided the basis for how we framed our story. We generally had two versions of the presentation, a relatively boilerplate non-confidential deck and a more audience-tailored confidential deck with more details. These two presentations were used with different investors depending on where they were in our outreach funnel, ensuring that we kept our message appropriate for the audience.

We paid a lot of attention to our science and data slides to ensure that our diagrams, schematics, plots, and pictures were clear and convincing. But another wrinkle in how we told the story arose from the need to do these presentations over videoconference, rather than in person, due to the COVID pandemic. When we were running through the pitch over Zoom, oftentimes the person talking wasn’t the one controlling PowerPoint. This initially made pointing out specific elements on the slide cumbersome, as you would have to use your voice as a pointer (“As you can see in the upper right middle graph below the picture…”). We could tell that the audience would sometimes get lost trying to find what we were describing. Our message was no longer clear, making it less convincing. We did not want a bewildered audience, so we addressed this issue by using color (“In the blue box, you can see a graph showing…”), which helped streamline how we communicated our message and made it easier for the audience to follow along. We found a way to keep the message clear and convincing.

While our PowerPoint slide decks helped us structure our message and were adjusted based on the audience, they would be meaningless if our message didn’t resonate. We had to telegraph the heart of our story, the rock-solid idea that stayed consistent throughout our storytelling. Fundamentally, our messaging had to clearly state how the fundraising goals were tied to the company’s purpose. Since ONL Therapeutics was developing drugs to prevent vision loss, we emphasized how the new money would fund the critical next steps in the drug development process, how each step would bring us closer to our end goal of bringing a promising drug to suffering patients. Because life science companies develop technologies to alleviate human suffering, David has found that it is often easier to believe in a life science company’s mission to help people, making it easier to evangelize the mission to investors.

Credibility and Calibration

While the heart of the company’s story was clear and consistent, David knew that he needed to establish our credibility. We had to show that we knew what we were talking about and that our plan was believable. David’s focus on credibility was apparent from the start, whether it was an initial outreach email or a PowerPoint pitch. By building credibility quickly, David believes that the audience will be more receptive to your message. We established our credibility by ensuring that our message was relevant for the audience. We would adjust our message and our slides depending on the investor. For example, since ONL is developing drugs for vision loss, we might have included a more extensive introduction to ophthalmology and retinal diseases if the investor didn’t have experience with the eye. Talking to an ophthalmology-focused VC firm, however, wouldn’t necessarily need the same level of background explanation but may warrant an additional level of scientific or clinical detail. By refining the focus of our story for the audience, it also showed that we knew who they were and indicated that we took the time to do our homework.

Similarly, this calibration of our storytelling for the audience also extended to our presentation of the slide deck. We would hone the message based on who we were talking to. If we were talking with scientists, for example, we would establish a science focus and describe our data in more detail. We would explain why our science made sense. On the other hand, during occasions when we were talking with people with more of a financial background, we would emphasize our financial story, the market opportunity, and plans for using the fundraising proceeds, explaining how our operating plan made sense. By properly calibrating our storytelling, we helped demonstrate that we knew what we were doing. Without our carefully calibrated focus on credibility, investors would be less likely to take the next step with us.

Leverage the Team

In addition to knowing what to communicate to which audience, our investor outreach also relied on knowing who should tell the story. ONL had a small team of five people during our Series B fundraising process. As true in David’s prior experiences, fundraising becomes the ultimate priority for everyone, and everyone played a part in the process. David has learned that fundraising requires having subject matter experts talking with subject matter experts on the other side of the table. While he’s a fast learner and can talk about all aspects of the company, David has developed the humility to recognize the limits to what he can credibly explain to potential investors, ably maintaining his and the company’s overall credibility with the investors. As part of this, he understands when to bring the right team member into the discussion. In addition to preserving credibility, David has found that involving the other members of the company is often seen as an exhibit of good teamwork, and demonstrating that you have a strong team gives another reason for investors to believe in the company. From a more practical perspective, David also recognizes the value of having more people on the call because one person can’t pick up and remember every detail of the discussion.

Somewhat unexpectedly, we benefited in this regard from the pandemic, as it allowed more people to get involved in fundraising since everything was virtual. Pre-COVID, only a couple of people would have gone to in-person meetings with investors due to time and resource needs. But with videoconferencing, David was able to use his whole team to meet the company’s fundraising goals.

In David’s mind, fundraising is a team effort. But it wasn’t just the ONL employees who got involved in communicating with investors. Our scientific advisors, existing investors, and other key opinion leaders (KOLs) also extensively interacted with VCs and strategics on our behalf, lending their credibility to support our message. So, achieving our fundraising goals was a total team effort.

Managing Feedback

When we presented to an investor, we often got feedback from the audience. Sometimes, these were unspoken looks of confusion and darting eyes when we poorly described the location of a graph on a slide. Other times, the feedback was more substantial, such as adjusting the amount of money we were looking for.

As you would expect, when we were talking with investors, we would describe our plan and state the amount of money we were asking for. We arrived at this value by determining what our base case would be for accomplishing our goals for the technology and as a business. By pricing out the steps it would take to achieve our goals, we were able to determine credible milestones to create our investment thesis.

This initial investment thesis was essentially a hypothesis, one that hadn’t yet been tested in the market. We knew that some of the numbers were built on our best-educated assumptions. Yet, we were also fully aware that we didn’t know all the answers. So, we treated our interactions with investors as experiments to test our hypothesis. Through our discussions with investors, we sometimes found that our assumptions were wrong, making us revisit our calculations. Throughout the fundraising campaign, our numbers and our base case evolved and became more refined as we listened to feedback from the market, an occurrence that has been true for all of David’s fundraising experiences. Eventually, through this market feedback, our story became stronger and more attractive.

But market feedback can be a tricky thing. If we were to adjust our story and plans to incorporate everything we heard from every investor, the resulting presentation would be a chaotic, nonsensical mess. Fully aware of this potential trap, David has approached this with an understanding that we, as the company, are closer to the data and have a better understanding of what can be delivered. This acts as a filter to help discern which investor suggestions are valuable and which are less so. Furthermore, David’s experiences have taught him that people have a ton of reasons why they don’t invest in you, and it may not actually be what they say to you. This makes it challenging to find the truth in a “No.” So, David has learned to be careful with using investor feedback to shape our message. However, sometimes when you get enough similar feedback from different investors, there’s enough credibility behind a change to make the adjustment. Therefore, developing a filter is vital for keeping you on message and preventing you from chasing every possible scenario.

While there are caveats to investor feedback, David did receive meaningful guidance from the people we talked to, and their input helped us focus and refine our message throughout our fundraising process. Their voices helped us filter market feedback and identify what things we could credibly do to get to the next level. Importantly, we experienced this assistance because of the good relationships that David and the team had established with the person on the other side of the table.

In the next blog post, I’ll describe the value that David put on relationships during our fundraising campaign. Relationships helped us open doors, improve our message, and close the deal.

Special thanks to:

• David Esposito, CEO, ONL Therapeutics (desposito@onltherapeutics.com)

• Connie Chang, COO, ONL Therapeutics (cchang@onltherapeutics.com)

• QIAGEN and Todd Festerling, PhD for sponsoring the blog