Raising Money with David Esposito, Part 3

David Esposito, CEO, ONL Therapeutics

In the Series B fundraising campaign for ONL Therapeutics last year, I witnessed David Esposito’s emphasis on communication. From the outreach planning and messaging management (see Part 1) to the shaping of the story and the pitch presentations to investors (see Part 2), we were immersed in the crafting of thoughtful communication.

But throughout this experience, I’ve come to realize that communication can only take you so far. Equally important is what can arise from your communication efforts and your interactions with your audiences: relationships.

David has established relationships and built up his professional network throughout his career, always emphasizing their importance. During our fundraising campaign, he continued to create new relationships, while leveraging old ones. These relationships proved to be vital to the success of our Series B round.

Relationships Opened Doors

Having a broad network allowed David to expand our outreach list. While 90% of David’s initial outreach was started with cold calls, emails, or LinkedIn messages, he also leveraged existing relationships. These contacts knew and trusted David from previous experiences and could connect him with new people who may not have heard ONL’s story before. These introductions came with the added credibility of having someone recommend you to another person, reducing another hurdle typically found in fundraising.

As a LinkedIn maestro, David used the social networking site prodigiously, finding that people were sometimes more responsive to a LinkedIn message than an email. In addition to his professional connections on LinkedIn, he also reached into his prior professional networks, like those formed during his time as a sales rep for Merck, and any alumni connections.

When we talked with new groups, we tried to plant the seeds of a future relationship. In some instances, David would try to find common ground with his audience, such as when he connected with the partner at a VC firm through their shared experiences at West Point. When the larger ONL team was on a call, sometimes we would find commonalities with our counterparts. For example, I would sometimes connect with a fellow immunologist, while my colleague would highlight her European roots when we talked with European firms. In David’s experience, this type of communication can help make things feel more human and personal and lay the foundation for a strong relationship in the future.

Relationships Helped Our Storytelling

While David’s existing relationships helped us make new connections, relationships also proved vital for our storytelling. Over the years, we have established strong relationships with our advisors and current investors. They understood who we were and what we were trying to do. They understood our plans and our rationale. They trusted us to execute our mission and to use their money wisely. They believed in our vision. So, when it was time to get them involved during our fundraising, we knew that we would have strong advocates in our corner. Our advisors and current investors went to bat for us as they told our story to new audiences. Because they were thought leaders and experienced investors, their reputations provided additional credibility to ONL and our story, building confidence in the company in the minds of potential investors.

As we created new relationships with our audiences, we sometimes found people that really wanted to help us succeed. For example, our discussions with an associate at a VC firm led to him becoming our champion within the firm, promoting us and working with us to make us more appealing to the firm’s key partners. As we talked more with him, we developed a fruitful relationship with him, even if in the end his firm didn’t invest in us. He was able to give us insight into our plans that we hadn’t fully considered. His feedback helped us refine our presentation and our ideas. By addressing his questions, we learned to better answer challenges to our plans. And working with him to make our message more appealing to his firm, likely helped us hone our message for other firms, too. Interestingly, he wasn’t an outlier. Similar patterns arose with a number of groups that we were talking to.

Because you don’t know who can help you or who will help you, David emphasized an important lesson: treat everyone well, regardless of who you talk to. While we all learned the Golden Rule as kids, we sometimes forget it. But in fundraising it was an important lesson to remember. David would sometimes meet with members of the firm at the lower end of the hierarchy, while other times he would meet with a firm’s managing partners. He would treat the analysts and associates the same as he did the big-name partners. In addition to simply being polite and respectful, David took his approach because the analysts and associates were often the gatekeepers to the key decision makers. He didn’t want to leave a sour impression with anyone, regardless of who he was talking with. Relatedly, he also taught me to always bring your A game to these meetings because you never know who’s going to show up. While he may have been scheduled to meet with an associate, sometimes the partners would join the call too. So, he always gave the same level of respect and professionalism to everyone he met.

Relationships Got the Deal Done

In the later part of last year, our fundraising campaign had reached its crescendo. It was time to close the deal. But this phase of fundraising can be perilous. Emotions can run high, and deals can fall through. The logistics of getting all the documents negotiated, finalized, and signed can be dizzying. Thankfully, we had a number of strong relationships that helped us cross the finish line and emerge with millions of dollars in the bank.

At the forefront was the relationship that ONL had formed with our lead investor, and more specifically, the relationship David had established with the partners at the VC firm. David found them to be good, straightforward, and honest partners in this process. They were true team players that we felt wanted the best for the company even before the final documents had been signed. These investors worked with us as partners as we navigated the ups and downs of the closing process. Had they been less trusting or more adversarial, the deal may have been derailed by any number of bumps in the road.

The relationships we had with our lead investor, as well as those with our other new investors, were invaluable as we completed the deal. But equally important to this process were the relationships we had with our expanded team, specifically our outside legal and IP groups. Our corporate law firm provided insightful comments and helped strategize with David and the Board. Logistically, they had to manage a stream of documents and numerous changes that had to be circulated among dozens of people. Similarly, our IP firm prepared us for an extensive due diligence examination by a Big Pharma company, helping us successfully navigate that gauntlet and proving that they were worth their weight in gold.

The fact that the deal closing process went smoothly and was completed by the deadline was due, at least in part, to the strength of the relationship between David and the legal teams. The law firms knew that they had our trust in their ability to execute, and we knew that they understood our positions, technology, and strategy. Without the strength of these relationships, our story may have ended quite differently.

Relationships Are Long-term

Importantly, the relationships that David and the team formed during our fundraising will be helpful in the future. People who are now familiar with our story may be more willing to take a meeting in a future fundraising campaign. Similarly, as our existing investors helped us during our Series B fundraising, the relationships with our new Series B investors can be leveraged in the future to connect us to new potential investors and advisors.

Viewing these as long-term relationships contributes to David’s perspective on stewardship. While we want to be good stewards of the investors’ money and execute our plans well, we also want to continue to foster the relationships we’ve established with our new investors.

As you can imagine, stewardship comes down to communication. When people give you money, they want to know what you’re doing with it. And David feels a responsibility to keep everyone informed and up to date. He makes a point of sending out monthly updates to our existing investors, our advisors, and other key stakeholders. These email updates are well-crafted and are centered around a high-level update. Throughout his experiences, David has found that simple things like this build your credibility and keep people engaged and informed and prevent people from feeling blindsided when hiccups occur. These acts are a major component of how David continues to strengthen existing relationships.

For our stage of company, David’s approach mirrors his method for compiling messages during our outreach phase. He hones his message into short, crisp notes and sends them on a consistent basis. He works to ensure that his updates aren’t so overstuffed with information that the reader can’t comprehend the key message. Because some notes may require multiple drafts, each adjusting the message, this type of communication, as you can imagine, takes a not insignificant amount of time and effort. David is aware of the trade-offs but believes that the effort is definitely worth it.

In David’s view, strong long-term relationships can open doors. For the company, these relationships can help us with future fundraising goals, and when done right, mindful curation of these relationships can lead to a virtuous cycle where success forms the foundation for future success.

Conclusion

With ONL’s Series B fundraising campaign, I had the chance to witness firsthand how David raises money. I saw how he exhibited consistent persistence as he engaged in his outreach process, and how he would deal with the subsequent flurry of rejections that would demoralize most of us. I learned how he crafted a story and relied on his team to tell it, and I’ve come to understand the value David puts on relationships, having seen the success that can arise from mindfully fostered partnerships.

Raising money isn’t easy. And it’s still not going to be easy in the future. But the lessons that I’ve learned from David may help tilt the odds toward success.

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