Angel Funding and Seed Funding

Using angel funding and seed financing to start or grow your company.Seed and angel funding are common ways biotech companies raise investment capital. Funds are primarily used to secure intellectual property (either through patenting or licensing), develop a business plan, finance an achievement of initial technical or market milestones (proof-of-concept or Beta sites), and contract with the initial management team.

Approaches to Raising Investment Capital

  • Friends and Family: Entrepreneurs often ask friends and family members for the initial start up funding for biotechnology, health care and medical technology companies. While this is a common approach to securing investment capital, many entrepreneurs structure these investments in ways that are detrimental to attracting professional financing. To simplify matters for raising follow-on investment capital (additional angel funding, venture funds, etc.), it is recommended that the security remains unpriced with a discount to a future, professionally priced round, and that the representation rights are structured, clear, and simple (e.g., designation of a representative
    for the class).
  • Angel Funding: According to the Center for Venture Research, angel funding is by far the largest source of seed and start up funding. Recently, angel technology investors have organized themselves into professional investment groups with a focus on medical technology investments. Ohio has several professional investment groups, including:

    These groups provide investment capital that ranges from $50,000-$250,000 directly. Additional “sidecar” medical technology funding on top of that can range up to $1 million. Such biotechnology, health care and medical technology investment groups provide strategic support, guidance, and capital raising assistance to ventures such as start up biotech companies. To learn more aboutĀ  biotechnology, health care and medical technology funding via angel financing, visit the Angel Capital Association, a Kauffman Foundation sponsored group.

  • Seed Funds: Finally, several seed funds have recently launched in Northeast Ohio. They focus in part on biotechnology, medical device, and health care IT & service funding. Such groups provide start up funding of $50,000 to $500,000 for ventures that meet their criteria. The following medical technology funding sources work closely with BioEnterprise:
    • JumpStart,Inc. funds high-growth businesses and ideas and works with their founders to develop biotech companies into venture-ready entities. Visit JumpStart Inc. to learn more.
    • Case Technology Ventures is a $5 million investment capital fund focused on creating new businesses based on technologies developed at Case and our affiliate institutions.
      Visit the Case Technology Ventures website to learn more.

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