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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
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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).
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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 about biotechnology,
health care and medical technology funding via angel financing, visit
the Angel Capital Association, a Kauffman Foundation sponsored group.
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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:
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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.
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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.
Credit to this article goes to bioenterprise.com
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